Protective Variable Annuities

Transcription

1 Protecting Retirement Protective Variable Annuities At a Glance

2 Today. Tomorrow. Together.

3 Protecting Retirement with Variable Annuities At Protective Life, we offer more than just products. We offer comprehensive solutions to support your clients unique retirement goals and protect against the risks that can impact their plans. With a focus on protecting retirement through all its various stages our broad portfolio of annuities, strategies and resources are designed to help you offer solutions based on what s most important to your clients. Explore our variable annuity solutions and learn about the various protection features they offer: Growth Protection Income Protection Legacy Protection Protective Variable Annuity Investors Series Protective Variable Annuity II B Series Protective Income Manager Optional Protected Lifetime Income Benefit available with the Protective Variable Annuity II B Series SecurePay 5 Optional Protected Lifetime Income Benefit available with the Protective Variable Annuity II B Series 1

4 Protective Variable Annuity Investors Series 1 For clients who want to tax-efficiently grow assets and manage the impact of volatility Availability Ages 0 85 Investment Amount Annual Costs Surrender Charges Healthcare Waiver of Surrender Charges Penalty-Free Withdrawals* Optional Investment Programs 1 Not available in New York Minimum Initial: $5,000 Minimum Additional: $100 ($50 via Electronic Funds Transfer) No additional investments accepted after 86th birthday. Maximum: $1 million Higher amounts may be accepted but must be approved before being submitted and may be subject to conditions. Mortality and expense risk and administration charge: 1.00% Charge is deducted from the average daily net value of the variable subaccounts. Contract maintenance fee: $35 Fee is waived if, on the anniversary, either the contract value or the total investment (less withdrawals and surrender charges, if any) exceeds $100,000. Owners have full access to each investment and any earnings attributed to it without a surrender charge seven years after it has been applied to the contract. YEAR Charge 7% 6% 6% 5% 4% 3% 2% 0% After the first contract anniversary, owners may withdraw all or a portion of the contract value without a surrender charge, if after the issue date, the owner or spouse either: Becomes confined to a qualified hospital or nursing facility for at least 30 consecutive days, or Becomes diagnosed with a terminally ill condition expected to result in death within 12 months The Waiver of Surrender Charge Endorsement for Terminal Condition or Nursing Facility Confinement may not be available in all states, and state variations may apply. During the first contract year, owners can withdraw 10% of the initial investment without a surrender charge. After the first contract year, owners can withdraw the greatest of: Accumulated earnings as of the prior contract anniversary 10% of the aggregate net investment as of the prior contract anniversary 10% of the contract value as of the prior contract anniversary * Automatic withdrawals are also available. These fixed payments of at least $100 may be taken on a monthly or quarterly basis. The contract value after each withdrawal must be at least $5,000. Withdrawals reduce the annuity s remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals may be subject to income tax and, if taken prior to age 59 1 /2 an additional 10% IRS tax penalty may apply. More frequent withdrawals may reduce earnings more than annual withdrawals. Dollar cost averaging: Six and 12 months Portfolio rebalancing: Transfers are not taxable and are available quarterly, semi-annually or annually Model portfolios Two allocation strategies to manage impacts of volatility For complete information, please see the Investment Options Guide and product prospectus. 2

5 Standard Death Benefit Enhanced Death Benefit (optional at additional cost) Loyalty Bonus The Contract Value Death Benefit is available at no additional cost. Should the owner pass away before starting annuity income payments, beneficiaries will receive the contract value. The Return of Purchase Payments Death Benefit may be selected in lieu of the Contract Value Death Benefit for an additional fee. Should the owner pass away before starting annuity income payments, beneficiaries will receive the greater of: The contract value or Total principal (total purchase payments) less an adjustment for each prior withdrawal The cost under this option is equal to 0.20% (on an annualized basis) of the death benefit at the beginning of each contract month. The Return of Purchase Payments Death Benefit is subject to a maximum of the contract value plus $1 million. At no additional charge, Protective Life will reward owners for maintaining a focus on long-term savings. We will increase the contract value by 2% if annuity income payments start after the 10th contract anniversary. To qualify, the annuity income payments must be structured for life with a certain period of 10 years or more.

6 Protective Variable Annuity II B Series 2 For clients seeking asset growth with options for income protection and legacy protection Availability Ages 0 85 Investment Amounts Annual Costs Surrender Charges Penalty-Free Withdrawals* Optional Investment Programs Minimum Initial: $5,000 ($25,000 on contracts with Protective Income Manager) Minimum Additional: $100 ($50 via Electronic Funds Transfer) No additional investments accepted after 86th birthday. On contracts with SecurePay 5, no additional investments accepted after two years from the benefit issue date. On contracts with Protective Income Manager, no additional investments accepted after 120 days from the benefit issue date. Maximum: $1 million Higher amounts may be accepted with prior company approval. Mortality and expense risk and administration charge: 1.30% Charge is deducted from the average daily net value of the variable subaccounts. Contract maintenance fee: $35 (in the state of New York, $30) Fee is waived if, on the contract anniversary, either the contract value or the total investment exceeds $100,000 (less withdrawals and surrender charges, if any). Contract owners have full access to each investment and any earnings attributed to it without a surrender charge seven years after it has been applied to the contract. YEAR Charge 7% 6% 6% 5% 4% 3% 2% During the first contract year, owners can withdraw 10% of the initial investment without a surrender charge. After the first contract year, owners can withdraw the greatest of: Accumulated earnings as of the prior contract anniversary 10% of the aggregate net investment as of the prior contract anniversary 10% of the contract value as of the prior contract anniversary * Automatic withdrawals are also available. These fixed payments of at least $100 may be taken on a monthly or quarterly basis. The contract value after each withdrawal must be at least $5,000. Withdrawals reduce the annuity s remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals may be subject to income tax and, if taken prior to age 59 1 /2, an additional 10% IRS tax penalty may apply. More frequent withdrawals may reduce earnings more than annual withdrawals. Dollar cost averaging: Six and 12 months Portfolio rebalancing: Transfers are not taxable and are available quarterly, semi-annually or annually Model portfolios For complete information, please see the Investment Options Guide and the product prospectus. Certain limitations may apply when protected lifetime income benefits are added to a variable annuity contract. 2 In New York the product offered is the Protective Variable Annuity NY II B Series 4

7 Standard Death Benefit The Return of Purchase Payments Death Benefit is available at no additional cost. Should the owner pass away before starting annuity income payments, beneficiaries will receive the greater of the: Contract value or Total investment in the variable annuity (total purchase payments), less an adjustment for each prior withdrawal The Return of Purchase Payments Death Benefit is subject to a maximum of the contract value plus $1 million. Enhanced death benefits may be selected for an additional cost at the time the contract is purchased in lieu of the Return of Purchase Payments Death Benefit. Each allows the owner to lock-in the maximum value attained at certain points during a contract year, potentially providing beneficiaries with a larger benefit if the contract value increases over time. Enhanced Death Benefits (optional at additional cost) MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT MAXIMUM QUARTERLY VALUE DEATH BENEFIT Death Benefit Lock-In Upon each contract anniversary Upon each contract quarter end Monthly Cost 0.20% (on an annualized basis) 0.25% (on an annualized basis) Charged at the beginning of each contract month. Availability Ages 0 75 Should the owner pass away before starting annuity income payments, the beneficiary will receive the greatest of the: Contract value or Total investment in the variable annuity (total purchase payments), less an adjustment for each prior withdrawal, or Maximum quarterly or anniversary value (based on option selection) attained before the owner s 80th birthday or date of passing, whichever is earlier, less an adjustment for each prior withdrawal Not available on contracts with Protective Income Manager. Subject to a maximum of the contract value plus $1 million. Death benefit may not be changed after contract issue. Loyalty Bonus At no additional charge, Protective Life will reward the owner for maintaining a focus on long-term savings. We will increase the contract value by 2%, if annuity income payments start after the 10th contract anniversary. To qualify, the annuity income payments must be structured for life with a certain period of 10 years or more. 5

8 Protective Income Manager Optional Protected Lifetime Income Benefit Highlights Availability Annual Cost Optimal Withdrawal Amounts* Protected Lifetime Payment Market Protection Income protection with opportunities for growth and potentially higher, rising income amounts Competitive joint life coverage withdrawal amounts Some fluctuation in annual income amounts, but never going below a certain guaranteed level Ages The contract value must be at least $25,000 to add Protective Income Manager. Protective Income Manager is not available on contracts with either the Maximum Quarterly Value Death Benefit or the Maximum Anniversary Value Death Benefit. At issue: 1.20% of the contract value The withdrawal amounts available under Protective Income Manager are a percentage of the contract value and calculated using a predetermined schedule of payment factors. The factors calculate the withdrawal amount needed to amortize the contract value over the remaining time until the younger covered person s 95th birthday and are determined by: The age of the younger covered person on the benefit issue date A predetermined interest rate (which is also based on the younger covered person s age) Whether the single or joint option has been selected As long as no excess withdrawals are made, the factor used to calculate the optimal withdrawal amount will increase each year. SAMPLE FIRST YEAR OPTIMAL WITHDRAWAL AMOUNT WITHDRAWAL PERCENTAGES ISSUE AGE (YOUNGER SPOUSE) SINGLE PERSON BOTH SPOUSES % 4.391% % 4.707% % 5.222% % 5.841% % 6.960% Once the oldest covered person reaches age 95, the contract owner may choose to withdraw any remaining contract value in a lump sum, apply that amount to any of the annuity income payment options available under the base contract or elect the Protected Lifetime Payment option. This option provides fixed monthly payments for the life of the covered person (or joint lives of both covered persons) equal to 1/12th of the annual Protected Lifetime Payment. The Protected Lifetime Payment is equal to the lesser of: 90% of the Optimal Withdrawal Amount as of the benefit issue date or 90% of the Optimal Withdrawal Amount as of the most recent reset date (which occurs if an excess withdrawal is taken) A significant age difference between two covered persons may likely result in a substantial amount of contract value remaining upon the Maximum Annuity Date (older covered person s 95th birthday). Clients should consult with their financial advisor about age differences before purchasing joint life coverage under Protective Income Manager. Protective Income Manager helps protect client income with two levels of market protection (as long as no excess withdrawals are made). Volatility Protection the annual withdrawal amount is guaranteed never to fluctuate more than 10% above or below the previous year s withdrawal amount Guaranteed Floor the annual withdrawal amount will never be lower than 90% of the withdrawal amount available in the first contract year, even if the contract value falls to zero due to poor market performance 6

9 SecurePay 5 Optional Protected Lifetime Income Benefit Highlights Benefit base captures annual market gains with downside protection for guaranteed growth now and steady, predictable income later Potential for the benefit base to grow annually 10 times by a minimum of 5% or until benefit withdrawals begin (if earlier), regardless of market performance Enhanced withdrawal amounts for qualifying medical and nursing home care conditions Can defer single or joint life coverage choice until benefit withdrawals begin Availability Ages Annual Cost Annual Withdrawal Amounts* Benefit Base Step-Up Provision At issue: 1.20% of the benefit base One person: 5.0% Both spouses: 4.5% The benefit base is the amount on which the protected lifetime income benefit is determined. The benefit base is equal to the initial investment, increased dollar-for-dollar for additional investments received within the first two years of the benefit issue date and adjusted for withdrawals. The benefit base is capped at $5 million. The benefit base will increase when positive market performance has caused the contract value to exceed the benefit base. This opportunity occurs on every contract anniversary until the owner reaches age 95. Future benefit withdrawals are then based on the new, higher benefit base increasing the amount of the benefit withdrawals. If the contract value is equal to or less than the current benefit base on a contract anniversary, benefit withdrawals simply remain level. 5% Roll-Up Benefit Should the contract value grow by less than 5% each year, the benefit base will still increase by 5%, provided the contract value is at least 50% of the benefit base. This opportunity occurs on every contract anniversary until it has occurred 10 times or until the owner decides to begin benefit withdrawals, if earlier. Future benefit withdrawals are then based on the new, higher benefit base increasing the amount of the benefit withdrawals. Extra Benefits SecurePay ME (medical evaluation enhancement) may provide additional withdrawal amounts for owners with qualifying medical conditions. SecurePay NH (nursing home enhancement) may provide additional withdrawal amounts for owners receiving qualifying nursing home care, potentially doubling the annual withdrawal amount up to a maximum of 10% for up to five years. * Withdrawals reduce the annuity s remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals may be subject to income tax and, if taken prior to age 59½, an additional 10% IRS tax penalty may apply. More frequent withdrawals may reduce earnings more than annual withdrawals. Both Protective Income Manager and SecurePay 5 are available for purchase at contract issue. With our RightTime feature, owners also have the flexibility to later add either option for 0.10% more than if they were purchased at issue. This way, clients don t have to make a decision up front they have the flexibility to add an income option later if needs change. 7

10 Investing with Protected Lifetime Income Options The optional Protective Income Manager and SecurePay 5 protected lifetime income benefits, available with the Protective Variable Annuity II B Series, can be included with one of three investment strategies: 1. Allocate to one of three Protective Life model portfolios Conservative Growth Balanced Growth and Income Balanced Growth 2. Allocate to one of two Protective Life Dynamic Allocation Series portfolios Conservative Portfolio Moderate Portfolio Please note that the Protective Life Dynamic Allocation Series Growth option is only available for partial allocations, and cannot total 100% allocation with a protected lifetime income benefit. It is, however, available under the Allocation by Investment Category (AIC) Program. For more information, please see the Protective Life Dynamic Allocation Series section of this brochure. 3. Allocate to a customized portfolio with the Allocation by Investment Category Program: Each investment option available with the Protective Variable Annuity II B Series has been assigned to an investment category based on investment risk. The owner may allocate to any investment option in Categories 1, 2 or 3, provided the minimum and maximum allocation requirements below are met. Please note investment options in Category 4 are restricted from allocation. AIC MINIMUM ALLOCATION MAXIMUM ALLOCATION For more information regarding the investment option categories, please see 1 40% 100% the Investment Options Guide for the 2 0% 60% Protective Variable Annuity II B Series. 3 0% 25% 4 N/A N/A Investment options, allocation requirements and model portfolios are subject to change at any time. For the most recent and complete information, please consult the prospectus. 8

11 Investment Management With the Protective Life, clients can diversify their variable annuity investments among several options from leading fund managers. We select each fund manager for their high level of professional credentials and experience. They are responsible for implementing each respective investment option s strategy and managing its portfolio trading activities. Tax-free transfers among the various investment options may help clients maintain their preferred level of diversification, as investments continue growing at varying rates of return. Certain limitations apply, so please see the product prospectus for more information. Diversification neither assures a profit nor eliminates the risk of experiencing investment losses. 9

12 Investment Options Protective Life offers your clients the flexibility to choose from a variety of quality investment options from leading fund managers. Clients have the option to build their own diversified portfolio or choose a turnkey solution with model portfolios that are designed to accommodate varying risk profiles and investment objectives. Take a look at the investment options available with our variable annuity solutions: l Protective Variable Annuity II B Series l Protective Variable Annuity Investors Series ALTERNATIVE STRATEGIES Guggenheim Global Managed Futures Strategy Fund Guggenheim Macro Opportunities Series (Series M) Guggenheim Multi-Hedge Strategies Fund Guggenheim U.S. Long Short Equity Fund LARGE CAP VALUE American Funds IS Blue Chip Income and Growth Fund SM Franklin Mutual Global Discovery VIP Fund Franklin Mutual Shares VIP Fund Invesco V.I. Comstock Fund Invesco V.I. Growth and Income Fund Templeton Foreign VIP Fund LARGE CAP BLEND American Funds IS Global Growth and Income Fund American Funds IS Growth-Income Fund Fidelity VIP Index 500 Portfolio Franklin Rising Dividends VIP Fund Goldman Sachs VIT Strategic International Equity Fund Lord Abbett Series Fund, Inc. Classic Stock Portfolio Lord Abbett Series Fund, Inc. Fundamental Equity Portfolio Oppenheimer Main Street Fund /VA Templeton Growth VIP Fund LARGE CAP GROWTH American Funds IS Growth Fund SM Fidelity VIP Contrafund Portfolio Franklin Flex Cap Growth VIP Fund Goldman Sachs VIT Strategic Growth Fund Invesco V.I. International Growth Fund Oppenheimer Capital Appreciation Fund/VA Oppenheimer Global Fund/VA MID CAP VALUE Goldman Sachs VIT Mid Cap Value Fund Invesco V.I. American Value Fund Lord Abbett Series Fund, Inc. Mid Cap Stock Portfolio MID CAP BLEND ClearBridge Variable Mid Cap Portfolio MID CAP GROWTH Fidelity VIP Mid Cap Portfolio Franklin Small-Mid Cap Growth VIP Fund Goldman Sachs VIT Growth Opportunities Fund Invesco V.I. Mid Cap Growth Fund Lord Abbett Series Fund, Inc. Growth Opportunities Portfolio SMALL CAP VALUE Franklin Small Cap Value VIP Fund 10

13 SMALL CAP BLEND Invesco V.I. Small-Cap Equity Fund Royce Capital Fund Micro-Cap Portfolio Royce Capital Fund Small-Cap Portfolio SMALL CAP GROWTH ClearBridge Variable Small Cap Growth Portfolio Templeton Developing Markets VIP Fund ALLOCATION FUNDS American Funds IS Asset Allocation Fund SM American Funds IS Capital Income Builder Fund Franklin Income VIP Fund Invesco V.I. Equity and Income Fund Lord Abbett Series Fund, Inc. Calibrated Dividend Growth Portfolio PIMCO VIT All Asset Portfolio SECTOR FUNDS Invesco V.I. Global Real Estate Fund HIGH QUALITY SHORT-TERM Franklin U.S. Government Securities VIP Fund PIMCO VIT Low Duration Portfolio PIMCO VIT Short-Term Portfolio HIGH QUALITY INTERMEDIATE-TERM American Funds IS Bond Fund American Funds IS US Government/AAA-Rated Securities Fund Fidelity VIP Investment Grade Bond Portfolio Goldman Sachs VIT Core Fixed Income Fund Invesco V.I. Government Securities Fund PIMCO VIT Total Return Portfolio MEDIUM QUALITY INTERMEDIATE-TERM Franklin Strategic Income VIP Fund Oppenheimer Global Strategic Income Fund/VA Templeton Global Bond VIP Fund HIGH QUALITY LONG-TERM PIMCO VIT Long-Term U.S. Government Portfolio PIMCO VIT Real Return Portfolio MEDIUM QUALITY LONG-TERM Lord Abbett Series Fund, Inc. Bond Debenture Portfolio MISCELLANEOUS FIXED INCOME Guggenheim Floating Rate Strategies (Series F) MONEY MARKET Oppenheimer Government Money Fund/VA RISK MANAGED FUNDS Goldman Sachs VIT Global Trends Allocation Fund Invesco V.I. Balanced Risk Allocation Fund PIMCO VIT Global Diversified Allocation Portfolio QS Legg Mason Dynamic Multi-Strategy VIT Portfolio DIVERSIFIED EMERGING MARKETS American Funds IS New World Fund SM GLOBAL EQUITY American Funds IS Global Growth Fund SM American Funds IS Global Small Capitalization Fund SM American Funds IS International Fund SM PROTECTIVE LIFE DYNAMIC ALLOCATION SERIES Protective Life Dynamic Allocation Series Conservative Portfolio Protective Life Dynamic Allocation Series Moderate Portfolio Protective Life Dynamic Allocation Series Growth Portfolio 11

14 Model Portfolios For clients who might want to simplify the asset allocation process, each variable annuity solution offers four model portfolios. These portfolios offer a broad diversification by asset class and fund manager. They are turnkey solutions for investors with varying levels of risk tolerance. Target Allocation: Equity Fixed Income PROTECTIVE VARIABLE ANNUITY II B SERIES Conservative Growth 40% 60% Balanced Growth and Income 50% 50% Balanced Growth 60% 40% Growth Focus* 75% 25% * Allocation to this model is not allowed when investing with an optional withdrawal benefit PROTECTIVE VARIABLE ANNUITY INVESTORS SERIES Conservative Growth 45% 55% Moderate Growth 55% 45% Growth and Income 65% 35% Aggressive Growth 90% 10% 12

15 Dynamic Allocation Series Portfolios Clients who are focused on removing the emotion from investing and following a rules-based allocation process can choose to allocate their investment to a Protective Life Dynamic Allocation Series portfolio. Managed by Janus and sold exclusively by Protective Life, these options look to shift equity allocations to and from cash weekly based on market signals, with a goal to grow assets over time while managing downside risk. 3 Target Allocation: Equity Fixed Income PROTECTIVE LIFE DYNAMIC ALLOCATION SERIES Conservative 50% 50% Moderate 65% 35% Growth 4 100% 0% 3 Janus refers to Janus Capital Management LLC. Janus Capital Management serves as investment adviser. Protective Life Dynamic Allocation Series is distributed by Janus Distributors LLC. Janus is not affiliated with Protective Life. 4 Not available on contracts with an optional protected lifetime income benefit. Investment options, allocation requirements and model portfolios are subject to change at any time. For the most recent and complete information, please consult the prospectus. Protective Life is your carrier of choice for helping clients protect retirement. To learn more, visit protectingretirement.com or contact our Annuity Sales Desk at

16 Variable annuities are long-term investments intended for retirement planning and involve market risk and the possible loss of principal. Investments in variable annuities are subject to fees and charges from the insurance company and the investment managers. Diversification neither assures a profit nor eliminates the risk of experiencing investment losses. Performance of the Protective Life Dynamic Allocation Series Portfolios depends on that of the underlying funds. They are subject to risk with respect to the aggregation of holdings of underlying funds which may result in increased volatility as a result of indirectly having concentrated assets in a particular industry, geographical sector, or single company. No assurance can be given that the Protective Life Dynamic Allocation Series Portfolios investment strategy will be successful under all or any market conditions. Janus Capital does not have prior experience using the methodology, a proprietary methodology co-developed by Janus Capital and Protective Life Insurance Company. Although it is designed to achieve the Portfolios investment objectives, there is no guarantee that it will achieve the desired results. Protective and Protective Life refer to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life & Annuity Insurance Company (PLAICO). Variable annuities are issued by PLICO in all states except New York and in New York by PLAICO; securities offered by Investment Distributors, Inc. (IDI), the principal underwriter for registered products issued by PLICO and PLAICO, its affiliates. All companies are located in Birmingham, AL. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Policy form numbers, product availability and product features may vary by state. Flexible premium deferred variable and fixed annuity contracts issued under policy form series VDA-P-2006 (PLICO) and VDA-A-2006 (PLAICO). SecurePay 5 benefits provided by rider form number VDA-P-6035 (PLICO) and VDA-A-6035 (PLAICO). Protective Income Manager benefits provided by rider form number VDA-P-6039 (PLICO) and VDA-A-6039 (PLAICO). Investors should carefully consider the investment objectives, risks, charges and expenses of a variable annuity, any optional protected lifetime income benefit and the underlying investment options before investing. This and other information is contained in the prospectus for a variable annuity and its underlying investment options. Investors should read the prospectus carefully before investing. Prospectuses may be obtained by calling PLICO or PLAICO at CABD.5489 (07.17)