1 / 26

Indexed Universal Life Insurance

Indexed Universal Life Insurance. Stephan Mitchell Director, Product Marketing Pacific Life Insurance Company. MKT12-32A.

edward
Download Presentation

Indexed Universal Life Insurance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Indexed Universal Life Insurance Stephan Mitchell Director, Product Marketing Pacific Life Insurance Company MKT12-32A For Life Insurance Producer Only. Not For Use With The Public.

  2. This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.Pacific Life’s individual life insurance products are marketed exclusively through independent third-party life insurance producers, which may include bank affiliated entities. Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance products and their guarantees, including optional benefits and any fixed subaccount crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Indexed Universal Life (IUL) and Universal Life (UL) Insurance generally require additional premium payments after the initial premium. If either no premiums are paid, or subsequent premiums are insufficient to continue coverage, it is possible that coverage will expire.Standard & Poor's 500® Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use by Pacific Life Insurance Company. The life insurance product is not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of purchasing a life insurance product. For more information regarding the criteria for index additions and removals, please visit www.standardpoors.com. The Index is unmanaged and not available for direct investment, and does not include the reinvestment of dividends. Non-guaranteed elements are not guaranteed by definition. As such, Pacific Life reserves the right to change or modify any non-guaranteed element. This right to change non-guaranteed elements is not limited to a specific time or reason. Riders will likely incur additional charges and are subject to availability, restrictions and limitations. Clients should be shown policy illustrations with and without riders to help show the rider’s impact on the policy’s values. The indexed universal life products discussed in this presentation do not directly participate in any stock or equity investments. Failure to maintain the policy to maturity may result in no participation in the equity index. Investment and Insurance Products: Not a Deposit – Not FDIC Insured – Not Insured by any Federal Government Agency – No Bank Guarantee – May Lose Value Pacific Life Insurance Company Newport Beach, CA 92660 (800) 800-7681 www.PacificLife.com Pacific Life & Annuity Company Newport Beach, CA 92660 (888) 595-6996 www.PacificLife.com For Life Insurance Producer Only. Not For Use With The Public.

  3. Competitive Analysis – Footnotes The following slides are intended to compare Pacific Life Insurance Company’s Pacific Indexed Accumulator 4(PIA4; Form No. ICC11 P11PI4 or P11PI4, Form number based on state in which policy is issued), Pacific Prime IUL (Prime IUL; Form No. ICC11 P11P1I or P11P1I, Form number based on state in which policy is issued), Pacific Indexed Performer – LT (PIP-LT; Form No. ICC11 P11PIP or P11PIP, Form number based on state in which policy is issued) and Indexed Pacific Estate Preserver (IPEP, Form No. P09IEP) in reference to similar life insurance products from other insurance carriers. Products are not identical. Competitor information presented is based on publicly available data, illustrations, or data (as of January 1, 2013) received directly from the company. Underwriting classes and criteria will differ from company to company, we attempted to use comparable risk classes across all companies. While we believe the information is accurate, we can not guarantee that it is. Please contact the company for current illustration and product information. Various aspects of products, including but not limited to features, benefits, expenses, loads and charges, will vary from company to company and will impact the values shown. Products are not identical, and the products' specific features and the client's use of those features will impact long-term policy performance. Values for all policies may contain guaranteed and non-guaranteed elements, including but not limited to current interest rate and current cost of insurance rates. This is not an estimate of future performance. Companies use different methods in determining current non-guaranteed elements, and there will be variations in their values and meanings. Many life insurance products have some flexibility in how they are structured. For example, death benefit coverage under certain products may be provided through a combination of the base coverage and any available term or other riders. Each policy selected, illustrated, and sold should be structured based upon your client’s particular insurance needs and financial objectives. It is your responsibility to know that the particular policy selected, illustrated, and sold will best meet your client’s needs and objectives both now and in the future. Each product contains guaranteed and non-guaranteed elements (including indexed interest rate). Index interest rate is not guaranteed. For Life Insurance Producer Only. Not For Use With The Public.

  4. Hypothetical Value of $1000 Invested in 1999* *December 31, 1999 to December 31, 2012; 1-year annual point to point measurement, 12% growth cap rate and 0% floor (minimum crediting rate) for indexed strategy. Source: Morningstar Database, January 2013 For Life Insurance Producer Only. Not For Use With The Public.

  5. Growth In Indexed Universal Life (IUL) Sales (Target Premium, $Millions) 1 Source : Annuity Specs , “Advantage Index Sales & Market Report,” 3rd Quarter 2012 For Life Insurance Producer Only. Not For Use With The Public.

  6. Industry Marketshare by Product Type, 2012(LIMRA 3rd Quarter 2012 Confidential Sales Report of Recurring Premium for 83 participating companies) For Life Insurance Producer Only. Not For Use With The Public.

  7. Breaking Down IUL SalesYear-End Results 20121 1 Source : LIMRA Confidential Sales Survey, 3rd Quarter 2012, Ranked by Planned Recurring Premium for 78 participating companies. For Life Insurance Producer Only. Not For Use With The Public.

  8. *Form Number based on state and product in which policy is issued. For Life Insurance Producer Only. Not For Use With The Public.

  9. Pacific Life IUL Products Fixed Account • 5.00% Currently 2.00% Guaranteed • Full Liquidity • Dollar-Cost Averaging • Charges and Deductions For Life Insurance Producer Only. Not For Use With The Public.

  10. Pacific Life’s IUL Products Current 1-Year Indexed Account Options *Referred to in the contract as the 1 Year Indexed Account 2. **Referred to in the contract as the 1 Year Indexed Account 3. For Life Insurance Producer Only. Not For Use With The Public.

  11. Pacific Life’s IUL Products Current Multi-Year Indexed Account Options *Cumulative **Known as the 5-Year Indexed Account 2 in the contract. For Life Insurance Producer Only. Not For Use With The Public.

  12. Hypothetical Rates of Return and Default/Maximum Illustrated Rates Indexing parameters for the 1-Yr S&P and 1-Yr International are 12% cap, 100% participation, and 0% floor. For the 1-Yr High Par, 11% cap, 150% participation and 0% floor. For the 2-Yr, 32% cap, 100% par and 0% floor; for the 5-Yr High Par, No cap, 115% par and 0% floor. The hypothetical average returns section of this chart is only intended to demonstrate the mechanics of an indexed universal life insurance policy, and is not a prediction of how an indexed UL might have operated had it existed over the period depicted above. The actual historical growth cap and growth floor of an indexed life insurance product existing over the period depicted above may have been higher or lower than assumed, and likely would have fluctuated subject to product guarantees. Historical returns are no guarantee of future performance. IPEP was not offered for sale until Feb. 2010, Prime IUL was not offered for sale until January 2012, and PIA 4 and PIP-LT were not available until April 2012, so the returns shown are not representative of actual product performance. S&P Data Source: Bloomberg, January 2013. For Life Insurance Producer Only. Not For Use With The Public.

  13. Hypothetical Historical Returns for Indexed Accounts, Ten-Year Rolling Periods, 1993-2012 Color Ranking Code: Worst In the Middle Best For each 10-Yr period, each of the 5 accounts are color-ranked from the highest (blue) returns to the lowest (red). This graph is only intended to demonstrate the mechanics of an indexed universal life insurance policy, and is not a prediction of how an indexed UL might have operated had it existed over the period depicted above. The actual historical growth cap and growth floor of an indexed life insurance product existing over the period depicted above may have been higher or lower than assumed, and likely would have fluctuated subject to product guarantees. Historical returns are no guarantee of future performance. IPEP was not offered for sale until Feb. 2010, Prime IUL was not offered for sale until January 2012, and PIA 4 and PIP-LT were not available until April 2012, so the returns shown are not representative of actual product performance. Returns are based on hypothetical annual premiums as of December 15 of each year and held for 10 years. S&P Data Source: Bloomberg, January 2013. Indexed parameters are as follows: 1-Yr International: Growth Cap (Cap) 12%, Floor 0%, Participation Rate (Par), 100%; 1-Yr High Par S&P: Cap 11%, Par 150%, Floor 0%; 1-Yr S&P: Cap 12%, Floor 0%, Par 100%; 2-Yr S&P: Cap 32%, Floor 0%, Par 100%; 5-Yr High Par: No cap, 115% Par, 0% Floor. Standard deviation based on series of 10-Yr returns for entire chart. For Life Insurance Producer Only. Not For Use With The Public.

  14. Historical Rates1 3% Guaranteed Rate 2% Guaranteed Rate 0% Guaranteed Rate 1The gross index crediting rates refer to the rates of return not accounting for the deduction of any charges. For the IUL’s, premiums are assumed to be paid monthly and continuously rolled over into the next index segment. All open segments are ignored which means that the last dollar is assumed to be invested (or rolled over) in [June 2011]. The investments are assumed to be withdrawn at the end of the last segment closing date. All other non-index investments compared follow the same methodology, and are assumed to have the funds withdrawn at the same time as the corresponding IUL investment. Average competitor companies: ING Reliastar Protector UL, ING UL0CV, J.H. Protection UL-G, J.H. Protection UL, J.H. Accumulation UL, Lincoln Life Current UL, MetLife Guarantee Advantage, NYIAC Universal Life, Northwestern Mutual Custom UL Protector, Penn Mutual Guarantee Protection UL, Principal UL Flex, Prudential PruLife Protector UL. The S&P 500 returns stated above do not include dividends. Dividends from 2005 to 2012 averaged 2.13%. PIA refers to Pacific Life Insurance Company’s Pacific Indexed Accumulator IUL (Policy Form No. P05PIA); Versa Flex V refers to Pacific Life Insurance Company’s Versa Flex V UL (Policy Form No. P04VF5). For Life Insurance Producer Only. Not For Use With The Public.

  15. Current Growth Cap Rates (Cap Rates), IUL Products with 100% Guaranteed Participation, 0% Annual Floor*, S&P 500 Annual Point to Point CreditingSource: AnnuitySpecs Monthly Survey, February 2013 *Products with an asterisk have a 1% floor For Life Insurance Producer Only. Not For Use With The Public.

  16. Managing the Cap Rate Current Growth Cap Rate Options Prices Bond Yields For Life Insurance Producer Only. Not For Use With The Public.

  17. First Generation IUL Products: Current and Guaranteed Growth Cap (Cap) Rates at Issue (Product names are listed on Slide 25) Source: Annuity Specs Monthly IUL Survey, October 2005-December 2007 For Life Insurance Producer Only. Not For Use With The Public.

  18. First Generation IUL Products: Growth Cap Rates at Issue vsCap Rates Today* (Product names are listed on Slide 25) For Life Insurance Producer Only. Not For Use With The Public. *Current as of February 1, 2013

  19. First Generation Current Cap Rates vsCurrently Marketed* Product Cap Rates(Product names are listed on Slide 25) For Life Insurance Producer Only. Not For Use With The Public. *Current as of February 1, 2013

  20. Riders, Features and Benefits Premier Living Benefits Rider1 Surrender Value Enhancement Riders2 No-Lapse Guarantee Rider3 Planned Performance Tracking Overloan Protection Rider 24 Conversion Rider5 Automated Income Option 1Form #R12CII, ICC12 R12CII, Form number based on product and state in which policy is issued 2SVER Term Insurance-2 Rider (SVER-2) (Form R09SVERI); SVER Term Insurance Rider-Corporate (SVER-C) (Form R09SVERT); Return of Premium-2 Rider (ROP-2) Form R11ROP or ICC11 R11ROP). May be known in the contract as: SVER Term Insurance, Term Insurance Rider, SVER Term Insurance Rider- Trust/Executive, Term Insurance Rider-Trust/Executive Benefit, or Term Insurance with Limited Return of Premium Rider. Form number based on rider and state in which policy is issued. 3Form No. R03FNL or ICC11 R03FNL, Form number based on state in which policy is issued. The Flexible Duration/Lifetime No-Lapse guarantee, depending on how your client structures their policy, has a maximum duration of the insured's lifetime, subject to certain limits. If your client’s net no-lapse guarantee value is zero, the no-lapse feature terminates. If the no-lapse feature terminates, additional premiums would be required to resume the no-lapse guarantee. If policy performance is such that your client’s policy is being maintained solely by the no-lapse guarantee, your client’s policy will not build cash value 4Form No. R08OLP 5Form No. R06CON For Life Insurance Producer Only. Not For Use With The Public.

  21. Case Study • Male 55 Best Nonsmoker Class • Premiums $35,000 Years 1-10 • Minimum Increasing Death Benefit • Switching to Level in Year 11 • 7.00% Assumed Indexed Interest Rate • 100% Allocation to 1-Yr S&P 500 Account • Solve For Maximum Policy Distributions • Withdrawals switching to fixed loans Yrs 16-35 • Target $10,000 accumulated value at Age 100 For Life Insurance Producer Only. Not For Use With The Public.

  22. Life Insurance Retirement Plan (LIRP) (Product Names Listed on Slide 24) For Life Insurance Producer Only. Not For Use With The Public.

  23. Life Insurance Retirement Plan (LIRP) (Product Names Listed on Slide 24) For Life Insurance Producer Only. Not For Use With The Public.

  24. Products Used in Case Study For Life Insurance Producer Only. Not For Use With The Public.

  25. Indexed UL Products: First Generation vs Currently Marketed For Life Insurance Producer Only. Not For Use With The Public.

  26. Pacific Life Insurance Company Newport Beach, CA 92660 (800) 800-7681 www.PacificLife.com Pacific Life & Annuity Company Newport Beach, CA 92660 (888) 595-6996 www.PacificLife.com MKT12-32A For Life Insurance Producer Only. Not For Use With The Public.

More Related