Sales Guide and Training for SpectraMark

Transcription

1 Sales Guide and Training for SpectraMark Flexible Premium Deferred Fixed Indexed Annuities Issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA Distributed by Legacy Marketing Group As of June 30, 2014 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS. Products and features are subject to state availability. Certain restrictions may apply. This document is not a legal contract. For the exact terms and conditions, please refer to the contract. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 1

2 TABLE OF CONTENTS INTRODUCTION TO SpectraMark ANNUITIES...3 FIDELITY & GUARANTY LIFE INSURANCE COMPANY SUITABILITY REQUIREMENTS...3 A DETAILED LOOK AT SpectraMark ANNUITIES...9 INTEREST CREDITING OPTIONS...10 ACCESS TO ACCOUNT VALUES...13 INCOME SECURITY RIDER SM...16 LEGACY RIDER...19 COMMISSIONS...20 FIDELITY & GUARANTY LIFE INSURANCE COMPANY: THE STRENGTH BEHIND THE PRODUCT SUPPORT AND RESOURCES...20 FREQUENTLY ASKED QUESTIONS ABOUT SpectraMark ANNUITIES...21 For further information, please call the resources listed at the back of this guide or refer to Visit the secure site regularly at for the most current SpectraMark Sales Guide and Training. For product questions and effective sales ideas, call Marketing Field Support , Ext FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 2

3 Introduction to SpectraMark Annuities With diverse interest crediting options, a 3% premium bonus, a competitive rider that provides guaranteed lifetime income, multiple liquidity riders, and a strong death benefit, SpectraMark and SpectraMark LT flexible premium fixed indexed annuities respond to your clients needs for growth, income, and protection. This sales guide and training provides the information you need to decide whether SpectraMark is right for your clients, including: Fidelity & Guaranty Life Insurance Company Suitability Requirements. A Detailed Look at SpectraMark Annuities. Frequently Asked Questions About SpectraMark Annuities. Please note: Fidelity & Guaranty Life offers a Buyer s Guide for Fixed Deferred Annuities with Appendix for Fixed Indexed Annuities (FGLI4898) for your reference available on The Forms Store or by contacting your Wholesaler. Fidelity & Guaranty Life requires the Buyer s Guide be given to the client at the point of sale. I. Suitability The Company s Requirements Fidelity & Guaranty Life Insurance Company ( Fidelity & Guaranty Life ) requires that all Producer recommendations for the purchase or replacement of annuity products should have a reasonable basis as to their suitability for the consumer, based on the information disclosed by the consumer to the Producer at the time the recommendation is made. Fidelity & Guaranty Life also requires its appointed Producers to make every reasonable effort to present each client with the information necessary to make well-informed decisions relating to the purchase, exchange, or replacement of any annuity product. At a minimum, Fidelity & Guaranty Life Producers and their clients should be able to answer yes to each of the questions below prior to completion of any annuity purchase, exchange, or replacement: Does the client understand the key features of the product? Does the client understand the purpose of the annuity? Does the client have adequate remaining funds in case of an emergency? Is the client comfortable there are no likely, foreseeable significant adverse changes in income or expenses during the annuity surrender period that may affect the client s decision to purchase an annuity? If the client is replacing or exchanging another product with this annuity, does the client understand the pros and cons of the exchange, i.e., tax penalties, surrender charges, new surrender periods, loss of existing benefits? Will the consumer benefit from the new annuity s features and enhancements such as any riders selected? Is the complete transaction (including surrender and purchase) suitable? FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 3

4 II. Suitability Reviews Fidelity & Guaranty Life has established home office procedures for reviewing the suitability of annuity sales transactions. The process involves a review of information you submit with every application, including a review of its Suitability Acknowledgement Form ( SAF ). The SAF will be reviewed to determine whether the suitability information provided in connection with the transaction: Appears to reflect a reasonable basis as to suitability and should be accepted for issue. Appears to lack a reasonable basis as to suitability and should be declined. Requires further review of certain factors and should be held until Fidelity & Guaranty Life completes its review. In situations where additional review is required, Fidelity & Guaranty Life will conduct an elevated review of the suitability information, which may include: Contacting Producers by telephone with additional questions; Conducting telephone interviews with applicants; and/or Requesting written responses and/or documentation from Producers to support purchase, replacement, or exchange recommendations. Fidelity & Guaranty Life will decline transactions determined, via the suitability review process, to lack a reasonable basis as to their suitability. Also, the Company may offer your client the right to free-look an issued annuity at any time and may reserve the right to charge back any commissions paid on that transaction. III. Suitability The Producer s Responsibility Pursuant to the adopted NAIC Revised Model Regulation on Suitability in Annuity Transactions, a licensed insurance Producer must have reasonable grounds for believing that the recommendation of the purchase, replacement, or exchange of an annuity is suitable based on the insurance needs and financial objectives disclosed by the consumer. It is your responsibility both as an appointed Producer for Fidelity & Guaranty Life and as a licensed insurance Producer to recommend the purchase, replacement, or exchange of an annuity only after carefully evaluating the unique financial circumstances, objectives, and needs of your customer and determining an annuity is suitable. Prior to the recommendation to purchase, exchange, or replace an annuity, you are also required to ensure the following: The consumer has been reasonably informed of the material features of the annuity; The consumer will benefit from purchasing the annuity; and The annuity as a whole is suitable for the consumer. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 4

5 When a recommendation involves a replacement or exchange, you are also required to consider the following: Will the consumer incur surrender charges? Will the consumer benefit from product enhancements (such as riders)? Has the consumer had another annuity exchanged or replaced within the preceding thirty-six (36) months? IV. Suitability Acknowledgement Form The Fidelity & Guaranty Life Suitability Acknowledgement Form ( SAF ) is an essential part of the Company s suitability program and is required with every new annuity application. The SAF is designed to help you assess your client s financial situation and determine whether an annuity is suitable by asking many of the questions to be considered prior to making an annuity recommendation, including, but not limited to: What are your client s net worth and liquid assets? How much of your client s liquid assets will remain after the purchase of this annuity? Will your client s income after the purchase of this annuity sufficiently cover his or her living expenses? What is your client s monthly disposable household income? What is the source of the funds being used to purchase this annuity? What is your client s purpose for purchasing the annuity? I.e., what financial goals will this annuity help your client achieve? Does the long-term nature of an annuity product fit the client s financial time horizon? Does the client anticipate needing to take any distributions that will be subject to surrender charges? What is your client s investment experience? What other products does your client currently own or has owned in the past? What is your client s federal tax bracket? How much risk is your client willing and able to sustain in exchange for potentially greater gain? FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 5

6 V. Documents and Recordkeeping When completing the SAF, remember to complete all blanks and answer all questions. Incomplete forms will cause an application to be deemed Not in Good Order and will delay suitability review and issuance of the annuity. It is okay, when applicable, to use NA or N/A to indicate not applicable or use a null sign (Ø) if the amount is zero, but it is generally preferable not to use dashes. Fidelity & Guaranty Life does not permit consumers to opt out of completing the SAF. However, if your client is concerned about privacy, you may assure your client that the information from the Suitability Acknowledgement Form will not be shared by the Company with any third party for marketing purposes, as explained in the Fidelity & Guaranty Life privacy policy. Be sure also to describe any privacy practices used by you or your agency for handling personal information of your clients. Edits to information on the original SAF, including additional information not previously disclosed, must be initialed and dated by the proposed contract owner(s). Always keep copies of the SAF and all other documents, make notes of conversations with clients, and save any other information considered in your suitability assessment so you can demonstrate the basis for your recommendations. The information should be kept for whatever period is required by your state s laws, some extending as much as 10 years. Promptly provide additional information to Fidelity & Guaranty Life when requested. VI. Whose Suitability Information should be collected? Below are some basic rules to help in determining whose suitability information should be collected: If the proposed owner of the contract is a natural person, but not the same as the annuitant, the SAF should be completed with the proposed owner s information. If the proposed owner is a revocable trust, the SAF should be completed with the grantor s information. If the proposed owner is an irrevocable trust and the annuity is purchased in conjunction with or in close proximity to the creation of the trust, then ordinarily the SAF should show the financial information of the grantor of the trust. If the trust predates and is independent of the purchase of the annuity, ordinarily the SAF should show the financial information of the trust itself. In these cases, be sure to explain what the purpose of the trust is and how the annuity fits the purpose of the trust. If the proposed owner is a corporation, you will need to evaluate the nature of the corporation. If it is closely held, such as an S-corporation, the SAF should look through to the principal owner. If the corporation is a traditional C-corporation in which no individual holds a majority interest, the SAF should be completed with financial information of the corporation itself. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 6

7 VII. Signatures Who should sign the form? Both you and the proposed annuity owner(s) are required to sign the SAF. You should review each point of the form with your client to ensure your client is reminded of the key considerations in purchasing the annuity and acknowledging all of the information provided is complete and accurate to the best of your client s knowledge. In cases where the proposed annuity owner is a non-natural person, the following guidelines generally apply: If the proposed owner is a trust, the trustee must sign the SAF. A copy of the title page of the trust authorizing the trustee to perform financial transactions and the signature page of the trust should be provided with new business paperwork. Be sure to include a properly completed Certificate of Trust (ADMIN 5663) for irrevocable trusts or Verification of Trust (ADMIN 5662) for revocable trusts. If the proposed owner is a corporation, the appropriate corporate representative must sign the SAF. A copy of the Corporate Resolution reflecting the signor has the authority to act on behalf of the corporation should be provided with new business paperwork. If the contract is an UTMA or UGMA, the parent/custodian must sign the SAF. VIII. Definitions Household: The Owner and Owner s spouse or partner, or an adult residing with the Owner and sharing finances (i.e., income and expenses) with the Owner. Owner: A person who will own the annuity contract if issued. Owners have the right to make withdrawals, surrender, or change the designated beneficiary. Owners may also be trusts, corporations, and other non-natural persons. Monthly household income: After-tax approximate household income of Owner and any spouse/partner, including but not limited to, earned and investment income, such as salary and wages; Social Security payments; pension and IRA payments; rental income; and interest and dividends earned on other financial instruments. (Income currently earned on financial instruments that will be used to fund the annuity purchase should not be included.) Monthly household expenses: Approximate household expenses of the Owner and any spouse/partner, including but not limited to, rent/mortgage payments; utilities; travel and transportation; insurance premiums; health care, including insurance premiums and any deductibles or copayments; debt repayment; support for dependents; membership costs; vacation costs; charitable contributions; and property taxes. Monthly disposable household income: Monthly household income minus monthly household expenses. A separate worksheet may help you to develop this number. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 7

8 Emergency: A significant unanticipated change in circumstances during the surrender charge period of the recommended annuity, including potential changes in medical expenses, financial situation, or living arrangements. Total Net Worth: Total assets minus total liabilities (i.e., debts, loans, mortgages, or any other liabilities). Liquid Assets: Assets that can be accessed without substantial penalty such as checking and savings accounts, money markets, short-term certificates of deposit, and no-load mutual funds. Source of funds: The original source(s) of money used to purchase the annuity and make any subsequent premium deposits into the annuity. Distributions: Payments or withdrawals to be taken from annuity. Risk tolerance: Level of risk a consumer is willing and able to accept for potentially greater returns. Replacement: A transaction in which a new annuity is to be purchased and it is known or should be known to the Producer that, by reason of the transaction, an existing annuity or life contract has been or is to be: (a) lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurer, or otherwise terminated; (b) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of non-forfeiture benefits or other policy values; (c) amended so as to affect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (d) reissued with any reduction in cash value; or (e) used in a financed purchase. Age: Owner s legal age at time application is signed by the proposed owner. Exchange: A 1035 tax-free exchange in which the Owner transfers money from one annuity to another annuity. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 8

9 IX. A Detailed Look at SpectraMark Annuities Top Features Issue Age Limits Premium Payments Additional Premium Restrictions Premium Bonus Death Benefit Minimum Guaranteed Surrender Value Interest Crediting Options See details on pages Access to Account Values* See details on pages Competitive enhanced income rider and death benefit rider packaged with the contract. 3% upfront bonus on premiums paid in the first year. Index gains that vest to date of death. Multiple interest crediting options. Nursing home, terminal illness, and home health care benefits. No market value adjustments or administrative charges. Convenient checkbook access. 10% surrender charge-free withdrawals beginning Year 2, or minimum required distributions beginning Year , nonqualified , qualified. $10,000 minimum premium. $2,000 minimum interest crediting option allocation. $1 million maximum premium per owner without Home Office approval. Additional premium is allocated to the Fixed Interest Option and may be reallocated to an indexed option on contract anniversaries only. Premiums paid in the first year will be increased by 3%. The increased amount will be credited to the account value immediately and will be eligible to earn index credits. See Legacy Rider on Page 19. The minimum guaranteed surrender value (MGSV) equals 87.5% of premium payments reduced by surrenders net of any surrender charges thereon and adjusted for any account value reallocations, accumulated at a rate between 1% and 3% (set at the time the contract is issued). The MGSV is calculated individually for each interest crediting option, with the total account MGSV being equal to the sum of the MGSV for each interest crediting option. Fixed Interest Option. Step Forward Strategy (also known as the 3-Year High Value Fixed Indexed Interest Crediting Option Rider). S&P 500 One-Year Annual Point-to-Point With Cap. S&P 500 One-Year Monthly Point-to-Point With Cap. S&P 500 One-Year Monthly Average With Cap. S&P 500 Three-Year Monthly Average With Spread. S&P 500 Declared Rate on Gain. Up to 10% of account value after the first year or MRD starting Year 1. Checkbook access. Systematic income option. SEPP. Waiver of surrender charges for nursing home, terminal illness, and home health care. * Surrender charges may apply to withdrawals. Withdrawals may be taxable and subject to penalties prior to age 59½. Withdrawals may reduce the death benefit. It is recommended that tax advisers be consulted. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 9

10 X. Interest Crediting Options With your guidance, clients can choose the option or combination of options that best helps them achieve their financial goals. FIXED INTEREST OPTION The interest rate for this option is declared by the Company and guaranteed for each 12-month period and will never be less than the MGSV accumulation interest rate described in the contract. A new 12-month period is established for each premium payment or transfer allocated to this option. Clients may transfer from this option on contract anniversaries. If clients anticipate needing to take periodic withdrawals, this option is recommended. INDEXED INTEREST OPTIONS These options offer clients the opportunity to link interest credited to a formula that tracks percentage changes in the S&P 500 Index during an interest crediting period. Clients benefit from tax-deferred* earnings and index-linked gains without eroding their principal. If an owner dies prior to the next index crediting date, the indexed interest credit will be as of the date of death. The S&P 500 is a leading stock market index and a primary economic indicator. The index measures price changes of 500 widely held U.S. common stocks. Dividends paid on the stocks underlying the index are not reflected in the index itself. The following indexed options are available. Please refer to the client brochure interest crediting option inserts for crediting examples. Step Forward Strategy (also known as the 3-Year High Value Fixed Indexed Interest Crediting Option Rider). One-Year Annual Point-to-Point With Cap. One-Year Monthly Point-to-Point With Cap. One-Year Monthly Average With Cap. Three-Year Monthly Average With Spread. Declared Rate on Gain (also known as the Point-to-Point Fixed Declared Rate on Index Gain Crediting Option Rider). Step Forward Strategy The annual point-to-point structure locks in earnings every three years at the highest anniversary value. The anniversary values are determined by measuring the index value on the allocation date and each allocation date anniversary ** during the three-year interest crediting period and applying a cap. At the end of the period, the highest anniversary value is locked in. In no case will the interest credited be less than 0%. The cap is declared at the beginning of the interest crediting period and locked in for a full three years. Anniversary values are calculated on a compound basis. * Under current law, tax deferral is a basic feature of tax-qualified plans. Placing qualified funds into an annuity does not provide any additional tax benefit. ** If the allocation date falls on a non-trading day, the closing value of the S&P 500 on the next trading day will be used to determine the index value. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 10

11 One-Year Annual Point-To-Point With Cap In this annual reset option, interest credited is determined by subtracting the prior year s index value from the current year s index value, then dividing the result by the prior year s index value. The resulting index percentage change is multiplied by the option s account value to determine the index interest credit. Interest credited is subject to a cap. Interest credited is locked in annually and will never be less than 0%. One-Year Monthly Point-to-Point With Cap This annual reset option measures the change of the index monthly over a one-year period. A cap is applied to each monthly gain (there is no monthly floor when the monthly index change is negative), and the monthly returns are totaled at the end of the one-year period to determine the interest credited. Interest credited is locked in annually and will never be less than 0%. One-Year Monthly Average With Cap This one-year monthly average option measures the index value each month during the one-year period. The index values are added together and divided by 12. The average is then compared with the index value at the beginning of the period, and a cap is applied. Interest credited is locked in annually and will never be less than 0%. Three-Year Monthly Average With Spread For this option, the index value is measured each month during the three-year period. The index values are then added together and divided by 36 to determine the index average. Interest credited is determined by comparing the index average with the index value on the allocation date and applying a spread rate. Interest credited is locked in at the end of each three-year interest crediting period and will never be less than 0%. Declared Rate on Gain This annual reset option measures changes in the index over a one-year period. If the index price at the end of the period is greater than the index price at the beginning of the period, the interest credited will equal the declared rate multiplied by the strategy value at the end of the period. If the index price at the end of the period is equal to or less than the index price at the beginning of the period, no interest will be credited. Interest credited is locked in at the end of each one-year term and will never be less than 0%. INDEXED INTEREST OPTION TERMINOLOGY Anniversary Value Applies to the Step Forward Strategy. The anniversary value measures increases and decreases in the index value annually during the three-year period. The highest anniversary value determines the amount of interest credited. Accumulation Value This value is used in the annual statement and also on sales illustrations. It is equal to the sum of the Fixed Interest Option, the strategy values for each indexed option other than the Step Forward Strategy, plus the greater of the highest Step Forward Anniversary Value or Step Forward Strategy Value. This value reflects the unvested gains in the Step Forward Strategy that vest at the end of the three-year period. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 11

12 Cap The cap determines the maximum interest rate declared by the Company during the interest crediting period. The minimum guaranteed caps for the indexed options are: Step Forward Strategy 5%. One-Year Annual Point-to-Point With Cap 3%. One-Year Monthly Point-to-Point With Cap 1%. One-Year Monthly Average With Cap 3%. Participation Rate A rate declared by the Company for each interest crediting period. It is expressed as a percent of any index growth, is used to calculate any interest to be credited, and is guaranteed to be 100% (in the indexing formula) for all indexed options. Spread Rate This rate applies only to the Three-Year Monthly Average With Spread option and is a predetermined percentage that is deducted from calculated interest before interest earnings are credited. The maximum guaranteed spread rate is 18%. Declared Rate This rate applies only to the Declared Rate on Gain option and is a predetermined interest crediting rate that is declared by the Company at the beginning of the interest crediting period. The minimum guaranteed declared rate is 1%. ALLOCATION DATE This date, also referred to as the buy date, is declared by the Company for the allocation of each premium payment, transfer, or renewal into the interest crediting option and is the first day of the interest crediting period. There are currently four allocation dates: the 1 st, 8 th, 15 th, and 22 nd of the month. Applications, outstanding requirements, and premium must be received in good order two business days prior to the allocation date. Otherwise, applications and premium are held without interest until the next available allocation date. See Page 20 for commission-related information. RATE LOCKS For premiums from 1035 Exchanges and transfers facilitated by our Administrative Office, interest rates, spread rates, declared rates, and cap rates will be locked in for 60 days from the date the application is received in the Administrative Office. Note: Premium receives the greater of the rate in effect on the date the application is received or the allocation date (also referred to as the buy date). If cash is received with the application (rate lock start date) and transfer premium is received at a later date, all the premium will receive the same higher rate, provided the transfer premium was received within the rate lock duration of 60 days. RENEWALS AND ANNIVERSARIES An owner who wants to change interest crediting options must notify the Administrative Office at least 30 days prior to the annuity s anniversary. If no new interest crediting option is selected, funds will renew on the allocation date into the same interest crediting option. If an interest crediting option is no longer available, funds will be allocated proportionately across the remaining interest crediting options in which account value is allocated. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 12

13 TRANSFERS AMONG INTEREST CREDITING OPTIONS Initially, your clients may allocate premium among any of the available interest crediting options subject to the minimum required amounts. Additional premiums are applied to the Fixed Interest Option. Values may then be transferred among the interest crediting options only at the end of an interest crediting period. XI. Access to Account Values* SpectraMark clients have several options for accessing their account values. Clients may select the interest crediting option from which monies will be withdrawn. If they do not select an option for withdrawals, withdrawals will come from each interest crediting option based on the proportional percentage of account value the option represents. Amounts withdrawn from an indexed option before the end of the interest crediting period will have no interest earnings credited for that period. Therefore, if regular withdrawals are anticipated, the Fixed Interest Option may be an appropriate selection. WITHDRAWALS FREE OF SURRENDER CHARGES Each contract year after the first contract year, clients may withdraw up to 10% of their account value (as of the prior contract anniversary), less any prior free withdrawals taken during the current contract year. For tax-qualified contracts, if the minimum required distribution is greater than the surrender charge-free limit, it may be withdrawn without surrender charge, beginning the first contract year. CHECKBOOK ACCESS Available upon request by the owner, the checkbook brings peace of mind and eliminates the need for forms and mail time. Four drafts can be written per contract year. The minimum draft amount is $500, and the draft must be made payable to the owner or a financial institution. Checkbooks are not available for certain types of annuities. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS (SEPP) The SEPP option, provided for under IRC 72(q) and (t), generally allows for withdrawals before age 59½ without income tax penalties. In the first contract year, the full amount of SEPP withdrawals is subject to surrender charges. After the first contract year, SEPP withdrawals that exceed 10% of the account value are subject to surrender charges. A 10% surrender charge-free withdrawal may not also be taken when this option is elected. See the enrollment form for details. SYSTEMATIC INCOME OPTION For clients who need regular access to their account values, systematic income is available on an annual, semiannual, quarterly, or monthly basis. The minimum withdrawal amount is $100. Except for monthly income payments, which are only available electronically, clients can elect to receive payments electronically or by check. * Surrender charges may apply to withdrawals. Withdrawals may be taxable and subject to penalties prior to age 59½. Withdrawals may reduce the death benefit. It is recommended that tax advisers be consulted. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 13

14 NURSING HOME BENEFIT A contract owner confined to a nursing home qualifies for a waiver of surrender charges under this benefit if: Confinement begins at least one year after contract issue. Confinement continues for at least 60 consecutive days. The surrender is made while the owner is confined. Written proof of confinement is received at the Administrative Office. TERMINAL ILLNESS BENEFIT A contract owner who is terminally ill qualifies for a waiver of surrender charges under this benefit if: The illness or physical condition results in a life expectancy of 12 months or less. The terminal illness is diagnosed at least one year after contract issue. Written proof of the terminal illness is received at the Administrative Office. HOME HEALTH CARE BENEFIT A contract owner who requires home health care services by a licensed home health care provider as a result of being impaired in performing two out of six activities of daily living (bathing, dressing, transferring, toileting, continence, and eating) qualifies for a waiver of surrender charges under this benefit if: Home health care services begin at least one year after the contract issue date. Impairment in two of six ADLs has continued for at least 60 consecutive days. The surrender request is made while the owner is receiving home health care services. Written proof is received at the Administrative Office indicating (1) impairment in performing two of six ADLs, (2) the need for home health care services as result of the impairment, and (3) impairment is expected to last 90 days from the date of request. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 14

15 SURRENDER CHARGES A charge may be assessed as follows for a surrender or withdrawal. The charge is applied as a percentage of the account value surrendered. (Surrender charges vary by product version. Refer to State Approval Matrix for product approval details.) Year SpectraMark SpectraMark LT SpectraMark (Indiana) 1 14% 9% 12% ANNUITY PAYMENT OPTIONS Annuity payout options selected by the owner or beneficiary for receiving annuity payments over a fixed period, in a fixed amount, or over the lifetime(s) of the designated person(s). The following annuity options are available for beneficiaries or annuity owners who elect to annuitize: Income for fixed period. Life income with guaranteed period. Life income. Joint and contingent life income. Joint and survivor life income with guaranteed period. Joint and survivor life income. Life income with lump sum refund at death. For annuity payment options with a guaranteed period, the minimum payout period is five years and the maximum is the lesser of 25 years or the life expectancy of the annuitant(s). For all annuity payment options, the annuitization amount is based on the account value at that time less surrender charges. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 15

16 XII. Income Security Rider SM The Income Security Rider SM enhanced guaranteed minimum withdrawal benefit rider guarantees a lifetime of income* without annuitization and provides enhanced income if the annuitant becomes impaired in performing two out of six activities of daily living (ADLs). The longer your client waits to take withdrawal payments, the greater each guaranteed withdrawal payment may be. If after guaranteed minimum withdrawal payments begin the account value is subsequently reduced to $0, the rider guarantees lifetime income provided excess withdrawals have not been taken. The guaranteed withdrawal payment amount is a percentage of the income base. The income base, which does not include the premium bonus and is tracked separately from the account value, is the greater of: Initial premium, plus an 18% income base bonus; or Initial premium growing for up to 10 years at a competitive compound roll-up amount (see Quick Reference for current rider roll-up amount). Unless the owner is an entity, the owner and annuitant must be the same person. Restart: In many states, clients have the option to restart a new 10-year roll-up period. Restart must be elected on a contract anniversary and can occur only between the start of the sixth contract year and prior to the end of the 10th year. A new roll-up rate and rider charge are declared when the restart is elected. The restart roll-up rate may be lower or higher than the current roll-up rate, but will never be less than 3%. Check the Quick Reference for the current income rider cost and for state availability of the restart option. Step-up: A step-up occurs when the income base is increased to the account value, if larger. The step-up is automatic and is available each contract anniversary during the withdrawal period. Any increase in the income base will result in an increase in the guaranteed withdrawal payment. Accumulation Period: This is the period between the annuity s date of issue and the date withdrawal payments begin. During this period, the income base can grow as defined above, adjusted proportionately for any withdrawals taken prior to the date withdrawal payments begin. If the income base grows, the guaranteed withdrawal payment will also grow. Withdrawal Period: This period begins when rider withdrawal payments begin. Starting in the second contract year and once the annuitant (or younger annuitant in the case of joint annuitants) has attained age 50, rider withdrawal payments can be made each contract year (subject to surrender charges, if any) and must be $100 or larger. Rider payments may start and stop at any time. Payments count toward any free partial withdrawals available under the contract and reduce the annuity value. * If your client annuitizes under the contract, your client must select a lifetime payment option as defined in the contract in order to receive payments for life. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 16

17 Withdrawals may be taken up to the guaranteed withdrawal payment amount, which is the maximum amount that can be withdrawn each contract year without negatively affecting the income base. The guaranteed withdrawal payment amount is calculated by multiplying the income base by the guaranteed withdrawal percentage (see table on following page) and is based on the annuitant s age (or younger annuitant in the case of joint annuitants) at the time guaranteed minimum withdrawal benefit payments begin. The payout factor increases every year until the maximum payout factor is reached (see table). Once the policyholder begins taking guaranteed withdrawal payments, the factor is locked in for the duration of the withdrawal period. If step-up occurs during the withdrawal period, the guaranteed withdrawal percentage will be recalculated based on the annuitant s then current age. Note: Withdrawal payments may be taxable. Clients should seek the advice of a tax professional before exercising this rider. Enhanced Guaranteed Withdrawal Payment: An owner who is impaired in performing two out of six activities of daily living (bathing, dressing, transferring, toileting, continence, and eating) may request enhanced guaranteed withdrawal payments if: The impairment began at least one year after the annuity s date of issue. The rider has been inforce for three years,* and the annuitant (or younger annuitant in the case of joint annuitants) has attained age 60. No premiums have been paid into the contract for at least three years before the request for enhanced benefits. The annuitant is a U.S. resident on the date the enhanced benefit is approved. Written proof is received at the Administrative Office indicating (1) impairment in performing two of six ADLs, (2) the need for an appropriately licensed professional to provide care related to the impairment, and (3) impairment is expected to be permanent. If an annuity owner who meets eligibility criteria is currently receiving guaranteed withdrawal payments, the payment amounts will change to the enhanced guaranteed minimum withdrawal benefit. Note: If your client is no longer impaired or if the account value equals zero (0), the Enhanced Guaranteed Withdrawal Payment amount will revert to the Guaranteed Withdrawal Benefit payment amount. *Five years in states where restart is not approved. See State Approval Matrix. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 17

18 Guaranteed Withdrawal Percentages Single Annuitant Joint Annuitant Annuitant s Enhanced Enhanced Age Guaranteed Guaranteed Guaranteed Guaranteed , Rider cost: Annual rider charges are calculated as a percentage of the income base on the annuity s anniversary after interest has been credited. Check the Quick Reference for the current income rider cost. Joint Annuitants: Income under the rider can be based on the lives of two people provided they are joint annuitants and legal spouses. In the case of joint annuitants, the guaranteed withdrawal percentage is determined by the age of the younger of the two annuitants at the time income payments begin. The guaranteed withdrawal payment is guaranteed to be paid until the death of the second annuitant. Joint payouts are allowed on both qualified and nonqualified contracts. Spousal Continuation: If the rider is in the accumulation period on the date of the first owner s death, the rider will continue if the surviving spouse continues the contract. The guaranteed withdrawal percentage will be based on the surviving spouse s age, single FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 18

19 annuitant, at the time income payments begin. If the rider is in the withdrawal period, guaranteed withdrawal payments will continue based on the same annuitant s age as it was at the time of owner s death, and will increase upon step-up. Excess Withdrawal: An excess withdrawal is a withdrawal that causes the total withdrawals for the contract year to exceed the guaranteed withdrawal payment amount. The income base will be reduced in proportion to the reduction in the account value. The guaranteed withdrawal payment amount will be recalculated following an excess withdrawal. Depending on the amount of the withdrawal, surrender charges and other penalties may apply. Required minimum distributions attributable to the contract and in excess of the guaranteed withdrawal payment will not be considered excess withdrawals. Termination: The rider terminates, and charges cease, when any of the following occur: The annuity terminates for any reason. Annuitization. Owner cancels the rider (may not be cancelled until after the 10th contract year*). Death benefit. XIII. Legacy Rider** Under this rider (also known as the Guaranteed Minimum Death Benefit Rider), which is included with the contract, clients can rest assured knowing their beneficiaries are protected. The amount payable as a result of the death of an owner (or first owner, if joint owners) before the maturity date is the greater of: Total account value. Minimum guaranteed surrender value. Initial premium plus premium bonus growing up to 10 years or until age 85 (whichever comes first) with 5% simple interest. Rider cost: Rider charges are equal to the rider charge percentage on the contract information page multiplied by the rider death benefit on the contract anniversary. Check the Quick Reference for the current death benefit rider cost. * Except in TX. ** Any death benefit payable will be adjusted proportionately for any withdrawals previously taken. May not be available in all states. See State Approval Matrix. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 19

20 XIV. Commissions Commissions may be paid as early as the next commission run following the allocation date (see Page 12 for allocation date information). Commissions are paid twice weekly. Attained ages 0 75, full first-year commissions paid. Based on age of oldest owner. Commissions are paid on all additional premiums prior to Year 2. For commission rates and complete details, including chargeback information, please see the Compensation Schedule. XV. Fidelity & Guaranty Life Insurance Company: The Strength Behind the Product SpectraMark flexible premium deferred fixed indexed annuities are issued by Fidelity & Guaranty Life Insurance Company. Rated by A.M. Best B++ (Good) for financial strength rating (FSR), 5 th highest of 16 ratings; rating as of June Fidelity & Guaranty Life is headquartered in Des Moines, IA, and licensed to do business in the United States except in New York. In New York, products are offered through a wholly owned subsidiary, Fidelity & Guaranty Life Insurance Company of New York. Incorporated in 1959, Fidelity & Guaranty Life Insurance Company has a solid commitment to serving the individuals it knows best middle market consumers seeking safety, protection, accumulation, and income features of secure life insurance and annuity products. XVI. Support and Resources CLIENT BROCHURES SpectraMark brochure (FG1540). Six interest crediting option inserts (FG1541 FG1546). Income Security Rider SM insert (FG1547). Three surrender charge inserts (FG1548, FG1549, FG1593). Notice of SpectraMark Changes (FG1643). PRODUCER TOOLS Browse LegacyNet (access via for: Sales and marketing items: - Preapproved ads. - PowerPoint presentations. - Current sales promotions. - Materials in the Legacy Store. Business items: - The Forms Store for applications, state-specific forms, New Business forms, and sales kits. - Product availability. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 20

21 - Interest rates and charges. - State approvals. - Commission and hierarchy information. - Supplies. - Status on New Business applications. - Legacy discounts. XVII. Frequently Asked Questions Q: Will Fidelity & Guaranty Life accept wire transfers of premiums? A: Yes. Wire transfer instructions and forms are available on LegacyNet. Q: Are exchanges/transfers permitted from an existing Fidelity & Guaranty Life deferred annuity to SpectraMark or SpectraMark LT? A: Yes, but surrender charges will NOT be waived on existing annuities, and please refer to Legacy s Compensation Schedule for information on commissions. Q: Are annual Consumer Statements provided? A: Fidelity & Guaranty Life provides statements on an annual basis. Q: Where can I find state-specific forms? A: Visit The Forms Store on the LegacyNet secure site (access via for all the state-specific forms you need to write SpectraMark business: From the Legacy Service Center, click The Forms Store icon. Under Company, select Legacy Fidelity & Guaranty Life Insurance Co. Under Service Type, select New Business. Under State, select the appropriate state. Under Product Type, select Annuities. Under Product Name, select SpectraMark. Click Lookup. There you will find the annuity application and all required forms and disclosures. In addition to the latest New Business forms, The Forms Store provides access to licensing and contracting, policyholder services, sales kits, and individual marketing materials. Need help locating the right form? Click the Online Help icon at the top of The Forms Store page for search instructions and tips on viewing, printing, and ing documents. Don t have a password? Visit the public site at click on Register Now in the upper left-hand corner, and follow the instructions. Check the LegacyNet secure site regularly for the most current state requirements. Q: Where can I obtain additional information? A: See contact information on the following page for Marketing and Administration. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 21

22 Marketing and Distribution Legacy Marketing Group 2090 Marina Avenue Petaluma, CA Phone Number , Ext Main Fax Number Administrative Services 777 Research Drive Lincoln, NE Mailing Address P.O. Box Lincoln, NE Phone Number Main Fax Number Claims #27 New Business #43 Policyholder Services #23 Licensing and Contracting #6 FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 22

23 SpectraMark flexible premium deferred fixed indexed annuities are issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA. Products distributed by Legacy Marketing Group dba: Legacy Marketing Insurance Services (CA Only) 2090 Marina Avenue, Petaluma, CA Telephone: Fax: Form Nos.: ACI-1018(06-11), API-1018(06-11), et al. Rider Nos: ARI-1040(11-12), ARI-1009(02-11). These products are offered on a group or individual basis as determined by state availability. Subject to state availability. Certain restrictions may apply. See current State Approval Matrix. S&P 500 is a trademark of The McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity & Guaranty Life Insurance Company. The Product is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of purchasing the Product. No bank guarantee. Not FDIC/NCUA/NCUSIF insured. May lose value if surrendered early. FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 23

24 Product Training Verification Please close this document and return to Step 2 of Steps To Complete Your Annuity Training on LegacyNet. After clicking the link in Step 2, you will be taken to the Annuity Training Acknowledgement page. There you will be asked to provide your name, Producer number, and address and to verify that you have viewed this presentation by clicking I Agree. After clicking I Agree, your completed acknowledgement will be submitted to our Administrative Office, and you will receive an confirming receipt. Please retain that confirmation for your records. If you have questions or need assistance, please call , Ext FG1580v0514 FOR BROKER USE ONLY. NOT FOR USE WITH CONSUMERS Page 24