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SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans Overview

SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans Overview. Presented by: Shelby J. Smith, Ph.D. Training/Service/Support by: 401k Marketing. For Agent Use Only. An FIA* Exclusively for 401(k) Plans.

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SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans Overview

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  1. SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) PlansOverview Presented by: Shelby J. Smith, Ph.D.Training/Service/Support by: 401k Marketing For Agent Use Only

  2. An FIA* Exclusively for 401(k) Plans • *Policy Form No. 8891(0910), along with Rider Form No. 7965, 7966, or state variations thereof. Not approved in all states. **Guarantees are dependent on the claims paying ability of the issuing Company Unique Features: • Takes bi-weekly contributions/transfers/employer matches • Daily valuation, on-line enrollment & management • Competitive administrative costs • Guaranteed** Lifetime Income Rider: ages 25-75 Differences: • FIA only for 401(k) Plans • Level commissions – paid on Accumulation Value • Administered same as traditional 401(k) option • Portable if employee separates from employer

  3. Level Commissions! Why? • Comprehensive disclosure of 401(k) fees required in 2012* • ERISA: fiduciaries must assure “reasonable” fees are paid • Plan-Level & investment fees disclosure required by 8/31/2012 • Participant-Level fees & charges disclosure required by 11/14/2012 • All fees & charges must be disclosed & regardless of who pays • Product providers, managers & administrators cannot “hide fees” • “Revenue sharing” must now be disclosed by all 401(k) service providers • Commissions on additions, transfers & “roll-ins” • Level commission on accumulation value is: • Year 1: 0.80% paid as premium received • Subsequent Years: 0.20% paid quarterly *DOL: ERISA Section, 401(k) Final Rule Fact Sheet 2/2012: 29CFR Part 2550, Section 408(b)(2)and ERISA Section 404(a)(1)(A) & (B).

  4. Commission Example *Previous years’ transfers paid quarterly **Current years’ additions paid 0.8% as received & prior years paid quarterly in arrears 401(k) has the following characteristics: • 40 employees participate & 70% over age 55 • Total Plan assets are $4,000,000 Assumptions • 55+ employees transfer 50% of their money ($1,400,000) • Bi-weekly contributions to annuity are $20,000 • Growth is only 3% annually (employee count & participation assumed static) Commissions paid on Accumulation Value of FIAs in 401(k)

  5. Other Commission Possibilities… • Who’s likely to know retirement or separation plans in advance? • Rollovers to IRA – consolidation of IRA accounts • Routine employee meetings could foster credibility and add-on sales potential • Possible opportunities outside the 401(k) • Other qualified money like IRA • Non-qualified money • Life insurance, LTC, disability, etc. • Buy-sell agreements, business continuation & more • Non-annuity investments (must be securities licensed or RIA/IAR) • Estate planning • Potential for Referrals • Spouses, relatives, friends & associates • Other employer plans from owners/executives REGULAR SERVICE MEETINGS WITH PLANPARTICIPANTS RECOMMENED

  6. Why Employees Might Choose FIA • No decrease of existing 401(k) options • Risk averse or approaching retirement • Upside potential without market downside losses • Predictable growth of income account via roll up rate • Fixed rate option & choice of indexing methods • Accumulation Value: can only go up or sideways, never down* • Guaranteed** Lifetime Income Rider (“GLIR”) • Can exercise GLIR option OR take lump-sum – flexibility • Withdrawals for emergencies – income may be reduced • Flexible, safe and understandable • *Assuming there were no withdrawals • **Guarantees are dependent on the claims paying ability of the issuing Company

  7. Why Employers Might Add FIA to 401(k) • Appropriate for some employee • Risk averse • If approaching retirement • Competitive fees and traditional 401(k) administration • Employer money vesting schedule unchanged • Owners/executives probably participate in 401(k) • No need to decrease other 401(k) choices • Optional Guaranteed* Lifetime Income Rider available** • Reduces distractions when • Markets meltdown or interest rates plummet • Company’s stock price decreases • *Guarantees are dependent on the claims paying ability of the issuing Company • **Ages 25 to 75 only, not approved in all states

  8. Who is the Insurance Company • Life Insurance Company of the Southwest • (Rating current as of 10/27/2012) • A.M. Best: A (Excellent) • S&P: A (Strong) • Moody’s: A2 (Good) • About National Life: • A Fortune 1000 company serving 840,000 customers • Founded in 1848 • FIAs since 1996 (first to issue flex FIA) • LIMRA* recognized: #1 provider of FIAs for employer plans • Source: www.nationallifegroup.com • *LIMRA, U.S. Individual Annuities Executive Summary – Second Quarter 2011

  9. Administration by ExpertPlans • Technology innovator & 401(k) Plan leader • Private label sites: advisor, employer & employee • Thousands of 401(k) Plans with billions in assets • Flexibility: new, existing, small, large, conversion, etc. • Investments: MF, ETF, managed and now FIAs • Cost effective, competitive, qualified & experienced • Dedicated experts to assist advisors with 401(k)s • 401(k) proposal prepared for advisors & employers Source: www.expertplan.com

  10. FIA* Exclusively for 401(k) Market • SecurePlus VIP – Value & Income Plan • Features & benefits • Traditional FIA features • 10-Year withdrawal penalty from initial premium date • Issue ages: 25-75 • Flex premiums** accepted • No commissions for single accounts over $1 million • *Policy Form No. 8891(0910), along with Rider Form No. 7965, 7966, or state variations thereof. Not approved in all states. • **Minimum monthly amount is $100.

  11. The Market & Why Now? The Market* • Roughly 450,000 plans • Size: very small (1 participant) to millions • 50+ ages own majority of plan assets • Participating employees: about 50 million • 401(k) assets: $3.1 trillion (12.2011) Why Now? • Recent market volatility & aging workforce • Greatest fear of retirees is outliving money** • Guaranteed lifetime income viewed favorably** • Potential impact of mandated fee disclosures *Source: 2012 Investment Company Fact Book, 52nd Edition, Chapter 7 **Source: Allianz Life Insurance Company of North America, Poll released June 2010 & Harris Interactivepoll conducted 9/2012 for Wells Fargo Institutional Retirement & Research

  12. Opportunity of 401(k) Market • Fish with a net NOT a single line • The “Ultimate Protection” annuity • An ideal potential practice builder • Trillions of assets & millions of employees • Add-on and linked sales opportunities • Demographics changing & economic future uncertain • Addresses a worry retirees fear greater than death* • Guaranteed** lifetime income from FIA • Accumulation value can go only up or sideways – never down • Predictable, reliable & flexible • New opportunity – an FIA designed exclusively for 401(k) market • Fee disclosures opens door for “change” • *Source: Allianz Life Insurance Company of North America, Poll released June 2010 • **Dependent on the claims paying ability of the issuing insurance company

  13. Call Help Desk at 877.319.2078 Meet qualifications & get appointed with LSW Training: marketing/product/implementation/administration Work with ExpertPlans to create an “advisor’s” website Develop a prospecting strategy Identify businesses or find others with connections Obtain 401(k) employer data from 401k Marketing Do a direct mailer through 401k Marketing Sponsor 401(k) workshops for employers Print, web, radio, etc. advertisements *Advertisements & promotional materials must be compliance approved before us How Do You Participate?

  14. What are the Hurdles? • Longer sales cycle • Your marketing company may not offer program • Must learn 401(k) market & dealing with businesses • Level commission is only option • Securities licensed/registered required • Follow up service & support is required & critical

  15. What are the Opportunities? • Working with groups • Including 401(k) plans in your practice • Recurring commission potential • Potential opportunity for new business outside 401(k) • Create your own “Solo-401(k)” • Learn FIA/401(k) market before your competitors

  16. Summary • FIAs for 401(k) plans: A unique opportunity • 401k Marketing help & assistance • Training by 401k Marketing • Market is huge and new opportunities available • Sales/commission potentials are great & continuous • Securities licensed/registered required • Limited availability currently

  17. Questions? Call Desk at 401k Marketing at 877.319.2078 for details and ask for Andy Alvis, Celeste DuPrez or Rebecca Brundage e-Mail your questions to 401Q@bhcdressander.com

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