1 HARTFORD LEADERS VUL LEGACY Preserve your legacy with variable universal life insurance
2 Client: Jack Age: 42 Estimated net worth: $750,000 Profession: Warehouse manager His story: Married, three children Living a comfortable lifestyle Saving for college educations Goals: Protect his income for his family Avoid student loans for his children Make sure his children will have higher education opportunities, regardless of what happens to him Have a contingency plan for chronic illness Strategy: A Hartford Leaders VUL Legacy policy provides a death benefit with taxadvantaged accumulation potential to help Jack meet his goals of protection and accumulation. In addition, by electing the LifeAccess Accelerated Benefit Rider, they are prepared if a chronic illness impacts their family. The flexibility of LifeAccess can be used to help provide independence and income in the event of a chronic illness. Hartford Leaders Variable Universal Life Legacy After thinking about your goals, you decided you want the protection of life insurance and a way to pass on your assets. Hartford Leaders VUL Legacy, a variable universal life (VUL) insurance policy, can provide cost-effective death benefit protection and pass on your legacy to your beneficiaries federal income-tax free. If you are comfortable with the risks of market exposure, VUL may be right for you. Hartford Leaders VUL Legacy can help you to: Replace your income to protect your family in the event of an untimely death Access cash for future needs before or during retirement 1 Preserve the value of your estate for future generations Think ahead through business continuation planning if you are a business owner Create a charitable legacy Plan ahead for a loved one with special needs The capabilities of your policy can be expanded through the election of supplemental riders such as the LifeAccess Accelerated Benefit Rider 2 (LifeAccess), which allows access to your policy s death benefit if you become chronically ill. This rider is available at policy issue for an additional cost. Tax advantages* Tax-free. Tax-deferred. Tax-advantaged. Hartford Leaders VUL Legacy offers you many tax benefits. Generally income-tax-free death benefit Potential growth in the policy s cash value on a tax-deferred basis Tax-advantaged access to account value through policy loans and withdrawals 1 Tax-free transfer of assets among investment options 1 See the Policy Loans and Withdrawals section on page 6 for more detail. 2 System for managing the LifeAccess Accelerated Benefit Rider covered by U.S. Patent No. 7,958,035. 1
3 A policy that uniquely fits your needs Hartford Leaders VUL Legacy provides death benefit protection and flexibility to adapt to your needs. Enjoy the tax advantages of life insurance with the security of a built-in no-lapse guarantee (NLG). The NLG: Prevents your policy from lapsing, regardless of market conditions, when you meet the cumulative requirements. Cumulative premiums paid, less withdrawals and indebtedness, must equal or exceed the cumulative NLG premiums. Is automatically included Is based on the issue age of the insured and is: 20 years for ages 55 and younger To age 75 for those over 55, but never less than five years By paying only the premium required for the NLG, you may be foregoing the opportunity to build greater account value to help maintain the policy after the NLG period. If the NLG is not available, you must maintain sufficient account value to support ongoing charges to prevent the policy from lapsing. If you do not pay the necessary premium to maintain the no-lapse protection and the guarantee is deemed inactive as a result, you must maintain sufficient account value to support monthly deductions and changes, or the policy will lapse. Guarantees and benefits within the policy are based on the claims-paying ability of the issuing company. The guarantee does not apply to any variable investment option. The benefits of VUL Protection: Plan for your future with death benefit protection and the potential for cash value accumulation. Flexibility: Decide what you need now, knowing that you can change certain features later. Choice: Choose your premium amount and payment schedule, provided they are sufficient to support the death benefit. Control: Determine how to allocate premiums among the available investment options. Accessibility: Access the policy s account value through loans and withdrawals if needed. 1 Tax Advantages: Enjoy the tax advantages that life insurance offers. * The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Act ) reinstated the federal estate tax and generation-skipping taxes and reunified the estate and gift tax basic exclusion amount. Under the Act, estate, gift, and generation-skipping transfers are taxed at a maximum rate of 35%. The individual basic exclusion amount for estate, gift and generation-skipping transfers is $5,000,000, subject to an inflation adjustment in An individual s basic exclusion amount for estate tax purposes may be increased by the unused basic exclusion amount of a deceased spouse. The Act expires at the end of 2012, at which time the estate, gift and generation-skipping transfer tax exemptions will be reduced to $1,000,000 (the generation-skipping tax exemption is indexed) and the maximum rates will be increased to 55%. The uncertainty regarding how the Act might be modified, underscores the importance of seeking guidance from a qualified advisor to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios. 2
4 How Your Policy Works 1. You pay premiums. 2. We deduct premium loads and taxes. 3. The net premium is applied to your policy account value. You determine how to allocate premiums between the underlying investment options and/or the Fixed Account. We credit you interest on any account value allocated to the Fixed Account (or Loan Account). Account value allocated to the underlying investment options is subject to the respective performance of the investment options. Both the investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. We deduct monthly charges to cover policy expenses, such as the cost of insurance, administrative charge, per $1,000 charge, mortality and expense risk charges, and applicable rider charges. 4. You may take withdrawals from your policy. Withdrawals taken from the policy will cause the death benefit of the policy to be reduced. See the Policy Loans and Withdrawals section on page 6 for more detail. 5. If you take a loan, the loan proceeds are paid out of Hartford s assets and we use your policy as collateral (Loan Account). We credit you interest on the amount in your Loan Account. We charge you interest on the loan and if the interest is not paid when due, your indebtedness (loan amount plus accrued interest) will grow. Loans and loan interest reduce the death benefit and cash surrender value. See the Policy Loans and Withdrawals section on page 6 for more detail. 6. Upon death of the insured, we will pay the death benefit minus outstanding policy loans including accrued interest (Indebtedness) to policy beneficiaries. 7. A chronic illness can be just as financially and emotionally devastating as an untimely death. With the LifeAccess Accelerated Benefit Rider (LifeAccess), the policy s death benefit may be accelerated if a licensed health care practitioner certifies that you are chronically ill and otherwise meet the terms of the rider. Receiving rider living benefits under LifeAccess will reduce, and possibly eliminate the death benefit available to your beneficiaries. Premium Premium Loads and Taxes Fixed Account Account Value Underlying Investment Options Loan Account for Collateral Death Benefit Interest Crediting to Fixed Account Withdrawals Monthly Policy Charges Interest Crediting to Loan Account LifeAccess 3 Variable universal life insurance policies contain fees and expenses, including cost of insurance, administrative fees and premium loads, surrender charges and other charges or fees that will impact policy values. The underlying funds also have fund operating expenses. The investment return and principal value will fluctuate so that when redeemed, may be worth more or less than their original cost. During the first 9 years, surrender charges are deducted from the account value if the policy is surrendered. Additional surrender charges apply for the 9 years following an unscheduled face amount increase or 9 years following a Cost of Living Adjustment increase.
5 The important steps of VUL planning Select a face amount and choose a death benefit option Select supplemental benefits Whether you inherit an estate, downsize your house or add to your family, you have the control to decide how much insurance you need and adjust your face amount as your needs change. Increases in face amount may require additional underwriting. Legacy offers you four death benefit options. Option A (Level) Provides death benefit protection that equals your current face amount Allows you to limit insurance costs, yet maintain a fixed amount of death benefit protection Option B (Return of Account Value) Provides death benefit protection that equals your current face amount plus your policy s account value Allows you to put as much premium into the policy as possible for accumulation purposes, subject to life insurance qualification test Option C (Return of Premiums) Provides death benefit protection that equals your current face amount plus your policy s premiums (less withdrawals), up to a maximum of your face amount plus $5 million dollars Option D (Decreasing) Provides death benefit protection that equals your current face amount plus the lesser of either your account value at death or your account value on the date on which you switched to the decreasing death benefit option Allows you to minimize policy charges as your account value grows, without having to provide evidence of insurability Customize your policy with optional riders that accommodate life s changing needs. So, no matter what life presents, you ll be prepared. These riders may be subject to additional costs, eligibility requirements, availability, and other restrictions. For details, please consult your financial professional and the product s prospectus. LifeAccess Accelerated Benefit Rider Chronic illness can be physically and financially overwhelming. About 70% of Americans over age 65 will require at least some type of chronic care services during their lifetime. 1 The LifeAccess rider advances up to 100% of the policy s death benefit 2 if a licensed health care practitioner certifies that you are chronically ill and meet the terms of the rider. Physician recertification is required annually. The benefits from the LifeAccess rider can be used to pay any expense whether directly related to your care or not. Once qualified for the benefit, no receipts are required. This rider is available at policy issue for an additional cost. Receiving benefits under the rider will reduce the death benefit available to the policy s beneficiaries. Guaranteed Minimum Accumulation Benefit Rider Guarantees that the policy s account value will be no less than the total of gross premiums paid when the rider matures, regardless of policy performance. Available for an additional charge. Adjusted for any face amount decreases and withdrawals Matures after 20 years or at age 75, whichever comes first There is a cumulative rider premium requirement to maintain the rider If the account value is less than the benefit amount on the benefit date, the account value will be increased by allocating value to the money market subaccount on the valuation day following the benefit date. This amount is subject to market fluctuation. 1 U.S. Department of Health and Human Services: National Clearinghouse for Long-Term Care Information, The Maximum Monthly Benefit under the rider cannot exceed the least of: a) The monthly equivalent of the IRS Per Diem Limit at the time of claim; or b) The monthly equivalent of the IRS Per Diem Limit on the policy issue date, compounded annually at 4%; or c) 2% of the death benefit amount at the time of claim. Note: The IRS Per Diem Limit for 2011 is $300. 4
6 Guaranteed Minimum Death Benefit Rider Gives you a one-time option to convert to a paid-up policy (a paid-up policy does not require any additional premium to support the death benefit), if the account value at maturity is not as much as what you had planned. At this point, the VUL policy is no longer in effect and no loans or withdrawals are allowed. Available for an additional charge. Death benefit of the paid-up policy is guaranteed to at least equal the cumulative premiums paid during the rider term, regardless of policy performance Adjusted for any face amount decreases and withdrawals Matures after 20 years or at age 75, whichever comes first - There is a cumulative rider premium requirement to maintain the rider Accelerated Death Benefit Rider for Terminal Illness Although no one likes to think of what could happen tomorrow, you can help prepare for the unexpected. In the event that you have a life expectancy of one year or less, and you have elected this rider at issue, up to 100% of your death benefit can be accelerated. Waiver of Monthly Deductions Circumstances can change quickly. Know that in the event that you become disabled, your policy s deductions can be waived. Waiver of Specified Amount Disability Benefit You have the flexibility to control your premium payments. And you also have the security of having those specified premium payments credited back to your account if you should become disabled. Accidental Death Benefit In the event of an accidental death, know your beneficiaries will be provided for with an increased death benefit. Child Rider Provides $5,000 or $10,000 of term coverage on each of your children who, at issue, are age 16 days to 14 years. Term Rider Provides additional term insurance for you or a family member. Cost of Living Adjustment Rider Inflation happens. Schedule face amount increases to adjust to a higher cost of living. Biannual face increases underwritten today are based on the Consumer Price Index. DisabilityAccess Rider Pays a monthly disability benefit for up to 24 months if the insured, while gainfully working, suffers a disability resulting from sickness or injury, and as a result of such disability, the insured is prevented from performing the substantial and material duties of his or her own occupation. Overloan Protection Rider Can protect a highly-loaned policy from lapsing. Set premium payments After choosing your face amount and death benefit option, you can establish your premium amount and payment schedule, provided you adequately fund the policy. Choose an asset allocation strategy Determine your tolerance for market risks and volatility and how long you have to meet your insurance funding objectives. Remember, VUL is designed to help you meet long-term financial goals. Then, determine how to allocate your net premium among the wide range of investment choices. With Legacy, you can select investment options yourself or you can choose a professionally developed static asset allocation model that aligns with your investment philosophy. Transfer funds between investment options tax-free and rebalance your allocations as you see fit. The Hartford offers dozens of investment options, managed by world-class sub-advisors. Periodically review your policy and adjust benefits and policy features as needed Periodically review your policy to make sure that your strategy is still aligned with your financial goals. Know that any time after the first policy year, you can adjust the face amount to accommodate any changes, subject to policy minimums and, for increases, underwriting. Talk to your financial professional about how Hartford Leaders VUL Legacy can help preserve and protect your legacy. 5
7 Policy Loans and Withdrawals All accumulation that occurs within the policy is tax-deferred. You have the option to access any accumulation value in your policy through withdrawals and loans. Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy s account value and death benefit. Withdrawals Assuming the policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the extent they exceed the policyowner s cost basis in the policy. The assets can be used at any time and for any need, offering you the freedom and flexibility to draw on your policy if you need it, when you need it. It can be used to help pay college tuition, help supplement retirement income, even to help purchase a car or boat, for instance. A withdrawal reduces the cash surrender value and can affect the face amount, death benefit and net amount of risk (which is used to calculate the Cost of Insurance Charge). Withdrawals may increase the risk of policy lapse and may have unfavorable tax consequences. Loans You can obtain a loan by using your life insurance policy as collateral. Assuming the policy is not a MEC, usually loans are received free from current federal taxation. Taking a loan has some risks. Policy loans (including outstanding loan interest): Will decrease your death benefit May increase the risk that your policy will terminate Will have a permanent effect on your Cash Surrender Value May impact the availability of some rider benefits May increase the premium necessary to keep the policy in force May have adverse tax consequences When we loan you money, we segregate an amount equal to the loan proceeds from your account value and refer to it as a Loan Account (LA). The LA acts as collateral for the loan and is a part of your account value. We will credit you interest on the LA. However, we continue to charge you interest on the loan proceeds. We will charge interest on the loan for as long as it remains unpaid. The LA cannot be used for policy charges. The outstanding loan and loan interest is your indebtedness. If the annual loan interest is not paid when due, the amount of the loan will increase by the amount of the unpaid interest (loan interest capitalizes) and your indebtedness will increase. If you don t pay back the loan (including loan interest) and the insured dies, we will subtract the indebtedness from the death benefit. If the policy loan is still outstanding when you surrender your policy or it lapses, the indebtedness will be considered taxable income to the extent that there is gain in the policy. The only way to reduce your indebtedness while the insured is alive is to pay back the loan and the loan interest. Interest we credit to the LA does not reduce your outstanding indebtedness. You should consider at least paying the annual loan interest due each year to prevent your indebtedness from increasing. Your indebtedness will be fully paid off one of three ways: 1. When you elect to pay it off with cash 2. When you surrender or lapse the policy, any indebtedness is recouped by us 3. When a death benefit is being paid out on your policy any indebtedness is recouped by us Modified Endowment Contracts (MECs) Your policy will become a MEC if the level of premium funding in the policy in relation to the death benefit provided exceeds federal guidelines for life insurance. Distributions (including deemed distributions) from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. Talk to your agent and trusted advisor before taking a withdrawal or a policy loan. Before taking a withdrawal or a policy loan, we encourage you to work with your agent and trusted advisor to understand the financial impact a withdrawal or policy loan could have on your policy as well as any adverse tax consequences. If you have outstanding policy loans, ask to see a policy illustration showing the current impact of your loan on your policy s death benefit. Also, you should work with your agent to regularly check on your loan status to keep track of your loan and unpaid loan interest and to understand the amount of taxable income, should the policy lapse or be surrendered. 6
8 WHY CHOOSE THE HARTFORD? The Hartford Financial Services Group, Inc. (NYSE: HIG) is a leading provider of insurance and wealth management services for millions of consumers and businesses worldwide. A Fortune 150 company, The Hartford is consistently recognized for its superior service and as one of the world s most ethical companies. More information on the company and its financial performance is available at Over 750,000 Americans currently trust their life insurance needs to The Hartford s life subsidiaries, in part because they are getting more than the promise of a death benefit. They are entrusting their financial protection to a company that prides itself on integrity. You should carefully consider the investment objectives, risks, and charges and expenses of any variable universal life insurance policy and its underlying funds before investing. This and other information can be found in the prospectus for the variable universal life insurance policy, the underlying funds prospectus and appropriate product information, which can be obtained from your financial professional or by logging on to Please read them carefully before you invest or send money. The product prospectus and contract will reflect the appropriate issuing company. This information is written in connection with the promotion or marketing of the matter addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice. Guarantees and benefits within the policy are based on the claims-paying ability of the issuing insurance company. The guarantee does not apply to any variable investment option. Broker/dealers, insurance agencies and their affiliates who sell the policy make no representations or guarantees regarding such ability. The Hartford is The Hartford Financial Services Group, Inc. and its subsidiaries, including the issuing companies of Hartford Life Insurance Company (HLI) (New York) and Hartford Life and Annuity Insurance Company (HLA) (outside New York), Simsbury, CT. The mailing address for both issuers is P.O. Box 2999, Hartford, CT Variable life insurance products discussed in this material are distributed by Hartford Equity Sales Company, Inc. (HESCO), a broker/dealer affiliate of The Hartford. Hartford Leaders VUL Legacy is a flexible premium variable universal life insurance policy. HLI policy form # HL-15894(03)(NY). HLA policy form # LA-1238(03) and may include state abbreviations. Features may vary by state. LCM Printed in U.S.A The Hartford, Hartford, CT LIF /11 P.O. Box 2999 Hartford, CT