Discover What s Possible

Transcription

1 Discover What s Possible Accumulation Builder Choice SM IUL for Business Accumulation Builder Choice SM Indexed Universal Life for Business Owners

2 Building your path to success As a small business owner, you are always striving to fulfill your business vision and protect what you ve built. Permanent life insurance can be the financial solution you need to protect your business from the unexpected and access a world of possibilities. Making your business vision a reality

3 Indexed Universal Life Insurance (IUL) is a type of permanent life insurance that can serve as a vital financial tool to help you protect your business and take advantage of opportunities to secure your financial future. Accumulation Builder Choice SM Indexed Universal Life (IUL) provides strong death benefit protection plus the potential for significant cash value accumulation that can be used to support a wide variety of business objectives. Tailor your coverage to meet your specific protection and business needs from retaining key employees, to planning for retirement to making sure your business stays in the family if something happens to you. Unlock possibilities for your business with a tried and true financial solution that can help you support cash flow needs and help fund business expansion. A cost-effective financial solution for your business Accumulation Builder Choice IUL can help protect your assets while enabling you to capitalize on life s business opportunities. It can help provide: Death benefit protection and financial security for your business and family Strong cash value accumulation potential with protection from market declines Cash flow and liquidity for business expansion, expenses and emergencies Imagine the possibilities Employee benefit and retention tools to reward and retain top talent Continuity for your business when you die or retire Retirement income solutions to help you reach retirement goals. 1

4 Unlocking the possibilities for your business Accumulation Builder Choice IUL can help you meet your objectives at any stage of your business by providing death benefit protection and cash value accumulation you can use for various business needs, plus a safety net to protect you from future market volatility. By offering life insurance protection plus dynamic growth potential, Accumulation Builder Choice IUL can help build the financial security and leverage you need to pursue your business vision with confidence. Protection You Can Count On Accumulation Builder Choice IUL can provide you with solid life insurance protection to help safeguard your business interests and help ensure your family will be able to maintain their lifestyle if you are not there. And the death benefit your beneficiaries receive will be income-tax-free. You can even tailor your coverage to your specific needs by taking advantage of a variety of optional benefits, such as benefits that can help if the insured becomes disabled or chronically ill. A Strong Protection Guarantee Accumulation Builder Choice IUL includes a no-lapse guarantee that ensures the policy death benefit will remain intact up to 30 years, even if the policy value falls to zero or below.* The no-lapse guarantee stays in effect as long as the required premiums are paid and you do not take any policy loans. 2 * The actual number of no-lapse years will vary based on the age of the insured.

5 Supporting Your Business and Personal Needs Accumulation Builder Choice IUL provides death benefit protection, plus the potential to build significant cash value that can support your business in a variety of ways. You can use policy cash value to finance vital initiatives throughout your company s life cycle. You can tailor your coverage to your particular needs as your business evolves and your life situation changes. Accumulation Builder Choice IUL can serve business uses such as: Protecting Your Family The loss of income that results from the death of a business owner can spell disaster for the business and the owner s family. Accumulation Builder Choice IUL s death benefit can help your family maintain their standard of living and help them manage the business if you re not there. Ensuring the Continuity of Your Business The death benefit from an Accumulation Builder Choice IUL policy can be used to support the transition of responsibilities, leadership and business assets when a business owner dies. Should an owner, partner or key employee retire or become disabled, the policy cash value can also be used to pay creditors, hire temporary employees, pay for professional services or buy out departing owners. Accumulation Builder Choice IUL can be ideal if you: Own a family business and want to pass it on to your children Need to protect your business from the unforeseen Have one or more business partners who may need to be bought out Want to use the tax advantages of life insurance as part of your benefit package for yourself and your key employees Depend on your income or assets to provide yourself and your dependents with a comfortable lifestyle. 3

6 Providing Cash Flow for Business Expenses and Growth You can access funds from the policy whenever you need them, and use the money for any purpose, such as covering emergency expenses, funding a business expansion, providing collateral for a loan, or making a special purchase.* You can also use your policy cash value as a safety net to tap into if you encounter a business interruption or financial hardship. And in most cases, the funds you take from your policy are income-tax-free. Your policy cash value can also allow you to be more flexible by providing an alternative to relying on credit or investments for your liquidity needs. Helping You and Your Employees Achieve Retirement Goals You can use policy cash value to support your or your employees retirement plans. The policy cash value can provide income-tax-free supplemental retirement income. Accumulation Builder Choice IUL can serve as a source of funding for the conservative growth portion of a retirement plan. It can help fill financial gaps resulting from unexpected expenses and help you secure a comfortable retirement. Supporting Employee Benefit and Key Employee Retention Programs Accumulation Builder Choice IUL can serve as a cost-effective employee benefit and retention tool. You can use policy cash value to reward and retain key employees through tax-advantaged programs that can be structured to provide select employees with significant incentives if they remain with the business until retirement. 4 * Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage and will reduce the death benefit and policy values.

7 Attractive choices to build cash value Accumulation Builder Choice IUL offers you several ways to accumulate and access policy cash value that can help you unlock possibilities for your business. Diverse Ways to Accumulate Cash Value A variety of account options to choose from, and the ability to transfer account values between accounts, allows you to diversify your growth potential and take advantage of distinct earning opportunities. Indexed Accounts offer you strong, market-based growth potential without the risk of directly participating in the stock market. The interest credited to Indexed Accounts is based on the performance of a market index.* Interest is credited annually up to a competitive cap, enabling you to enjoy market upside gains. Even if the market declines, you can count on guaranteed annual interest of at least 1 percent. Plus, your gains are locked in at the end of each 12 month period, protecting your cash value from future market volatility. You can choose to allocate your premiums to one Indexed Account or select multiple Indexed Accounts. Choosing what s right for you depends on your cash flow requirements, risk tolerance and financial goals. Working with your financial professional, you can decide which account options best fit your business and personal needs. * Indices do not have sales charges, and it is not possible to invest directly in an index. 5

8 Multiple Indexed Account Options Deliver Diverse Growth Opportunities for Your Business Accumulation Builder Choice IUL offers you a choice of three Indexed Account options to help you achieve your goals. 1 1 Year S&P 500 Indexed Account Classic Design If you prefer to allocate all or some of your funds to an account based on an index with a long history and domestic focus, the 1 Year S&P 500 Indexed Account may be a good choice for you. With this account, interest is credited based on the performance (excluding dividends) of the S&P 500 *, one of the most well established and recognized market indicators. Index highlight: Widely regarded as the best single gauge of the large cap U.S. equities market S&P 500 Index is an unmanaged index of 500 stocks from a broad range of industries and is considered to be representative of the stock market in general. 2 1 Year S&P Global Broad Market Index (BMI) Indexed Account Maximum Diversity If you seek diversity and want to allocate funds to an account based on an index that encompasses a wide spectrum of markets at varying stages of development, you may want to consider the 1 Year S&P Global BMI Indexed Account. With this account, interest is credited based on the performance (excluding dividends) of the S&P Global BMI*, a market index that measures global stock market performance. Index highlight: Considered a broad measure of the global equities markets worldwide S&P Global BMI is an index of small, mid and large cap stocks from a broad range of developed and emerging markets, including US and Canadian companies and companies in developed and emerging markets worldwide. 6 * S&P, Standard & Poor s, S&P 500, Standard & Poor s 500, S&P Global BMI, S&P Global Broad Market Index, and Standard & Poor s Global Market Index are trademarks of Standard & Poor s Financial Services LLC and have been licensed for use by The Penn Insurance and Annuity Company and its affiliates. The product is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of purchasing this product.

9 Understanding the Make-up of Your Index Options The chart below provides an overview of the make-up of the S&P 500 Index and S&P Global Broad Market Index. The indices serve as broad indicators of market performance and are not investments. S&P 500 Index S&P Global Broad Market Index Equities Large Cap Large Cap, Mid Cap Small Cap Markets United States Developed Worldwide Emerging Worldwide The information above reflects Penn Mutual s understanding of the make-up of these indices at the time of printing and are not guaranteed. Index configurations and criteria are managed and subject to change by Standard and Poor s Financial Services, LLC. It is not possible to invest directly in an index. For additional information about these indices visit: The Value of an Indexed Account with Downside Protection The hypothetical example below shows how an Indexed Account with a competitive cap and a guaranteed floor can provide the potential for strong accumulation with the safety net of a positive return even in a down market. As the chart below illustrates, the Indexed Account yields a positive return even in years in which the index performance is negative. 30% 25% 20% 26.4% 20.9% 15% 10% 5% 0% -5% -10% 13.0% 13.0% 5.2% 5.2% 1.0% 1.0% Year 1 Year 2 Year 3 Year 4 Year 5-3.8% -4.4% 13% Hypothetical Cap* 1% Guaranteed Floor Hypothetical Index Return (excluding dividends) ABC IUL Indexed Account Return * A cap is the maximum crediting percentage for an Indexed Account. The cap percentage for the 1 Year S&P Global BMI and the S&P 500 Indexed Accounts may differ from each other and could be higher or lower than the hypothetical cap used in this example. The chart above reflects a hypothetical 1 year, point-to-point indexed segment that is rolled over into a new segment each year. Indexed segments are based on the upside potential of the Index, up to a competitive cap, with the downside protection of a minimum floor. The participation rate on the Indexed Accounts in this example is 100%. The above chart is for illustration only and does not attempt to predict actual results. 7

10 3 5 & 1 Year Blend S&P 500 Indexed Account* Greatest Potential If you want to give your premium dollars the opportunity to earn greater interest over an extended period, you can allocate funds to the 5 & 1 Year Blend S&P 500 Indexed Account. This 5 year account has built-in annual interest crediting based on the performance (excluding dividends) of the S&P 500, with the opportunity to earn a bonus interest credit at the end of a 5 year period. If the positive change in the value of S&P 500 performance over the 5 year segment period is more than the compounded annual interest already credited over the five years, your account earnings can receive a significant boost. While the annual interest cap percentage is lower for the 5 & 1 Year Blend account option than for the 1 Year account options, and additional interest at the end of the 5 year period is not guaranteed, the long-term growth potential is greater. Your Indexed Account Gains are Locked-in No matter which Indexed Account(s) you chose, your annual gains are locked-in at the end of each segment period. The combination of this interest crediting method, plus a guarantee of at least 1 percent interest, offers several advantages, including: Protecting previous segments from being affected by market downturns Providing you with a financial safety net and significant potential for cash value accumulation even when the market is volatile Giving you the freedom, if you choose, to be more aggressive and flexible in other areas of your financial plan. 8 * Value in the 5 & 1 Year Blend S&P 500 Indexed Account must remain in this account for a full 5-year period.

11 Maximizing Growth Potential with the 5 & 1 Year Blend The hypothetical example below shows the annual gains for each 1 year segment, plus the extra gain resulting from additional interest credited at the end of 5 years. In this scenario, the total interest gain over five years is 47.9%. Of that, 21.8% is credited due to the performance of the 1 year segments and 26.1% is the additional interest received at the end of the 5 year period. Even if the 5 year segment performance was poor, the account would still receive the cumulative compounded interest earned in the 1 year segments, which would be a minimum of 5.1% or, in this example, 21.8%. Although the 5 & 1 Year Blend Indexed Account has more risk than the 1 Year Indexed Accounts, it offers strong downside protection and more upside potential. Interest Credited Each Year Within the 5 Year Period (1 Year Segments) 30% 25% 20% 15% 10% 5% 0% -5% -10% 26.4% 5.2% 5.2% 6.5% 20.9% 6.5% Year 1 1.0% Year 2 Year 3 1.0% Year 4 Year 5-3.8% -4.4% 21.8% Cumulative, Compounded Interest from the 5 Annual Segments 6.5% Hypothetical 1 Year Cap 1% Guaranteed Floor 90% 80% 70% 60% 50% Hypothetical Index Return (excluding dividends) ABC IUL 5 & 1 Year Blend Indexed Account Return Additional Interest Credited at the End of the 5 Year Period (5 Year Segment) 80% Hypothetical Cap 47.9% Your policy earns the higher of either the five 1-year returns or the 5 year return 40% 30% 20% 10% 0% 26.1% 21.8% Year 5 Additional Index Credit at End of 5 Year Segment* 21.8% Hypothetical Floor (Credit Based on 1 Year Segments)** * Additional interest at the end of the 5 year period is not guaranteed. ** Calculated based on the interest credited on the 1 year segments. This floor is determined at end of the 5 year period. Values in the 5 & 1 Year Blend S&P 500 Indexed Account segments must remain in the account for the full 5 year segment period. Indexed segments are credited based on the upside potential of the S&P 500 Index from the segment start date to the end of the 1 year or 5 year segment, up to a competitive cap, with the downside protection of a minimum floor. The above chart is for illustration only and does not attempt to predict actual results. 9

12 Additional Account Options The Fixed Account earns a competitive fixed interest rate which resets every 12 months from the date funds are allocated but is guaranteed never to fall below 1 percent. The fixed account is an option for individuals who prefer predictable growth. The 12 Month Dollar Cost Averaging (DCA) Account places funds in a fixed account that credits a highly competitive interest rate. A portion of the funds is then transferred monthly to the Indexed Account(s). The DCA Account can help you smooth out the impact of market fluctuations by spreading out your premium allocations over 12 months.* As a cost-effective financial solution for your business, permanent life insurance can help protect your assets and your family while offering financial versatility and flexible growth possibilities. The Advantage of Tax Deferral Regardless of which account you choose, your policy cash value will grow on a taxdeferred basis. And because the interest earnings are tax-deferred, your cash value can grow more rapidly. Complete Access to Your Cash Value** You can withdraw or borrow funds from the policy whenever you need them, and use the money for any purpose, such as funding business projects, buying out a partner s share in the company, or covering emergency business expenses. And in most cases, the funds you take from your policy are income-tax-free. A Choice of Loan Options You have a choice of two types of loans based on your needs and risk tolerance. Indexed Loans charge a fixed interest rate (6 percent during policy years one through ten and 5.5 percent after year ten) while the loan amount continues to earn interest at the same rate as the Indexed Account. When the interest being credited to your Indexed Account is greater than the fixed loan rate, you build more cash value than you would with a Traditional Loan. 10 * Available for new premium allocations only. A higher rate of return is not guaranteed. ** Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage and will reduce the death benefit and policy values.

13 If the credited rate for the Indexed Account falls below the fixed interest rate, the loan cost will be the difference between the index performance and the fixed interest rate. But you are always guaranteed to receive at least 1 percent interest. Traditional Loans charge a variable interest rate that resets annually, but also credits interest on the loaned funds. The net cost of the loan will be 1 percent in policy years one through ten and zero starting in policy year 11.* A more conservative loan choice, the Traditional Loan may be appealing if you prefer predictability. * The 0% net cost in years 11+ is subject to change but guaranteed not to be more than 0.25% (0% in NY). Ask your financial professional what s possible. Discover the possibilities 11

14 Customize coverage to meet your business needs Accumulation Builder Choice IUL delivers the life insurance protection and diversified growth opportunities to help fulfill your business vision. It also supports business needs with optional riders, including some designed specifically to meet your particular concerns as a business owner. * Business Versatility Supplemental Exchange Rider permits replacement of one covered employee with another employee without having to purchase a new or additional policy. Surrender Benefit Enhancement Rider waives early surrender (cancellation) charges and guarantees that during the first 3 years, the policy value upon surrender of business-owned/business-sponsored policies will be equal to the premium paid. Waiver of Surrender Charges Rider waives early year policy surrender (cancellation) charges for business-owned/business-sponsored policies. Return of Premium Term Insurance Rider provides an added death benefit to premiums paid, up to the most recent anniversary. Individual Protection Supplemental Term Insurance Rider provides an additional death benefit while the rider is in force and improves long-term cash values. Accidental Death Benefit Rider guarantees an additional death benefit if death results from an accident. Guaranteed Increase Option Rider allows coverage increases at certain ages without evidence of insurability. Added Security Chronic Illness Accelerated Benefit Rider** allows access to a portion of the death benefit if a chronic illness is diagnosed. Accelerated Death Benefit Rider allows access to a portion of the death benefit if a terminal illness is diagnosed. Overloan Protection Benefit Rider keeps the policy in force despite outstanding loans. Disability Completion Benefit Rider waives policy charges and credits a pre-determined premium to policy cash values if disability occurs. Disability Waiver of Monthly Deductions Rider protects the policy if total disability occurs. Family Protection Additional Insured Term Insurance Rider extends life insurance to a family member without obtaining an additional policy. Children s Term Insurance Rider covers all eligible children and guarantees each child the opportunity to convert their child coverage to a permanent policy when they reach age 23. * Optional riders and benefits may be subject to eligibility and underwriting requirements, additional premium requirements and/or minimum or maximum coverage amounts. Availability and rider provisions may vary by state. For additional information, ask your financial professional. ** In TX: Long-Term Care Illness Accelerated Benefit. 12

15 Why Penn Mutual? At Penn Mutual, we are singularly committed to helping individuals, families and small business owners unlock the possibilities of life through our life insurance and annuity solutions. Unlock the possibilities We have never failed to meet an obligation to a policyholder. With our financial strength and stability standing behind our guarantees, we are committed to the brighter futures and best interests of all of our policyholders.

16 Our Noble Purpose Since 1847, Penn Mutual has been driven by our noble purpose to create a world of possibilities, one individual, one family and one small business at a time. As an original pioneer of mutual life insurance in America, we believe that life insurance is the most protective, responsible and rewarding action a person can take to build a solid foundation today and create a brighter future for generations to come. All guarantees are based on the claims paying ability of the issuer. Accumulation Builder Choice SM Indexed Universal Life is an indexed universal life insurance policy offered by The Penn Mutual Life Insurance Company. Product or features may not be available in all states. Policy form numbers ICC12-IFL and IFL-12. (Policy form numbers may vary by state.) Any reference to the taxation of life insurance products in this material is based on Penn Mutual s understanding of current tax laws. You should consult a qualified tax advisor regarding your personal situation. Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage and will reduce the death benefit and policy values. For more information on coverage, please write or call your financial professional The Penn Mutual Life Insurance Company, Philadelphia, PA 19172, PM /12 A2JC E2