Indexed Survivor Universal Life

Transcription

1 Indexed Survivor Universal Life Protecting your estate /10

2 Indexed Survivor Universal Life Building wealth has always been about more than living the good life. The estate you ve amassed through hard work, sacrifice and savvy investing was also meant to support your loved ones and provide for them long after you re gone. But hefty estate tax bills could wipe out those intentions. Depending on when you and your spouse die, your heirs may owe the federal government up to half of your estate, and they may have to liquidate assets to pay that bill. Though Congress has discussed on many occasions repealing the estate tax, the need for the revenue generated by this tax makes total repeal unlikely. So while the tax implication may be inevitable, you have a way to protect your heirs from absorbing the entire cost. Products issued by Aviva Life and Annuity Company. 1 This policy description provides highlights and does not cover all restrictions, conditions or limitations that may apply. Consult your agent or see the policy for full details. Benefits may be limited or excluded during the first two years of your policy under suicide and contestibility provisions.

3 The Solution: Life Insurance Adequate life insurance is a very efficient and cost effective way to cover those obligations and to meet survivorship needs. That is why Aviva has combined the solid guarantees of a survivor policy with the innovation of our indexed products to offer you our Indexed Survivor Universal Life (ISUL) policy. It provides the coverage you need with the flexibility you desire and is specifically designed for people like you with sophisticated financial and insurance needs. Paying estate taxes isn t the only use for a survivor policy. It can be used for a variety of purposes: n Preserve your heirs inheritance The policy can cover the costs of state inheritance taxes, income taxes, property taxes, probate costs, medical expenses, funeral expenses, mortgages, debts, and legal fees, all of which can significantly reduce the value of an inheritance. n Charitable gifts To replace the amount given to a charitable organization in order to provide heirs with the full value of your estate. n Key person coverage To hire qualified people or maintain the value of a business after the deaths of two partners or key employees. n Wealth transfer An alternative to owning tax-heavy assets such as IRAs and unqualified annuities. n Lifetime support To provide lifetime financial support to a special needs child who may outlive the parents. 2

4 With an Indexed Survivor UL policy, you can take advantage of n A last survivor life insurance policy that insures two lives and pays the death benefit upon the second death, when the proceeds are most needed to protect assets and create wealth for your beneficiaries n An optional No-Lapse Guarantee Rider that ensures a guaranteed death benefit and a guaranteed premium payment period n Flexible premium payments and death benefit options n An array of riders to customize the policy for your needs n The options of taking policy loans and withdrawals (subject to policy specifications) n An index linked crediting approach that includes a guaranteed minimum interest rate while providing more growth potential than most traditional life insurance products n Proceeds that are income tax-free upon the second death and cash values that accumulate tax-deferred 3

5 The coverage you need The Aviva Indexed Survivor UL is one policy that insures two people. We offer face amounts beginning at $250,000 for people ages 20-85(youngest insured must not be 80 or over). The death benefit is payable upon the death of the second insured. A survivor policy is typically less expensive than buying two separate policies, while also giving otherwise uninsurable individuals the opportunity of obtaining coverage. A No-Lapse Guarantee Rider* that provides choice When attached to our Indexed Survivor Universal Life policy, the No-Lapse Guarantee Rider can provide a guaranteed death benefit for the lifetime of the insured individuals. This rider is designed to keep the ISUL policy in force even if the cash surrender value falls to zero, provided the required premiums are paid on a timely basis. You choose the length of guarantee and the corresponding number of premium payments, with lower premiums available based on health. And if your premium payments fall below the level needed to keep the rider in force, the No-Lapse Guarantee enters a five-year restoration period in which premiums can be paid to catch up and restore the rider. This valuable rider is available only at the time of policy issue. (Form 2JNLGF06) * The No-Lapse Guarantee Rider is called the Extended Guarantee Rider in Connecticut and the Death Benefit Guarantee Rider in Illinois. Certain policy changes can void the guarantee. See rider form for complete details. Charges for this rider apply. 4

6 Why Index-Link Indexed Survivor UL is an indexed between traditional universal life While the account value of a tradi periodically declared by the insure the movement of a stock market i life product has the potential over the traditional products. Consequently, th retirement income, as well as the opti cash value to support the internal exp When you apply for your policy, you choose from the avail page). We then follow a few steps for premium direction, When you make a premium payment, the net premiums go into the Basic Interest Strategy. That money remains in the Basic Interest Strategy until there is enough to cover approximately one year s cost of insurance and other policy charges.* (See back cover) Funds in excess of this amount may then be directed to the other strategies as described below. Funds in the Basic Interest Strategy earn a fixed interest rate determined by the company. Excess dollars from the Basic Interest Strategy create interest crediting segments (depending on the strategy or strategies that you choose). Segments are created two times each month when amounts are available from the Basic Interest Strategy. Over time, a policy will likely contain many active interest crediting segments. At the end of each indexed strategy crediting period (and monthly with fixed strategies), interest is applied according to strategy specifications and interest credits, if any, for that period are locked in. At the end of every segment term (1, 5 or 6 years, depending on the strategy), the segment dollars mature and are placed back into the Basic Interest Strategy, along with any new premium, to begin working for you again. 5

7 ed Interest Crediting? universal life insurance policy. The major difference and indexed universal life is the way interest is credited. tional UL policy is credited with interest based on a rate r, an indexed UL policy earns interest based in part on ndex, excluding dividends. We believe that an indexed life of the policy for greater interest crediting than the more is could mean more cash value and more supplemental on of having lower total premiums if you wish to use the policy enses. Here s How It Works: able interest crediting strategies (described on the next as outlined below. PREMIUM DOLLARS (Net of Sales Charges) BASIC INTEREST STRATEGY CHOOSE FROM SEVEN INTEREST CREDITING STRATEGIES MATURED VALUE 6

8 As a leader in indexed life insurance products, we ve created several interest crediting strategies from which to choose: n One-Year Fixed n Five-Year Fixed n One-Year Point-to-Point (five-year term) n One-Year Multi-Index (five-year term) n One-Year Monthly Cap (five-year term) n One-Year Monthly Average (five-year term) n Two-Year Point-to-Point (six-year term) Although an external index may be used to determine interest credited to your policy values, the policy does not directly participate in any stock or equity investments. You are not buying shares of any stock or index. ISUL simply uses stock market indices as a measuring stick. Any resulting index-linked credits subject to the limitations of the policy and strategy(ies) chosen are credited to the cash value of the policy. Credits are subject to participation and cap rates. n Interest Rate Guarantee Indexed Survivor UL provides a guaranteed minimum interest rate of 2%. On the fixed-term strategies, the policy guarantees that the declared interest rate will never be less than 2%. On the indexed strategies, the policy guarantees that the interest credited will never be less than 2% compounded annually over the segment term. The guarantee will be applied at the end of the segment term or upon lapse, surrender or maturity of the policy, whichever occurs first. 7

9 For more details about how this indexed life policy works, please talk to your agent and refer to our brochure Understanding Indexed Life. 8

10 n Other Factors Affecting Interest Crediting Any money which is removed from an indexed strategy segment during an interest crediting period for any reason (e.g., withdrawal, certain loans, policy surrender, to pay policy charges or expenses, etc.) is not credited with any index-linked interest for such interest crediting period. n Loans and Withdrawals* (See back cover) At any time, you can take a loan from available policy values and choose between a variable loan interest rate or a fixed interest rate. The differences between these two options include how the loan interest is determined and the rate credited to amounts borrowed. Loans will reduce the policy s death benefit and cash values until they are paid back. You can also simply withdraw money from the policy after the first year, which then reduces the death benefit and the cash value by the amount of the withdrawal (tax consequences and/or surrender charges could apply). Our detailed annual reports will keep you informed as to how the policy is performing and how much coverage and cash value it has. 9

11 More Options to Enhance Your Policy* You can choose among the following riders and options designed specifically to complement the Aviva ISUL to further help you meet your financial goals, protect your assets from uncertainty and improve the overall performance of the policy. Estate Protection Rider This rider provides an additional term death benefit should both individuals pass away in the first four policy years. The additional benefit reduces the impact of the federal estate tax three-year rule, which taxes policy death benefits if the second spouse to die had certain ownership rights within three years of his or her death. (Form 2J4YTF06) Policy Split Option This benefit is automatically included with eligible policies and provides the owners the opportunity, without evidence of insurability, to split their policy into two individual universal life policies in the event of a divorce or a substantial change in the estate tax law. In addition, business partners may also split their policy, with evidence of insurability, upon legal dissolution of the business. (Form 2JPSOF06) Death Benefit Return of Premium Rider Used in conjunction with death benefit option 1, this rider provides a death benefit equal to the face amount plus accumulated premiums (adjusted for withdrawals). It is not available if you purchase the No-Lapse Guarantee Rider. (Form 2JROPF06) Accelerated Benefits Rider Allows you to access part of the policy s face amount in the event that the last survivor is diagnosed with a life expectancy of 12 months or less. (Form 2ABRF06) Life Protector Rider** Prevents your policy from lapsing as a result of too much loan indebtedness-subject to certain policy and loan conditions. (Form 2JLPUF06) Joint Term Rider Provides additional term coverage on both insured individuals. (Form 2JTRF06) * Riders are subject to state availability, certain limitations, and may require additional charges unless otherwise specified. See terms of the rider for full details. ** The tax treatment of this rider, if activated, is not well settled under current law. In particular, it is not clear whether the rider will result in a taxable event at the time it is activated. Anyone contemplating the purchase of the policy with this rider should consult a tax advisor as to the possible tax ramifications associated therewith. 10

12 This brochure contains highlights only. You should refer to the Indexed Survivor Universal Life policy for a full explanation. All tax related information contained herein is based on our current understanding of federal tax laws as they relate to life insurance or other subject matter discussed. These laws are subject to change in the future. Neither Aviva nor its representatives offer legal or tax advice. You should consult a personal tax advisor on any tax matters. In order to comply with certain U.S. Treasury regulations, please be advised of the following: Unless expressly stated otherwise, any U.S. Federal tax advice contained in these materials, including attachments, is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service. Products issued by and all policy benefits are the responsibility of Aviva Life and Annuity Company, and not that of any other insurer or company. * Pg 5 As with most universal life policies, the cash value is determined by the sum of premiums paid net of any loads, deductions of policy charges, plus interest credited. Policy charges are deducted monthly and include a flat administrative fee, a coverage charge per $1,000 of face value, cost of insurance charges, and premiums for any riders. * Pg 9 This policy is designed for long-term accumulation and not for shortterm liquidity. However, if your needs change, the policy allows you to withdraw all or part of the cash value subject to certain limitations. Withdrawals may be subject to surrender penalties imposed by the company. Amounts withdrawn may also be subject to tax liability or tax penalties. Partial surrenders and loans may affect policy values and death benefits. Aviva does not provide tax, legal or accounting advice; always consult your own personal advisor for tax, legal, or accounting advice. Policy form 2JAF06. Availability may vary by state. Products issued by Aviva Life and Annuity Company 7700 Mills Civic Parkway West Des Moines, IA /10