Legacy Advantage Survivorship Universal Life SM. Producer Guide. For Producer Use Only. Not for Public Distribution.

Transcription

1 Legacy Advantage Survivorship Universal Life SM Producer Guide

2 MetLife understands your business. We respect your entrepreneurial spirit as you help guide clients toward financial freedom. We want to be your partner of choice as you grow your business the only way that matters, your way. Table of Contents POLICY OVERVIEW General Description...1 Availability...1 Risk Classes and Issue Ages...1 Face Amounts...2 Death Benefit Options...2 Death Benefit Proceeds...2 Premium Modes...2 Premium Types Policy Charges...3 Interest Rates...3 Cash Withdrawals Policy Loans...4 Policy Surrender Age 120 Processing...5 Lapse Processing...5 Policy Change RIDERS Estate Preservation Term Rider...6 Waiver of Specified Premium Rider Policy Split Option...8

3 Policy Overview GENERAL DESCRIPTION Legacy Advantage Survivorship Universal Life (SUL) is a joint life insurance policy that is designed to provide longterm death benefit protection with the potential for cash value to accumulate on a tax-deferred basis. Product Features: Cost-effective way to cover two lives in one policy, paying at second death. Potential guaranteed zero net cost loans in years 16 and beyond. Allows exchanges with carry-over loans. Legacy Advantage SUL is issued by MetLife Insurance Company USA in all jurisdictions except New York where it is issued by Metropolitan Life Insurance Company (collectively referred to as the Company ). AVAILABILITY Legacy Advantage SUL is available only on a fully underwritten basis. Unisex rates are available for all issues in Montana and for any non-qualified plans that require such use of rates, e.g., Corporate Split Dollar or Executive Bonus plans. Please check the current state availability list for the latest approval status of the policy riders. Term Conversions Term conversion programs may be offered from time to time. Term conversions to LASUL are allowed within the limits set by the Company regarding age and amount of insurance. Generally, depending on the term conversion program being offered, the policy owner may convert term insurance equal to one-half the face amount of the Legacy Advantage SUL for each insured without underwriting. The total face amount of Legacy Advantage SUL that can be issued through a conversion without underwriting is $7,500,000. Any amount above $7,500,000 will be subject to underwriting. Additional benefits/riders may be included in the new policy with Company approval and may be subject to underwriting. Legacy Advantage SUL is not available for group conversions. RISK CLASSES AND ISSUE AGES Issue ages for both insureds are based on each insured s age nearest birthday as of the policy date. 2 Backdating the policy date to conserve age is allowed according to normal state guidelines but no more than 180 days (90 days in Ohio) from the application signature date. The following risk classes and issue ages are available: Risk Class Issue Ages Elite Nonsmoker Preferred Nonsmoker and Smoker Standard Nonsmoker and Smoker Substandard Nonsmoker and Substandard Smoker Permanent and temporary flat extras, or combinations of the two, are allowed on all ages and risk classes except Elite. If both insureds ages are equal to or less than age 80 at issue, the combined table rating cannot exceed Table P (extra 400% or 16 tables) and the combined flat extra cannot exceed $40 per thousand. If any insured is over age 80 at issue, the combined total rating cannot exceed Table H (extra 200% or eight tables) and the combined flat extra cannot exceed $20 per thousand ($10 per person). If one life is declined, the other life cannot exceed Table D (extra 100% or four tables) or a $10 per thousand flat extra. 1 1 This feature is permitted administratively, not through a policy provision. 2 Policy date is the date shown on the cover of the policy, which may differ from the date when the policy was actually issued. The date when the policy was actually issued is called the issue date. Policy date is used to measure issue age, policy years, policy months and anniversaries. Issue date is used to measure suicide exclusion and incontestability periods.

4 2 FACE AMOUNTS Minimum: $250,000 for both at issue and after issue changes. Maximum: subject to normal underwriting guidelines. Face Amount Banding Band DEATH BENEFIT OPTIONS Two death benefit options are available: Option A (Level), which provides for the level face amount as shown on the Policy Specification page. Option B (Increasing), which provides for a death benefit equal to the level face amount plus the current policy cash value. DEATH BENEFIT PROCEEDS At the death of the second insured, the policy proceeds payable are: The policy face amount; plus Any increase amount associated with Death Benefit Option B; plus The death benefit provided by any riders; plus Any increase in death benefit due to Internal Revenue Code (IRC) 7702 corridor requirements; plus Premium payments received after death; plus The cost of insurance from the date of death to the end of policy month; minus Any amount due and unpaid as of the date of death; 3 minus Any loan and accrued loan interest as of the date of death. PREMIUM MODES The following modal premiums are available: Annual Semiannual Quarterly Face Amount of Insurance 1 $250,000-$999,999 2 $1,000,000 and above Monthly Bank Draft (MIDA$) PREMIUM TYPES The policy allows for flexible premiums. However, any premium change may affect the five-year no-lapse guarantee and the lengths of the current projected death benefit and cash value. Therefore, it is strongly suggested that an in-force illustration be reviewed to understand the impact of premium changes before any are made. Minimum Premium to Issue: Five-Year, No-Lapse Monthly Premium The five-year, no-lapse monthly premium is the minimum premium amount needed to issue the policy. If this amount continues to be paid this amount in uninterrupted monthly premiums, the policy is guaranteed to remain in force until the end of the fifth policy year. If the policy is backdated, the premium paid must be sufficient to bring the policy up to the current date or the policy will lapse. Planned Modal Premium This is the amount of money the policy owner states will be paid on a stated modal basis for a stated period of time (planned years to pay). The planned modal premium is shown on the policy specifications page. Planned First-Year Lump Sum This is a scheduled lump sum payment. Receipt of this lump sum is planned to occur within 12 months of the policy date. It includes any 1035 exchange money expected within the first 12 months from the policy date. Target Premium Target premium is used for the purpose of commission calculation and does not assure that the policy will remain in force. The rates are per thousand of face amount, banded and based on issue age, sex (for sex-distinct policies) and risk class. Target premiums for rated cases are capped at Table D for each insured. During the first policy year only, a face amount increase or decrease will cause a recalculation of the target premium. Targets are not increased for flat extras (temporary or permanent). In addition to the base policy, the Waiver of Specified Premium (WSP) has its own commissionable target premium. The other riders do not have commissionable target premiums. 3 Any amount due and unpaid as of the date of death is equal to the monthly deductions due.

5 Seven-Pay Premiums IRC 7702A guidelines specify cumulative yearly premium maximums to avoid Modified Endowment Contract (MEC) status. Violation of those maximums results in negative tax implications to the policy owner for withdrawals and loans made from the cash value and policy assignments. A 10% penalty may apply to pre-59½ taxable distributions and loans, subject to certain exceptions. The policy owner has 60 days from the end of the policy year to reverse the premiums made in excess of the seven-pay guideline in that policy year. The Company will immediately notify the policy owner whenever a premium is paid that exceeds these maximums. Note: Adding or removing riders, death benefit reductions or other policy changes can have an adverse effect on this test for MEC status. Maximum Premiums (Guideline Premiums) These premium limits are required to ensure that the policy qualifies as life insurance. On any date, the total premium paid cannot exceed the greater of the guideline single premium or the sum of the guideline level premiums. Contractually, the premiums are limited so that they do not exceed the guidelines under IRC Section Note: adding or removing certain riders and other policy changes can affect or cause the recalculation of the guideline premiums. POLICY CHARGES Percentage of Premium Charge The percentage of premium charge is intended to cover the Company s sales commission expense and state premium taxes. On a current 4 basis the premium charge equals 7.75% in years 1 through 20 and 5% thereafter. On a guaranteed basis, it equals 35% of premium up to target and 58% of premium in excess of target in all years. These charges are deducted from all premium payments and the remaining premium goes into the policy s cash value. Monthly Policy Charge The policy fee is $10 per month, or $120 annually. It is guaranteed not to increase for the life of the policy. This fee is deducted from the cash value each month. Coverage Expense Charge A coverage expense charge is deducted from the cash value each month. The rates are an amount per thousand of face and vary by duration, issue age, sex, band and risk class. Both the current and guaranteed charges are the same. Cost of Insurance Charge A Cost of Insurance (COI) charge is deducted from the cash value each month. Current 4 insurance rates are used to calculate the current COI charge according to the amount of pure insurance (net amount at risk) in the policy. Unisex rates use the 80% male/20% female blended COI rates for each life. The current rates vary by band, sex, issue age, duration, underwriting class and smoking status of each insured. The guaranteed COI rates vary by sex, attained age and smoking status. INTEREST RATES Guaranteed Interest-Crediting Rate The guaranteed minimum interest-crediting rate on the policy cash value is 2% for the life of the policy. Current Interest-Crediting Rate This rate is based upon a portfolio crediting method determined by investment returns that are reviewed on a quarterly basis. Current interest rates can only be changed quarterly. A persistency bonus is credited to the policy after the policy has been in force for 19 years and the current crediting interest rate is higher than the guaranteed interest rate of 2%. The persistency credit will be at least 0.50%. CASH WITHDRAWALS Cash withdrawals are available from the net Cash Surrender Value (CSV), which equals gross cash value less any applicable surrender charges, various monthly coverage expense charge and any existing policy indebtedness. Any withdrawals may have a negative impact on the five-year no-lapse guarantee. Withdrawals reduce the face amount dollar-for-dollar for policies with Death Benefit Option A. If Death Benefit Option A is chosen, the withdrawal may affect the 5-year no-lapse guarantee premium. For policies with Death Benefit Option B, the Death Benefit is reduced by the amount of the withdrawal, but the face amount does not decrease. Cash withdrawals will decrease the cash value. The minimum partial withdrawal amount is $100. The policy owner may withdraw the greater of: 25% of the policy s net CSV as of the beginning of the year; or Last year s maximum allowable withdrawal amount. 3 4 Current charges can be changed.

6 4 Currently, up to 12 withdrawals per policy year are allowed without any charge. The Company reserves the right to charge an administrative fee for any withdrawals and to change the maximum number of withdrawals allowed during a policy year. The maximum amount the Company will ever charge for a partial withdrawal is $25 per withdrawal event. Any withdrawal that causes a reduction in the policy face amount may have an applicable surrender charge assessed to that portion of the reduction. For any withdrawals during the 12 months following a requested face increase that result in a face decrease, the proportionate unpaid monthly coverage expense charges for the remainder of the 12-month period will be deducted from the policy cash value. POLICY LOANS Loans can be taken out at any time after issue provided there is an available loan value. Loans will have a negative impact on the five-year no-lapse guarantee. Policy loans will decrease the death benefit and the cash value. Basic Policy Loan Rules The minimum loan amount is $100. The maximum amount available for a loan is: 100% of the current cash value, as of the loan date; minus Any applicable surrender charges that would apply to a full/partial surrender; minus The last monthly deduction times the number of months to the next policy anniversary; minus Loan interest due to the next anniversary; minus Any outstanding loan balance, as of the loan date; plus Credited interest on the cash value at the guaranteed interest rate to the next policy anniversary. When a loan is taken, an amount equal to the loan is transferred from the policy cash value to a loan account. Any policy s borrowed cash value is credited with a fixed guaranteed loan account crediting rate of 2%. The total amount of the loan, including accrued interest and less any surrender charges, must not exceed the policy s cash value in order for the policy to remain in force. Notification will be sent to the policy owner and any assignee indicating the amount of loan repayment needed to keep the policy in force. There is a 62-day grace period beginning on the date the notice is sent. If the amount due remains unpaid at the end of that grace period, the policy will lapse without value. 5 This feature is permitted administratively, not through a policy provision. Loan Interest Rate Loan interest (payable in arrears) is compounded daily and is payable on each policy anniversary. Any loan interest that is not paid when due is added to the existing loan and begins to accrue loan interest as well exchanges 5 from policies with loan balances to Legacy Advantage SUL are allowed. Maximum loan carry-over on 1035 exchanges is 50% of the total rollover amount. A non-guaranteed preferred loan rate of 3% applies in the first 10 years for loans rolled over with a 1035 exchange (no preferred loan rate in NY). Any new interest associated with the carry-over loan will accrue at the preferred rate. Years Loan Interest Rate Loan Repayment Payment received by the Company must be designated for loan repayment or else it will be credited as policy premium. Payments designated as loan repayments will first go toward repaying non-1035 exchange loans and then toward loans with the preferred 1035 exchange loan rate. POLICY SURRENDER Loan Crediting Rate % 2% 2% 1-10 (Preferred) 3% 2% 1% % 2% 1% 16+ 2% 2% 0% Net Loan Cost Legacy Advantage SUL may be surrendered for its cash surrender value at any time. If the surrender occurs within 31 days after the policy anniversary date, the Cash Surrender Value will be at least equal to the Cash Surrender Value on the anniversary, less any loans or partial withdrawals taken during that period. Surrender Charges The surrender charge is a per-thousand of base policy face amount charge and applies for the first 19 years after the policy date. The charge is level for the first policy year, then decreases each month over the next 18 years until reaching zero at the end of the 19-year period. No additional surrender charges apply to the death benefit in excess of the face amount associated with Death Benefit Option B or any riders. Surrender charges differ based on issue age, sex, risk class and smoker status of each of the two insured lives.

7 The surrender charge applies to full surrenders, partial withdrawals, a change in Death Benefit Option that reduces the policy face amount and a requested face amount decrease. Each underwritten face increase will have its own surrender charge period. If a full surrender occurs within the first 12 months of the policy, or within the first 12 months following an increase in coverage, the remaining balance of the first year charges will be taken out of the policy cash value. AGE 120 PROCESSING Policy Charges No policy charges or surrender charges are taken out of the policy cash value on and after the policy anniversary at attained age 120 of the younger insured. Payment At this point, payment is only accepted if required under a grace period provision. Loans New and increased loans, as well as loan repayments and payment of loan interest, are allowed. Policy loan interest will continue to accrue and be due each anniversary beyond attained age 120 of the younger insured. Extension of Maturity Provision The Extension of Maturity Provision is available for issue ages for both insureds. This provision will provide (in accordance with any applicable state variations) the continuation of a policy s face amount beyond maturity, the policy anniversary at attained age 120 of the younger insured, provided the policy remains in force to attained age 120 of the younger insured. The Extension of Maturity Provision is included without additional underwriting on all policies. There is no charge for this provision. The death benefit at attained age 120 of the younger insured for Death Benefit Options A and B will be the greater of: The face amount of the base policy, plus the additional amount of coverage provided by certain rider in force at maturity; and 100% of the cash value. For issue ages (of either insured) the death benefit will be 100% of the cash value. This means that not only must the policy remain in force to attained age 120 of the younger insured, but that there also must be a positive cash value. LAPSE PROCESSING Each month a review will be conducted to see if there is enough net cash surrender value to pay the monthly deductions. If the net cash surrender value is not sufficient and the five-year no-lapse monthly guarantee is not in effect, then the policy will enter the 62-day grace period. At this point the customer must pay the least of: The amount needed to restore the five-year no-lapse (if applicable); and The amount needed to restore a positive cash surrender value. Notification of grace period and lapse is mailed to the policy owner and any assignee(s). POLICY CHANGE Face Amount Changes The policy owner can increase or decrease the policy face amount. Face amount changes will have an impact on the duration of the five-year no-lapse guarantee. Increases in Face Amount A policy owner may increase the face amount on any monthly anniversary. Each face increase has its own target premium and its own surrender charge and is based on attained age and current risk class of each insured. Any increase in face amount is subject to the following conditions: 1. Proof of insurability on increased coverage. 2. The increase will be effective on the policy s monthly anniversary date that follows our approval of the increase. 3. The increase must be at least $50, The older insured cannot be older than attained age 85 on the date of the request. Decreases in Face Amount A policy owner may decrease the policy face amount on any monthly policy anniversary. For any decrease during the first 12 months after the policy date, or the first year following a requested face increase, the proportionate unpaid monthly coverage expense charges for the remainder of the 12-month period will be deducted from the policy cash value. Any decrease in face amount is subject to the following conditions: 1. Minimum allowed face amount decrease is $5, The base policy face amount cannot be reduced below the minimum of $250,000. 5

8 6 Unless otherwise requested in writing, a requested face decrease would be processed in the following order: 1. Previous underwritten increases, starting with the most recent increase. 2. The face amount of the original base policy, then any face amount acquired from the Death Benefit Option change. 3. Surrender charges assessed, if applicable. Death Benefit Option Changes Death Benefit Option (DBO) changes are allowed after the first policy anniversary until maturity of the younger insured. The effective date is the monthly anniversary on or following the date the request is received. The net amount at risk must remain the same after the DBO change is exercised, which will result in a face amount adjustment. The Company reserves the right to require underwriting for death benefit option changes. As a result of a death benefit change, an insured(s) may be subject to underwriting. Change from Option A to Option B If the policy is changed from DBO A to DBO B, then the policy face amount is decreased so that the policy death benefit remains the same as before the change. This decrease will incur a surrender charge, if applicable, and cannot reduce the policy face amount below the minimum of $250,000. Change from Option B to Option A If the policy is changed from DBO B to DBO A, then the policy face amount is increased by the current policy cash value amount to equal the previous death benefit on the effective date of the change. RIDERS ESTATE PRESERVATION TERM RIDER (EPTR) General Description This four-year non-convertible term insurance rider provides an additional level death benefit at the second death. This can be used to pay extra estate taxes if the insureds are concerned about the three-year look back rule. Availability Available at issue only and both insureds must be insurable. It is subject to a $250,000 minimum face amount and capped at 125% of the base face amount. Rider Charges Monthly rates per thousand will be the same as the base policy plus an additional expense charge per thousand will be added. Termination This Rider will terminate upon the earliest of: 1. Its Expiration Date; 2. The termination of the Policy; 3. Suicide of either Insured, in accordance with the Suicide Exclusion provision of this Rider; 4. A decrease in the Policy s Face Amount (See the Change in Face Amount, Change in Death Benefit Option, and Partial Withdrawal provisions of the Policy.) and; 5. The monthly anniversary on or following receipt by us at our Designated Office of your written request to terminate this Rider. We may require the Policy for endorsement. WAIVER OF SPECIFIED PREMIUM RIDER (WSP) General Description This rider allows the owner to select a specified monthly benefit that is credited as monthly policy premium if the insured on which this rider is issued becomes disabled as defined under this rider before the policy anniversary at attained age 65. Both insureds are eligible for the rider, each choosing their own specified amounts. WSP does not have to equal the planned premium and is not guaranteed to keep the policy in force, so be sure to carefully recommend the appropriate amount of premium when illustrating WSP.

9 Availability This rider is restricted to issue ages The policy owner can add this rider at issue or on any monthly anniversary after issue, subject to underwriting approval. The maximum face amount for the rider is $3,000,000 (including all coverage in force with the Company and other companies). If the base coverage has a Table rating (A through F), then the maximum equals $500,000. Rider Charges The charge for this rider varies, based on attained age. The rates are expressed as an amount per $100 of specified amount. Risk Classes and Underwriting WSP is not available if the base coverage has a Table rating greater than F (150%) or a flat extra in excess of $10 per thousand. There is no distinction between males and females in underwriting rules and premiums for this benefit. The WSP rider is rated separately from the base policy. The available rating for WSP can be either 100%, 150%, 200%, 250% or 300% of the standard WSP rating. WSP Amount Limits The minimum WSP benefit is the policy minimum monthly premium to issue but never less than $10. The maximum monthly benefit equals 1/12 of the base policy guideline annual premium without any riders. 6 Changes in WSP Benefits WSP monthly benefit can be increased only when requesting an increase in the base policy face amount and is subject to underwriting. A decrease can be requested at any time. No increase in WSP amount will be permitted should the rating of the increased base face amount portion be rated Table Rating G or higher. If the specified face amount of the base policy is decreased after issue, a decrease in the WSP amount may be required to comply with tax code requirements. Rider Benefits Disability Beginning Before Age 60 After a continuous period of disability of six months, the monthly WSP benefit amounts will be credited to the policy as premiums until either the insured recovers or dies. However, if an insured s total disability that began prior to the policy anniversary at attained age 60 continues uninterrupted to age 65, all future monthly premiums will be credited to the policy as they become due. Disability Beginning Between Ages 60 and 65 After a continuous period of disability of six months, the monthly premiums will continue to be waived until the earlier of: The policy anniversary at the insured attained age 65; and The insured s recovery from disability. All monthly policy charges continue to be deducted during disability, including the charges for WSP. Definition of Total Disability Total Disability means the inability of the Covered Insured to perform the substantial and material duties of his or her regular occupation. Such disability must be the result of an accidental bodily injury or a sickness. The injury or sickness must first manifest itself after the Issue Date of this Rider. However, after this period of disability has continued for 60 months, the Covered Insured will be considered to be totally disabled only if he or she is unable to perform the substantial and material duties of any occupation for which he or she is reasonably fitted by education, training or experience. Performing substantial and material duties includes attending school or college as a full time student, if that was the main occupation of the Covered Insured when the disability started. If, after this Rider becomes effective, the Covered Insured suffers the total and irrecoverable loss of: - The sight in both eyes; - The use of both hands or both feet; or - The use of one hand and one foot, this will be considered total disability as defined in this Rider. Upon such a loss the Covered Insured will still be considered disabled even though working at an occupation. 7 6 This amount cannot be exceeded. If the face amount of the policy is decreased, the WSP amount may also need to be decreased to comply. Rider coverage could be reduced to adhere to the above guidelines.

10 Recurrent Total Disability If a subsequent period of total disability commences after a period of total disability, we will consider this subsequent period a continuation of the previous period unless: It is due to an entirely different cause; or The insured has performed all of the material and substantial duties of a gainful occupation for a continuous period of six months or more between such periods of total disability. If we consider the second period of disability as a continuation of the first, the six-month waiting period will not apply. Termination The rider will terminate upon the earliest of: - Attained age 65 of the insured; - The termination of the policy; - The date of death of the insured; and - The monthly anniversary on or following receipt by us at our designated office of your written request to terminate the rider. We may require the policy for endorsement. POLICY SPLIT OPTION (PSO) General Description This option allows the policy owner to split the policy into two individual life policies, in the event of divorce or there is a change in the federal tax law as described under Option Exercise. New individual policies will be issued on both insured s to the policy owner(s) without any optional riders from the original policy. The new policies will be issued for each insured to the policy owner(s) at the original underwriting class, but COI charges will be based on each insured s attained age. The new policies will be at their original underwriting class but COI charges will be based on each insured s attained age. All policy values and debts will be split in half. Availability This option, available only at issue, is automatically included on all policies when the two insureds are married and both issue ages are 18-75, inclusive, unless one life is uninsurable. State restrictions may apply. Rider Charges There is no charge for this rider. Option Exercise This option may be exercised when there is a: Change to the Federal Estate Tax Law which results in either: the removal of the unlimited marital deduction; or a reduction in the maximum Federal Estate Tax bracket to a rate of 25% or less. (The Insureds must have been married to each other when the Policy was issued.); or Divorce between the two Insureds insured by the Policy. (The Insureds must have been married to each other when the Policy was issued.) New Policies After the Split Each policy will be a new policy issued by the Company or an affiliate designated by the Company and on a plan determined by the issuing company. Issue Date and Age At the time of the split, the new policies will be issued with a current date of issue. The issue age for each insured will be the current attained age of each. Termination The rider will terminate on the earliest of: - The lapse of the Policy; - The surrender of the Policy; - The death of the Insured that dies first under the Policy; - The election to exchange the Policy under this Rider; and - When the older Insured attains age 80. 8

11 Notes 9

12 The policy s five-year no-lapse guarantee remains in force provided required premiums are paid and certain other requirements described in the policy are met. If the guarantee terminates, the policy will stay in force for as long as its cash surrender value is sufficient to pay the monthly deductions when due. If the cash surrender value is insufficient to pay the monthly deductions and the required premium is not received by the end of the grace period provided in the policy, the policy will lapse and terminate without any cash surrender value. Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. Like most insurance policies, MetLife s policies contain charges, limitations, exclusions, termination provisions and terms for keeping them in force. Contact your financial representative for costs and complete details. Legacy Advantage Survivorship Universal Life is issued by MetLife Insurance Company USA on Policy Form 5E and in New York only by Metropolitan Life Insurance Company on Policy Form 1E All product guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. Life Insurance Products: Not A Deposit Not FDIC-Insured Not Insured By Any Federal Government Agency Not Guaranteed By Any Bank Or Credit Union May Go Down In Value MetLife Insurance Company USA North Community House Road Charlotte, NC Metropolitan Life Insurance Company 200 Park Avenue New York, NY metlife.com CS BDUL METLIFE, INC. L [1217] PEANUTS 2015 Peanuts Worldwide