UNDERSTANDING INDEXED LIFE INSURANCE

Transcription

1 UNDERSTANDING INDEXED LIFE INSURANCE

2 STABILITY WITH UPSIDE POTENTIAL A life insurance purchase is one of the most important investments an individual can make. It can assure that a family s lifestyle will remain unchanged after the death of a loved one, or continue a business when one of the partners is gone. An indexed life insurance policy is a stable solution to those needs. Unlike a variable life insurance product, an indexed life product provides the potential for reward without market risk. Indianapolis Life Insurance Company 9200 Keystone Crossing, Suite 800 Indianapolis, IN

3 T H E C O N C E P T A N D T H E C U S T O M E R 1 Indexed life insurance is an alternative that fits between traditional fixed life plans and variable universal life plans. Determining your comfort level for market risk is important when considering which type of life insurance plan is most appropriate for you. Variable Life HIGHEST RISK Variable Life with some guarantees Indexed Universal Life Fixed Life LOWEST RISK CONSUMER SHIFT CLIENT APPETITE FOR RISK WHO CAN BENEFIT FROM INDEXED LIFE INSURANCE? Indexed life insurance buyers are typically individuals who: Want affordable protection with strong cash value accumulation potential. Want built-in product flexibility to better accommodate changing financial circumstances. Want the security and attractive interest potential provided by Indianapolis Life indexed life insurance products.

4 H O W I N D E X E D L I F E W O R K S 2 Instead of the Company declaring a specific interest rate or dividend, as with traditional life insurance, interest earnings are credited based on increases in value of a specific index. The Standard & Poor s 500 Composite Stock Price Index* (excluding dividends) is used as the index for Indianapolis Life s indexed life products. The S&P 500 Index is currently the most commonly used index for indexed life. Credited interest is linked to increases in the S&P 500 Index without the downside risks associated with investing directly in the stock market. And, because indexed life policies are permanent life insurance plans, they provide features that give you a sense of stability. S&P 500 Index Treasury Bonds Treasury Bills Inflation The S&P 500 Composite Stock Price Index is often regarded as the standard for broad stock market performance. It is used to measure the average stock price changes of the 500 most widely held companies representing 24 industry groups, 64 industries and 139 sub-industries. The S&P 500 Index represents approximately 80% of the total domestic U.S. equity market s capitalization. Historically, the S&P 500 Index has outperformed fixed interest products such as corporate and government bonds and CDs. $29.27 $23.29 $13.36 $6.76 June-58 June-63 June-68 June-73 June-78 June-83 June-88 June-93 June-98 April-05 $1 linked to the performance of the S&P 500 and two other assets compared to inflation The chart reflects the historical growth of the S&P 500 Index, 10-Year U.S. Treasury Bonds, 30-Day U.S. Treasury Bills and the Consumer Price Index Inflation Rate. The S&P 500 Index does not include dividend earnings. Past performance is no guarantee of future performance or of values of indexed life insurance. This chart is not intended to illustrate interest earnings under Indianapolis Life s indexed life plans. The growth rates shown do not reflect the impact of participation rates and cap rates (as described within this guide), which would affect actual credited interest earnings in any given market environment. THE OPPORTUNITIES OF AN INDEX Indexed life insurance offers the upside potential of stock market performance and a guard against downside risk with a guaranteed minimum interest rate. This chart demonstrates how different asset vehicles have performed during a 45-year period. It depicts the growth of one dollar placed in hypothetical assets tied to the S&P 500 Index, Treasury Bonds, Treasury Bills, and the inflation rate over a period from 1958 through * Standard & Poor s, S&P, S&P 500, Standard & Poor s 500 and 500 are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Indianapolis Life Insurance Company. Indianapolis Life s indexed life products are not sponsored, endorsed, sold or promoted by Standard & Poor s, and Standard & Poor s makes no representation regarding the advisability of purchasing these products. CDs offered by banks are insured by a government agency and offer a fixed rate of return. The principal and yield of corporate and government bonds are not insured and will fluctuate with changes of the market price and return of underlying securities. Source: Standard & Poor s, U.S. Bureau of Labor Statistics

5 T H E I N D I A N A P O L I S L I F E A D V A N T A G E : C U S T O M I Z A T I O N 3 UNDERSTANDING THE INTEREST CREDITING STRATEGIES Basic Interest Strategy The net premium is initially paid into the Basic Interest Strategy, from which insurance and administrative charges and policy expenses are paid. This strategy earns interest (as declared by the Company) and, as long as premiums continue, certain amounts will be held in this strategy to cover future insurance and administrative charges. The premiums in the Basic Interest Strategy will earn an interest rate that may fluctuate on a daily basis, but will never be less than the minimum rate guaranteed in the contract. The policyholder elects how the excess Basic Interest Strategy values will be directed to the other available strategies. Indianapolis Life will not sweep any amounts less than $100. Regardless of mode, before any premium directions are made into the other strategies, a minimum balance in the Basic Interest Strategy approximately equal to one year s policy charges is required. 1. One-Year Fixed-Term Strategy Each premium directed to this strategy creates a distinct one-year fixed term segment. Over time, policyholders will generally have a number of one-year fixed term segments within their policy. The interest rate for each one-year fixed term segment created is guaranteed for that one-year period. 2. Five-Year Fixed-Term Strategy Each premium directed to this strategy creates a distinct five-year fixed-term segment. Over time, policyholders will generally have a number of five-year fixed term segments within their policy. Other than the minimum contract guarantee, the current interest rate for the Five-Year Fixed- Term Strategy is not guaranteed. Indianapolis Life s current practice is to maintain a constant interest rate for each five-year fixed segment. 3. Five-Year Indexed Strategy 4. Six-Year Indexed Strategy In these strategies, interest earnings are linked to the S&P 500 Composite Stock Price Index (excluding dividends) and are subject to a participation rate (guaranteed at 100%) and a maximum earnings rate that can change at the beginning of each segment earnings period. In addition, the Indexed Strategies include the following features: Principal Protection: Premiums directed to an Indexed Strategy are protected from a downturn in the index. Lock-In of Earnings: Each premium directed to the Five-Year Indexed Strategy creates a new five-year segment. Index linked earnings are calculated and credited every 12 months on the funds in a segment. In effect, we lock in any index-linked earnings every 12 months, within a segment, and protect those earnings from potential future downturns in the index. Each premium directed to the Six-Year Indexed Strategy creates a new six-year segment. Index linked earnings are calculated and credited every 24 months on the funds in a segment. A greater earnings potential is available as indexed earnings are locked in every 24 months within a segment and protected from potential future downturns in the index.* Interest Rate Guarantee: For the Indexed Strategies, each segment has a minimum guaranteed interest rate of 2%. Interest is credited at the end of the segment term, under this guarantee, if the value of the segment at that time is not at least equal to the premium (less any withdrawals or deductions), compounded annually at the minimum guaranteed interest rate. May not be available in all states.

6 I N D E X E D L I F E I N S U R A N C E T E R M S 4 PARTICIPATION RATE Indianapolis Life indexed life policies guarantee that the participation rate will be 100% for the life of the contract. Index Increase (If any) CAP RATES Participation Rate Interest Rate Credited (Subject to the cap) Each earnings period, the segment's index-linked interest earnings are subject to a cap rate (or an annual account value growth limit), as specified in the contract. The cap is the maximum earnings rate that will be credited to a segment for the earnings period. The cap rate may be reset for each segment at the beginning of an earnings period, and at the discretion of the Company. Individual segments may have different cap rates assigned. Interest Earnings CAP Cannot Exceed The Cap EXAMPLE: If the cap rate is 12%, and the index earnings are 13%, you would receive 12% credited to your plan, not 13%. % Monthly Deductions All monthly deductions are first taken from the Basic Interest Strategy. However, if sufficient values are not maintained in the Basic Interest Strategy, deductions are then taken from the most recently established segment to the oldest segment of the strategies in this order: One-Year Fixed-Term Strategy, Five-Year Fixed-Term Strategy, Five-Year Indexed Strategy, and then the Six-Year Indexed Strategy. If sufficient policy values are still not available (and any minimum premium requirement has not been met), the policy will lapse. THE EFFECTS OF PARTICIPATION RATES AND CAPS Understanding participation rates, caps and the index measuring methodology used to determine the credited rate is key when comparing indexed life products. The accompanying examples show how two Point-to-Point products compare when using different caps and participation rates. It illustrates that products with lower participation rates need substantially greater index growth to achieve a credited rate equal to a product using a high participation rate and a cap. Scenario 1 Market Increases 10% Scenario 2 Market Increases 20% POLICY #1 I N D I A N A P O L I S L I F E 100% Participation, 12% Cap 10% credited rate I N D I A N A P O L I S L I F E 100% Participation, 12% Cap 12% credited rate POLICY #2 50% Participation, No Cap 5% credited rate 50% Participation, No Cap 10% credited rate 4 Scenarios are illustrative only and are not intended to be a predictor of actual results. Participation rates and caps are assumed to be constant for the term.

7 U P S I D E P O T E N T I A L W I T H D O W N S I D E P R O T E C T I O N 5 One significant advantage of an indexed life product is the potential to earn more than typical fixed rate life insurance and provide downside protection not found in most variable universal life insurance products. These hypothetical examples show the potential for increased interest earnings on premium directed to the Five-Year Indexed Strategy within an indexed life policy, but there is also the risk that the rate equivalent to traditional fixed life insurance and variable universal life insurance will not be earned. The real security of indexed life is in the protection from the downside stock market risk. Volatile INCREASING Market Conditions IF THE S&P 500 INDEX DOES Index Value Years Volatile DECREASING Market Conditions IF THE S&P 500 INDEX DOES THIS... Index Value 10% 2% 20% -20% -10% 1% 15% -6% 10% -3% Years THE RESULTS* WOULD BE THIS... UL** Indexed Life VUL (Using Five-Year Indexed Strategy) Year 1 6% 10% 10% Year 2 6% 12% 20% Year 3 6% 0% -20% Year 4 6% 12% 15% Year 5 6% 10% 10% Effective Annualized 6% 8.4% 6% Interest Earnings Rate THE RESULTS* WOULD BE THIS... UL** Indexed Life (Using Five-Year Indexed Strategy) VUL Year 1 6% 2% 2% Year 2 6% 0% -10% Year 3 6% 1% 1% Year 4 6% 0% -6% Year 5 6% 0% -3% End of Term - 7.2%*** - Adjustment Effective Annualized 6% 2% -3.3% Interest Earnings Rate * Expense charges and cost of insurance charges not reflected. Assumes a 2% minimum interest rate and a cap of 12% on indexed life that does not change during the five-year period. Assumes no dividends, management expenses or fund fees on variable universal life. ** Assumes 6% credited rate for each contract year. ***At the end of a segment's five-year term, Indianapolis Life credits any additional interest needed to increase the value of the segment to the minimum interest rate guaranteed in the contract, which in this example is 2%. There is no negative crediting with an index decrease. Scenarios are illustrative only and are not intended to be a predictor of actual results.

8 The Mechanics Of Indexed Life 1 Indexed UL policies from the companies of the AmerUs Life Insurance Group are fixed, permanent life insurance plans that differ from traditional UL policies only in the way interest is credited. The diagram on this page is designed to explain how interest crediting works in our Indexed UL policies. Basic Interest Strategy (BIS) $$ Fill Line When premiums pass the Fill Line, they are distributed to the interest strategy (or strategies) of your choice. To help simplify the explanation, we decided to use an analogy. Many people maintain collections these days our analogy involves a marble collection. RED TU ED A M EX IND EREST T INT MEN G E S MA T IND URED INT EXED S ER E E G ME ST NT 4 At the end of each premium strategy segment (either one, five, or six years, depending on the strategy), the entire contents of each segment which includes premium and credited interest is placed back into the Basic Interest Strategy. Then the premium and matured value distribution process starts all over again. Minimum Fill Line A minimum amount of premium dollars are kept in the Basic Interest Strategy to cover mortality charges and the company s cost for administering the policy. 1 Premium Dollars Interest Earned Fill Line Minimum Fill Line When the premium level in the Basic Interest Strategy jar surpasses the Fill Line, those premium marbles are placed into other premium strategy jars based on YOUR instructions you may distribute your premium between the strategies as you wish. 2 1-YEAR FIXED 5-YEAR FIXED $ Fixed Term Strategies 5-YEAR INDEXED 6-YEAR INDEXED 3a Every time premium is distributed from the Basic Interest Strategy jar to other strategies, a new jar or is added to receive the new premium. Over time, a policy will likely contain many active premium strategy jars or S. 3b THE FIXED TERM STRATEGIES are generally considered a more conservative choice for premium dollars. You simply choose the term and receive an interest rate declared at the time the premium segment is created. Premium remains in this strategy until the end of the 1-Year or 5-Year term at which time interest (blue marbles) is added. INDEXED INTEREST STRATEGIES earn interest based on the upward movement of the S&P 500 Composite Stock Price Index. If the S&P 500 goes up during a measuring period, the strategy segment is credited with the same percentage of interest up to the cap rate. If the S&P 500 drops during a measuring period, nothing happens to the strategy segment. Premium in the indexed strategies will not lose value if the S&P 500 Index loses value. The 5-Year Indexed Interest Strategy has a 1-Year Point-to-Point measuring period, so the measurement of the S&P 500 Index is noted each year and increases are locked-in while decreases are ignored. At the end of the 5-Year segment period, final interest earned is added to the segment. The same process occurs with the 6-Year Indexed Interest Strategy, except that the S&P 500 measurements are made every TWO years. Final interest is credited to each segment at the end of the 6-Year segment period. Note: Strategies may not be available in all states. When premiums are paid, they are initially collected in the Basic Interest Strategy jar. 2 4 Premium Dollars Premium Dollars Interest Earned 3 1-YEAR 1-YEAR 1-YEAR 1-YEAR 1-YEAR FIXED FIXED FIXED FIXED FIXED 5-YEAR 1-YEAR 1-YEAR 1-YEAR 1-YEAR FIXED FIXED FIXED FIXED FIXED Fixed Term Strategies 55-YEAR 5-YEAR 5-YEAR 5-YEAR INDEXED INDEXEDINDEXEDINDEXED INDEXED T T T 6-YEAR 6-YEAR -YEAR 1-YEAR -YEAR INDEXED INDEXEDINDEXED FIXED INDEXED Our I ndex 2% m ed UL po lic in So ev imum gu ies includ e an S&P en in the aranteed u 500 w unlik inter nderlyin g est ra ely e ere t each o los v prem e mo ent that te. i u m n the with s at lea egment w ey every y s ear, i ta ll b inter est ra 2% comp e credite d o te at matu unded rity.

9 A C O M P E L L I N G C O M P A R I S O N 8 The method used to measure index growth is a major driver of product performance because the interest credited is directly tied to the index growth. Indianapolis Life uses the Point-to-Point crediting method. With Point-to-Point, you can more easily understand how the credited rate is determined. Point-to-Point Example Using the Five-Year Indexed Strategy One-Year Point-to-Point The Point-to-Point design measures the growth of the index from one segment earnings period to the next segment earnings period. The starting point is reset annually. Earnings, if any, are credited and locked in on an annual basis. E S&P 500 B F Index Value A D Years C In this example, the total increase over five years would be figured by taking the sum of all anniversaries which experienced an index increase. Notice that the increases occur on the 1st, 3rd and 4th contract anniversaries (B, D and E). The two years that experienced an index decrease result in no gain and no decrease (C and F) in earnings. Point-to-Point Example Using the Six-Year Indexed Strategy Two-Year Point-to-Point For the Two-year Point-to-Point design, the starting point is reset every two years. Earnings, if any, are credited and locked in on a bi-annual basis S&P 500 B Index Value A D In this example, the total increase over six years would be figured by taking the sum of all 2-year points which experienced an index increase. Notice that our increases occur at the end of years two and six (B and D). The one point (C) that experienced an index decrease results in no gain and no decrease in earnings. C

10 D E T E R M I N I N G T H E I L L U S T R A T E D R A T E 9 HOW THE ILLUSTRATED RATE IS DETERMINED The total amount of interest credited to an Indianapolis Life indexed life policy is the sum of the interest earnings credited to each strategy. In order to represent the combined credited interest earnings in an illustration, a weighted average assumed rate is used. This weighted average assumed rate is derived by averaging the current interest rates of the Basic Interest Strategy, the One-Year Fixed-Term Strategy, and Five-Year Fixed-Term Strategy, along with a reasonable expectation of index growth for the Five-Year and Six-Year Indexed Strategies. The Basic Interest Strategy is always included in an illustration, but it is optional whether some or all of the other four strategies the One-Year Fixed-Term Strategy, Five-Year Fixed-Term Strategy, Five-Year Indexed Strategy and the Six-Year Indexed Strategy are chosen to illustrate cash value accumulation inside the policy. The weighted average assumed rate is illustrated as the assumed rate in the Non-Guaranteed Assumed Values section of the policy illustration. The interest crediting rate used for each strategy is found on the second page of the illustration. Interest Rates Basic Interest, One-Year Fixed- Term and Five-Year Fixed-Term Strategies The interest rates illustrated for the Basic Interest Strategy, the One-Year Fixed-Term Strategy and the Five-Year Fixed-Term Strategy are those currently being credited by the Company. These rates may change from time to time as declared by the Company. At no time will they be less than the interest rate guaranteed in the policy. Indexed Strategy Illustrated Rate Indianapolis Life provides a "guideline" rate to be used in illustrating cash value growth associated with the two Indexed Strategies. This guideline rate is dependent on the cap rate and is derived from applying the cap rate to historical movements in the S&P 500 Index, excluding dividends, based on the policy mechanics. Because the Company is basing the illustrated rate on such a long-term perspective, changes to the guideline rate due to emerging experience are expected to be relatively infrequent, e.g. every two or three years. Remember, the purpose of a policy illustration is to provide a reasonable view of the long-term, potential values in the policy based on its current, non-guaranteed elements as well as minimum guarantees. The illustrated rate is for illustration purposes ONLY. The actual credited rate can be higher or lower, and will be based on the actual S&P 500 Index movement, which cannot be predicted. Unlike the level rate illustrated for each strategy, the actual index-linked illustrated rates are likely to vary over time. The Five-Year Indexed Strategy uses an assumed rate that is credited each year while the Six-Year Indexed Strategy uses an assumed rate that is credited every two years. At the end of each five-year or six-year segment within the Indexed Strategies, Indianapolis Life guarantees the segment value will be at least equal to the premium paid (less any withdrawals or deductions) compounded annually at the minimum guaranteed interest rate of 2%. HOW THE CONTRACT IS SUPPORTED Indianapolis Life indexed UL policies are like any other fixed interest rate universal life contracts in that they are backed by the company s general account and no separate account is established. Indianapolis Life does not directly invest in the stock market to support the product. As it does with other general account products, Indianapolis Life chooses investments that closely mimic its liabilities. With an indexed UL product, this means that Indianapolis Life purchases assets to cover both the minimum guarantees of the contract as well as the upside potential brought about by the index features. For example, bonds, mortgages, or other fixed income assets may be purchased to support the minimum guarantees, while options or other equity based securities may be purchased to support the upside potential. Cap rates are, in general, based on the costs of these investments. Currently illustrated rates for a declared cap rate are representative of the monthly S&P 500 Index and dividend yield* data since January The Company will update the guideline illustrated rate when: 1) the cap rate changes, and/or 2) emerging S&P 500 Index experience warrants a change. * While the index excludes dividends, actual dividend yields do impact the cost of the investments supporting the product, which helps determine the cap rate. Subject to contract restrictions

11 I N D E X E D U L 10 F A Q S 10 FREQUENTLY ASKED QUESTIONS ABOUT INDEXED UNIVERSAL LIFE 1. Indexed UL is too complicated. It has so many moving parts used to determine credited interest. What is the easiest way to explain it? Actually, an Indexed UL policy works much like any other universal life policy. The only difference is in how the credited interest is determined. With a traditional UL product, the insurance company examines all of its investments to determine the individual rate of return on each one. Once these rates are determined, they are combined to provide a single rate of return for the company s investment portfolio. From the single portfolio rate of return, the insurance company determines the amount of interest that will be credited to a policy. Because the company s investment return is always changing, the company continually monitors its overall portfolio return and will change the credited interest rate when necessary. An Indexed UL policy is actually much less complicated it s really pretty simple. The credited interest rate is based upon the growth of the Index from one period of time to the next up to the cap rate. 2. Are the current illustrated rates for the Indianapolis Life Indexed UL products a little aggressive for today s interest environment? The illustrated interest rate represents the interest rate that would have been credited to the strategies based upon a 54-year history of the S&P 500 Index. In determining the illustrated rate, any growth of the S&P 500 Index in excess of the strategy cap rates was not used. In addition, index losses were not taken into account since, with our Indexed UL policies, we do not consider the negative index growth when crediting interest. We believe the 54-year period projects the hypothetical growth of the S&P 500 Index and provides a more accurate assessment of the potential for credited interest than what would have been measured using a shorter time frame. 3. Only a few companies sell Indexed Life insurance. Why? There were only a few companies selling Indexed Annuities when they were first introduced in the mid 1990 s. However, that market has grown rapidly, and now a significant portion of annuity sales are from indexed products. Indexed Life products require more administration and support than do Indexed Annuities. AmerUs Life Insurance Group was fortunate when it entered the Indexed Life market in 1998 because we (with these products in mind) had just installed a new computer system designed to handle Indexed Life products. Since that time, other companies have entered the market with their own indexed products as they could adapt their computer systems to support these unique life insurance products. Looking forward, it is likely that more companies will make indexed life products available as they are able to handle the administration. 4. What does an Indexed UL policy offer over a more traditional UL product? Over time, we believe that an Indexed UL product has the potential for greater interest crediting than the more traditional products. Consequently, this could mean that there could be more cash value, more retirement income, or lower total premiums if the policyowner wishes to discontinue premiums and use the policy cash value to support the internal expenses. 5. What is the biggest difference between Indexed UL and variable life Insurance? Indexed UL policy cash value is not invested in the stock market, and there is no direct link like there is with variable life products. Our Indexed UL uses the S&P 500 Index as a measuring stick, of sorts. The percentage of increase in the S&P 500 Index subject to a cap rate is added to the cash value of the policy. It s that simple.

12 I N D E X E D U L 11 F A Q S Our Indexed UL policies do not participate in the market losses (unlike variable life products). The index point from which index growth is measured is reset prior to each new measuring period at the level where the index finished the prior measuring period. Therefore, if the index goes down, nothing is taken away but the new measuring period will begin at the lowest index level. With a variable life policy, the cash value is usually invested in sub-accounts that are linked directly to the market. The cash value within the variable life policy will go up and down as the market goes up and down. While there is the potential for substantial gains, there is equal opportunity for substantial losses. For example, If the market decreases 30%, it will need to go back up 43% in order to get back to its initial level. Many clients do not want to risk their cash value to market fluctuation, so Indexed UL gives them the opportunity to participate in the index growth without the risk of market declines. 6. How is my money invested? Nearly all of the insurance company s invested assets are in high quality corporate and government bonds. The same investment portfolio supports Indexed UL products, as well as the traditional products. There is no direct investment in the equity markets with Indexed UL. 7. What if the S&P 500 Index goes down and there is no interest credited to the policy? Indexed UL policies of the Indianapolis Life Insurance Company include a 2% Minimum Guaranteed Interest Rate. Here s how it works The cash value within our Indexed UL products is guaranteed to accumulate at 2%. When the policy cash value segments mature, they are evaluated and additional interest will be credited if they have not compounded at 2% per year. This is a valuable feature of our Indexed UL policies that further shows how the premium and cash value of our policyowners is protected from downturns in the index. 8. Since it is possible to have several segments created, is it difficult to keep track of all of them? Each year the policyowner will receive an anniversary statement (annual report) that will reflect all of the activity that took place within the policy during the year just ended. It will identify all premium payments, expenses and interest earnings. The policy segments will be listed, along with their effective dates and current value. In addition, any interest earnings credited to a segment during the policy year will be shown. 9. Is there a no-lapse guarantee available? Yes, the Advantage Indexed UL plan has a very competitive No-Lapse Guarantee Rider. An extended maturity option is built into the policy so that if the insured is still living at age 100, the death benefit will be continued without additional premiums. The NLG Rider provides flexibility in that it can be removed if no longer needed and the policyholder can pay all the premiums on a limited-pay basis, such as to age 65 or for 20 years. 10. Are there any features that are unique to your Indexed UL policies that may not be found in other similar policies. Yes, there are two. The Life Protector Rider protects the policyowner from borrowing too much money from the policy in retirement, which may cause the policy to lapse creating phantom income. When a certain percentage of the cash value has been borrowed, borrowing activity is suspended, a one-time charge is assessed, and the policy continues at a reduced death benefit (paid-up-policy). A second feature unique to our Indexed UL policies is that the policyowner has a choice of two loan types from which to choose when borrowing from the policy. A variable loan can be particularly advantageous when credited interest on the policy is greater than the loan interest charges. The second loan type is a fixed loan or sometimes referred to as a wash loan. This fixed loan tends to be less expensive when index crediting is expected to be down or flat.

13 THE UNIQUE APPEAL OF INDEXED LIFE INSURANCE Indexed life products combine the features of traditional fixed life products with the potential to earn interest based on the upward movement of an index. With this unique combination of benefits, indexed life has become popular among financial consumers. While indexed products credit interest earnings based on the upward movement of an index, these products are not securities. Purchasing an indexed life policy is not the same as making an investment directly in the stock market. Indexed life policies are fixed life products that offer a viable alternative to variable universal life. Indianapolis Life thanks you for taking the time to learn about indexed life insurance, so you can determine whether this product is right for you.

14 Indianapolis Life Insurance Company 9200 Keystone Crossing Suite 800 Indianapolis, IN /05