Discover What s Possible

Transcription

1 Discover What s Possible Inflation Protector Variable Annuity Inflation Protector Variable Annuity

2 In retirement, you have many ways to spend your time traveling, enjoying hobbies, volunteering, or sharing moments with family. You can look forward to having more leisure, fewer responsibilities, and celebrating what you have accomplished. Imagine the possibilities

3 Creating Possibilities These days, retirees are living longer, more active lives, and it s possible that you will have 30 years to enjoy retirement. Since you may be retired for almost as many years as you worked, it is essential to ensure that your assets will last. The challenge is overcoming the many factors that can affect your retirement savings. Protecting Your Income When you retire, your paycheck comes from your savings instead of an employer. But taking too much income can cause shortfalls. For instance, if you take six percent of your assets per year as income, and your portfolio only grows by two percent per year, you may dramatically reduce your savings in just a few years. Impact of Inflation Rising inflation can consume your purchasing power over time. As prices rise, your money won t go as far. Your money will need to grow at least as quickly as the rate of inflation for your money to retain its purchasing power. Market Volatility You want your investments to continue to grow, but staying invested when you need your money can be risky. Your portfolio will experience ups and downs throughout retirement. Market volatility can decrease the value of your portfolio right when you need it most. If your portfolio value doesn t rebound quickly enough, you risk running out of money. A $25,000 annual pension income in 1980 would only have the purchasing power of $9, in 2010 John Q. Sample twenty-five thousand and 00/ John Q. Sample nine thousand eight hundred forty-three and 55/100 9, % of original purchasing power lost to inflation over 30 years 25, Source: U.S. Department of Labor, Bureau of Labor Statistics 1

4 Guarantee Your Retirement Income It s important that your retirement savings are protected from inflation and market swings, while offering steady, sustainable income. The key to a secure retirement is investing your assets so they will continue to grow, but also ensuring they are protected to support your desired lifestyle. Why Variable Annuities? Investing in a variable annuity with a living benefit can provide key advantages and offers: Guarantees that your income will be there for you, regardless of market performance Flexible payout options that allow you to decide how and when to take your retirement income* A variety of quality investment options you can select to meet your evolving needs Tax-deferred growth to allow your money to work for you Family protection options to provide additional security for your loved ones 2 Discover the possibilities Variable annuities are long-term investment vehicles designed for retirement purposes. They are subject to market risk and may lose value. *Subject to contract terms and conditions.

5 The Inflation Protector Variable Annuity provides growth by allowing you to stay invested in the market, while protecting your income from market volatility and inflation. This combined variable annuity and living benefit retirement vehicle adjusts with changes in the Consumer Price Index (CPI-U) annually, ensuring that your income will increase to keep pace with inflation, regardless of market performance. Guarantees and Flexibility Guaranteed retirement income that will grow by at least the rate of inflation, up to 6% and will never be less than zero Freedom to take income how and when you want it with a variety of withdrawal options* Broad array of investment options to meet your investment objectives Ability to help smooth the effects of market fluctuations with Dollar Cost Averaging Automatic Asset Rebalancing available to ensure your investment options stay aligned with your objectives After a four-year surrender period, you gain unrestricted access to your deposit without incurring surrender charges Death benefit provides additional protection for your family Investing regular amounts steadily over time (dollar-cost averaging) cannot guarantee a profit or protect against a loss in a declining market. Guarantees are based on the claims-paying ability of the insurer, and do not relate to the performance of the variable investment options. Withdrawals will reduce the contract value, withdrawal benefit base and death benefit amounts, may be subject to income taxes and surrender charges; and, when taken before age 59 1/2, may be subject to an additional 10 percent penalty tax. *Subject to contract terms and conditions. What is CPI-U? Not all inflation statistics are created equal. The CPI-U (Consumer Price Index for all Urban Consumers) is the most comprehensive inflation measurement and compares prices for necessities that directly affect your lifestyle in retirement, including: Food and beverages Housing (including rent and fuel oil) Apparel Transportation (including gasoline) Recreation Medical Care (including prescription drugs) Education and Communication Other Goods and Services (including tobacco) The average rate of inflation for the last 30 years was 3.2%. * * Source: U.S. Department of Labor, Bureau of Labor Statistics Consumer Price Index changes from December 1980 through December

6 Prospering in Retirement How Your Benefits Increase An investment in the Inflation Protector Variable Annuity with built-in living benefits gives you the security that you will have the retirement income you expect. It provides annual inflation or market performance increases in both phases of your contract accumulation and withdrawal 1. Your Withdrawal Options The Inflation Protector Variable Annuity provides you with flexible access to your money. You have the benefit of an Early Access Withdrawal, which gives you access to your investment without impacting your withdrawal options 2. When you are ready to start taking income, you will receive one of two withdrawal options based on your age 3 standard or lifetime. The annual income you receive is based on a percentage of your benefit base, which determines the amount you have available for future withdrawals. If you start withdrawals between ages 59 1 / 2 and 64 1 / 3 2, the standard withdrawal option permits withdrawals at 5% of your benefit base, providing guaranteed income for at least 20 years. You also have the possibility of resetting your income stream for an additional 20 years if there is account value left at the end of the withdrawal period. Age at first withdrawal 2 4 If you start withdrawals at age / 2 or older, the lifetime withdrawal option provides Lifetime withdrawal rates 5.00% 4.50% 4.00% 5.50% 5.00% 4.50% 6.00% 5.50% 5.00% guaranteed income for life at a rate that is determined by your age at the time of your first withdrawal. And, your income could potentially increase with a waiting bonus, which provides up to an additional 0.5% if you wait five years after making a deposit, or up to 1.0% if you wait 10 years. 0 4 Years 5 9 Years 10+ Years You also have the opportunity to benefit Years waited since deposit before first withdrawal from an additional increase in your lifetime withdrawal rate if the investments in your contract increase after you reach the next age level. 1 Inflation increases will cease for this option after expiration of the Inflation Increase Period. 2 Exercising this option will reduce your contract value, withdrawal benefit base and death benefit amounts. 3 All ages are based on the younger of the annuitant and joint annuitant, if contract is a joint life guarantee.

7 Meet Justin and Sarah, age 50 Justin and Sarah are anticipating retirement and want to invest in the market, but be guaranteed that their income will grow at least as fast as inflation. Strategy: Joint Life Guarantee $200,000 initial deposit Lifetime Withdrawal Option 5% withdrawal rate includes a 1% waiting bonus $25,000 Early Access Withdrawal Highlights: They benefit from market step-ups and inflation increases At age 59 1/2, they take an early access withdrawal of $25,000 does not affect withdrawal options but does reduce their benefit base They start taking income at age 65 and receive a 1% bonus for waiting more than 10 years. This increases their withdrawal rate to 5% and gives them income of $32,890 for the first year By age 72, inflation has increased their income to $39,219 and they have received $314,307 in cumulative income $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $50,000 Withdrawal Benefit Base, Cumulative Income and Contract Value Initial Investment: $200, Age Annual Income Cumulative Income received: $314,307 They have received $114,307 more than they deposited Income will continue for both Justin and Sarah as long as they live* $40,000 $30,000 Early Access Withdrawal: $25,000 Initial income: $32,890 Income after 7 years: $39,219 $20, Age Cumulative Income Contract Value Inflation Increases Withdrawal Benefit Base Account Value Step-Up Early Access Withdrawal *Inflation increases are available until the Inflation Increase Period (the period for which inflation increases apply) expires. Please see prospectus for more information. The above chart is based on historical data from 1988 through 2010, assumes 60 percent investment in the Large Growth Stock Fund and 40 percent in the Quality Bond Fund during the accumulation phase, 60 percent investment in the Flexibly Managed Fund and 40 percent in the Quality Bond Fund in the withdrawal phase with an average annual return of 3.91 percent (net of all fees and expenses). Assumes historical inflation rates as measured by the Consumer Price Index for All Urban Consumers (CPI-U), U.S. Department of Labor, Bureau of Labor Statistics from Contract values are as of end of year. Your own results will vary. The purpose of this chart is to demonstrate how election of the benefit rider affects variable annuity contract values and is for illustration only. Refer to page 8 for important performance disclosure information. 5

8 Meet Angela, age 61 Angela is ready to retire and would like to make sure her income will keep pace with inflation. Strategy: Single Life Guarantee $300,000 initial deposit Standard Withdrawal Option 5% withdrawal rate Highlights: Angela takes income immediately and receives $15,000 in the first year Her retirement income is guaranteed for 20 years and increases with inflation each year By year 20, her income increases with inflation to $26,749 and she receives $418,620 in cumulative income By year 20, her beneficiaries have an available death benefit of $492,764 At the end of 20 years, her benefit renews based on her Contract Value and provides 20 more years of guaranteed income and inflation protection $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 $30,000 $25,000 Initial Investment: $300,000 Cumulative Income and Contract Value Cumulative Income received: $418, Age Annual Income Income after 20 years: $26,749 Income resets to $24,638 $20,000 Initial income: $15,000 $15,000 $10, Age Cumulative Income Contract Value Inflation Increases The above chart is based on historical data from 1988 through 2010, assumes 60 percent investment in the Flexibly Managed Fund and 40 percent in the Quality Bond Fund in the withdrawal phase with an average annual return of 7.12 percent (net of all fees and expenses). Assumes historical inflation rates as measured by the Consumer Price Index for All Urban Consumers (CPI-U), U.S. Department of Labor, Bureau of Labor Statistics from Contract values are shown as of end of year. Your own results will vary. The purpose of this chart is to demonstrate how election of the benefit rider affects variable annuity contract values and is for illustration only. Refer to page 8 for important performance disclosure information. 6

9 Meet Henry and Kim, age 67 Henry and Kim have adequate retirement savings, but they want to ensure they will have guaranteed income throughout retirement. Strategy: Joint Life Guarantee $500,000 initial deposit Lifetime Withdrawal Option 4% initial withdrawal rate Highlights: Henry and Kim start taking 4% withdrawals immediately and receive $20,000 in the first year At age 78, they receive an account value step-up and lock in a 5% withdrawal rate, increasing their income to $38,369 Their retirement income continues to increase with the rate of inflation $1,200,000 $1,000,000 $800,000 $600,000 $400,000 Withdrawal Benefit Base, Cumulative Income and Contract Value Initial Investment: $500,000 Higher withdrawal rate locked in Cumulative Income after 20 years: $650,734 By year 20, their income increases with inflation and market step-ups to $47,222 and they receive $650,734 in cumulative income $200,000 $ Age By year 20, their beneficiaries have an available death benefit of $935,556 $60,000 $50,000 $40,000 Annual Income $38,369 Income after 20 years: $47,222 $30,000 Initial income: $20,000 $20,000 $10, Age Cumulative Income Inflation Increases Account Value Step-Up Contract Value Withdrawal Benefit Base The above chart is based on historical data from 1988 through 2010, assumes 60 percent investment in the Flexibly Managed Fund and 40 percent in the Quality Bond Fund in the withdrawal phase with an average annual return of 6.85 percent (net of all fees and expenses). Assumes historical inflation rates as measured by the Consumer Price Index for All Urban Consumers (CPI-U), U.S. Department of Labor, Bureau of Labor Statistics from Contract values are shown as of end of year. Your own results will vary. The purpose of this chart is to demonstrate how election of the benefit rider affects variable annuity contract values and is for illustration only. Refer to page 8 for important performance disclosure information. 7

10 Investing with confidence Penn Mutual offers a wide selection of investment options within your Inflation Protector Variable Annuity. The investment options, which are managed by some of the most experienced and highly regarded investment firms, offer you quality choices in every major asset class and category. You can create your own customized portfolio of investments to meet your unique needs, or you can choose from one of our LifeStyle Asset Allocation funds, which is a complete and broadly diversified portfolio of investment options that is designed for different risk tolerances. Our investment managers have gone through a rigorous review process that considers each firm s philosophy and investment process, their expertise, the fund performance, management and ownership structure, and commitment to ethical practices. In addition, Penn Mutual regularly reviews the performance and positioning of each investment option to ensure that it continues to meet the highest standards and that its objectives continue to be achieved. For complete details on the Penn Mutual family of investment funds, see the Investment Options brochure. These variable investment options are only available with Penn Mutual s variable products and cannot be offered to the general public. As with all variable products, they are subject to market fluctuations and may lose value. Additional Information For more detailed information, please see the prospectus Issue Age: (85 if joint annuitant is under 80) Minimum purchase amount: $10,000 initial/$1,000 subsequent Maximum purchase amount: $2 million per annuitant Account Access options: Annual, systematic, medically related and disability (contract issued prior to age 75), Early Access Withdrawal Revocability: Living benefit can be dropped on any anniversary after the third contract anniversary Variable Annuity Charges: Annual contract charge: lesser of $40 or 2% of variable investments (waived if variable contract value is $50,000 or more) Mortality and Expense Risk Charge: 1.50% Administration Charge: 0.15% Living Benefit Rider Charge: Single life: 1.25%, Joint life: 1.50% (joint annuitant must be spouse and primary beneficiary); maximum annual charge: 2.50% Total Net Fund Expenses (2013): Range from 0.34% % Surrender Charges: Age of Purchase Payments % Net Purchase Payment % 7% 6% 5% 0% Standardized Fund Performance Information for Illustrations Shown Large Growth Stock Fund 1 Year 5 Years 10 Years 5.25% 0.44% -7.58% Quality Bond Fund 1 Year 5 Years 10 Years -1.02% 4.41% 4.36% Flexibly Managed Fund 1 Year 5 Years 10 Years 1.00% 2.40% 7.27% The performance data is net of all fees and expenses and for illustration only. This data represents past performance and is not predictive of future results. The investment return and principal value will fluctuate so that units may be worth more or less than their original cost. Current performance may be lower or higher than quoted. Average annual total returns on a $1,000 investment with all distributions reinvested for periods ending September 30, The figures are net of all possible charges and fees, including the maximum contingent deferred sales charge of 8%, asset charges, product fees and administrative charges. If this material is used after September 30, 2010, please use the most recent relevant variable annuity month-end performance sheet on 8

11 All Funds are available in the accumulation phase and Funds indicated in blue are available in the withdrawal phase. Large Cap International Large Growth Stock Fund T. Rowe Price Associates Large Core Growth Fund Wells Capital Management Large Cap Growth Fund MFS Investment Management Index 500 Fund State Street Global Advisors Large Core Value Fund Eaton Vance Management Large Cap Value Fund Loomis, Sayles & Company International Equity Fund Vontobel Asset Management Developed International Index Fund State Street Global Advisors Emerging Markets Equity Fund Morgan Stanley Investment Management Balanced Flexibly Managed Fund T. Rowe Price Associates Balanced Fund Mid Cap Mid Cap Growth Fund Turner Investment Partners Mid Cap Value Fund Neuberger Berman Management Mid Core Value Fund American Century Investment Management SMID Cap SMID Cap Growth Fund Wells Capital Management SMID Cap Value Fund AllianceBernstein Small Cap Small Cap Growth Fund Janus Capital Management Small Cap Index Fund State Street Global Advisors Small Cap Value Fund Goldman Sachs Asset Management Specialty Real Estate Securities Fund Cohen & Steers Capital Management, Inc. Fixed Income Money Market Fund Limited Maturity Bond Fund Quality Bond Fund High Yield Bond Fund T. Rowe Price Associates LifeStyle Asset Allocation Funds Aggressive Allocation Fund Moderately Aggressive Allocation Fund Moderate Allocation Fund Moderately Conservative Allocation Fund Conservative Allocation Fund Unlock the possibilities Why Penn Mutual? At Penn Mutual, we are singularly committed to helping families unlock the possibilities of life through our life insurance and annuity solutions. We have never failed to meet an obligation to a policyholder. With our financial strength and stability standing behind our guarantees, we are committed to the brighter futures and best interests of all of our policyholders. 9

12 Our Noble Purpose Since 1847, Penn Mutual has been driven by our noble purpose to create a world of possibilities, one individual, one family and one small business at a time. As an original pioneer of mutual life insurance in America, we believe that life insurance is the most protective, responsible and rewarding action a person can take to build a solid foundation today and create a brighter future for generations to come. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ( SPDJI ), and has been licensed for use by Penn Mutual Life Insurance Company. Standard & Poor s, S&P and S&P 500 are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Penn Mutual Life Insurance Company. Penn Mutual s variable products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. Not FDIC Insured No Bank Guarantee May Lose Value Not a Deposit Not Insured by Any Federal Government Agency This brochure must be preceded or accompanied by an Inflation Protector Variable Annuity prospectus and the underlying funds prospectus. Investors should carefully consider funds objectives, risks, charges and fees before investing. This information, as well as other information, is contained in the product and underlying funds prospectuses, which should be read carefully before investing. Product and/or features may not be available in all states. Policy form numbers: ICC10-LVA, ICC10-GMWB (Policy form numbers may vary by state). Penn Mutual s variable products are primarily offered through Hornor, Townsend & Kent (HTK), Registered Investment Advisor, Member FINRA/ SIPC, 600 Dresher Road, Horsham, PA 19044, HTK is a wholly owned subsidiary of The Penn Mutual Life Insurance Company The Penn Mutual Life Insurance Company, Philadelphia, PA PM /13 A3CD E3