Income Planning with Lincoln Lifetime Income SM Edge. Headlines. Information compiled by Product and Distribution Support

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1 Vol. 7, Issue 6, June 20, 2013 Fixed Annuity Income Planning with Lincoln Lifetime Income SM Edge Lincoln Lifetime Income SM Edge is a Guaranteed Lifetime Withdrawal Benefit (GLWB) Rider available with Lincoln fixed indexed annuities for an annual charge. The Rider can help take away the uncertainty surrounding income planning. A client will know in advance the minimum amount of income that may be available at any point in the future. Lincoln offers two powerful tools to help demonstrate the benefits of Lincoln Lifetime Income SM Edge and planning ahead for future income needs. Both tools are available from producer websites and are compliance-approved for use with clients: Income Calculator ForeSight Annuity Illustration Platform The Income Calculator is a standalone illustration showing only the values for Lincoln Lifetime Income SM Edge. The calculator solves for the amount of premium required for a specific income or for the amount of income a specific premium will generate. It is easy to understand: Point to any age, follow that row across, and see the amount of income available for your client s life Headlines Income Planning with Lincoln Lifetime Income SM Edge Income Calculator Annuity Illustration Lincoln Lifetime Income SM Edge Reference Materials Updated Competitive Intelligence Corner: Consider all product and rider features First Quarter Lincoln OptiChoice SM Rate Histories Now Available Minnesota Updates Suitability Requirements State Insurance Licensing and Training Requirements: Florida **New** Minnesota **Updated** Access to Training This illustration is based on a $100,000 premium for a 50-year old client, assuming no prior or excess withdrawals. Single Covered Life. At age 60, the client could elect an Income Withdrawal of the Lifetime Benefit Amount shown. However, if the client waits until age 70 before electing the first Income Withdrawal, the lifetime income amount increases by almost 20%. Talk to clients about when they anticipate needing income, and the amount of income needed to supplement other sources of retirement income. Use the Income Calculator to easily demonstrate the benefits of planning ahead with Lincoln Lifetime Income SM Edge. Information compiled by Product and Distribution Support The Lincoln Leader contains product and business implementation information for Lincoln fixed annuities. Products and features subject to state availability. Certain products are only available in select distribution channels. Check your selling agreement for availability. For Agent/Broker Use Only Not To Be Used With The General Public. Page 1 of 6

2 Income Planning with Lincoln Lifetime Income SM Edge, Continued The ForeSight Annuity Illustration Platform illustrates the features of the fixed indexed annuity integrated with the values for Lincoln Lifetime Income SM Edge. This illustration will provide the client with an overall picture of the annuity and Rider purchase. In addition to demonstrating how the indexed accounts might perform under various scenarios, the Annuity Illustration provides a projection of contract values based on historical index values. The illustration also includes the Rider values when Lincoln Lifetime Income SM Edge is elected. Illustrating the Rider s Lifetime Benefit Amount being withdrawn from the contract helps explain the benefit of the Guaranteed Lifetime Withdrawal Benefit (GLWB) Rider. Clients can see the impact of the withdrawal on the Accumulation Value yet their Rider benefit remains intact. As long as the client continues to withdraw no more than the Lifetime Benefit Amount, the income will continue for life even though the Accumulation Value will eventually go to zero. Unlike annuitization, the client can start and stop withdrawals and if needs change, access any remaining Accumulation Value. The Nursing Home Benefit amount is also shown in the full illustration, in states where approved. The Nursing Home Benefit is not available in California, Connecticut, Hawaii and Washington. These two powerful tools can help clients understand the benefits and features of Lincoln Lifetime Income SM Edge. Illustrations can be generated from producer websites, or contact the Annuity Sales Desk for a custom illustration. Lincoln Lifetime Income SM Edge Materials Updated The reference guide and At-a-Glance for Lincoln Lifetime Income SM Edge has been updated to reflect approval in the state of Washington and the additional systematic withdrawal modal options for required minimum distributions. This material is compliance-approved for agent/broker use only and is posted in the reference material section of the applicable fixed indexed annuity product sections. For Agent/Broker Use Only Not To Be Used With The General Public. Page 2 of 6

3 Competitive Intelligence Corner Competitive Intelligence Update: Compare all product and rider features when looking at Guaranteed Lifetime Withdrawal Benefit (GLWB) Riders. Many companies offer GLWB Riders with their annuity products. When considering which product and rider best match your client s objectives, be sure to look at all costs, features and benefits of each product. Product and Rider Specifications: Some things to compare when choosing a product and rider: Rider features, such as: - Fees How much is the annual charge? Can the fee invade principal? How is the fee determined? - Income Base/Step-Up What triggers a step-up to Accumulation Value? How often can a step-up occur? Are step-ups available only during the income phase or for a certain timeframe? - Income Base/Roll-Up What is the roll-up percentage? Is the roll-up available only for a certain timeframe? - Income Factors How are the Income Factors determined? Are there any ways or incentives to increase the Income Factor? - Amount of Income What is the amount of income available at the anticipated distribution age? - Required Minimum Distributions (RMDs) Is the Rider RMD-friendly? - Termination Can the Rider be terminated by the client? Base contract features, such as: - Minimum guaranteed rates and caps - Nursing home and terminal illness waivers - Choice of index crediting methods - Availability of a fixed account The GLWB Comparison Spreadsheet and the individual product comparisons can be found in the Fixed Annuity Competitive Intelligence section of producer websites. Considerations Look at the whole picture: Consider company strength, experience in a particular market, product and rider features, crediting rate histories and product innovation when choosing a retirement income solution for clients. Summary: Lincoln Financial Group s insurance companies (Lincoln) have long been recognized for having a thoughtful and disciplined approach to bringing innovative and reliable products to the marketplace. Lincoln is committed to the annuity business and believes there is significant opportunity for market growth. Lincoln continues to offer compelling solutions to help advisors and clients achieve their financial goals. The Lincoln Marketing Research and Analysis Unit provides general information on a competitor s annuity products to help producers understand product differences, and should be viewed as informational only. When viewing any comparison, keep in mind that products and features are subject to state and firm approvals. For Agent/Broker Use Only Not To Be Used With The General Public. Page 3 of 6

4 First Quarter Lincoln OptiChoice SM 2013 Credited Rate Histories Now Available Lincoln OptiChoice SM credited rate histories have been updated through the first quarter 2013, and are now available on producer web sites. These charts are compliance-approved for agent/broker use only. Minnesota s Definition of "Suitability Information" Updated Minnesota House Bill, effective June 1, 2013, (approved May 14, 2013) applies to both fixed and variable annuity sales. The bulletin updated Minnesota s definition of "suitability information" and now requires the following information be available during the suitability review process: Anticipated material changes in the client's annual income; Anticipated material changes in financial situation and needs; Anticipated changes in existing assets; Anticipated material changes in liquidity needs; Anticipated material changes in liquid net worth; and Whether or not the annuity customer has a reverse mortgage. In addition, the Minnesota bill includes a provision specific to customers age 65 or older, where the proposed sale is a replacement and the customer will bear a surrender charge on the annuity being replaced. The provision indicates that, in cases involving such clients, the purchase needs to confer a substantial financial benefit to the consumer over the life of the contract. Minnesota has extended the look back period for replacements to 60 months. The bill also states that an actual person must review all applications for Minnesota prospects age 65 and over, instead of using other methods, such as an electronic front-end system. These updated suitability requirements are being incorporated into the Fixed Annuity Suitability Forms (Forms AN07091 and AN07091NJ); the updated forms will be available in mid-august State Insurance Licensing and Training Requirements Updates General Annuity / Product-Specific Training Requirements Florida (New) The NAIC Suitability in Annuity Transactions Model Regulation mandates general annuity and product-specific training requirements. States may have modified these requirements or have additional state-specific training requirements. Florida has adopted a state-specific version of the Annuity Suitability regulation. Below are the producer training requirements: Effective Date: October 1, 2013 General Annuity Deadline if licensed prior to effective date: No requirement General Annuity Deadline if NOT licensed prior to effective date: No requirement Reciprocity: No requirement Product Specific (Carrier Training) Deadline: October 1, 2013 For Agent/Broker Use Only Not To Be Used With The General Public. Page 4 of 6

5 State Insurance Licensing and Training Requirements, Continued Updated: Minnesota has adopted a state-specific version of the Annuity Suitability regulation. Below are the producer training requirements: Effective Date: June 1, 2013 General Annuity Deadline if licensed prior to effective date: July 1, 2014 General Annuity Deadline if NOT licensed prior to effective date: July 1, 2014 Reciprocity: Yes Product Specific (Carrier Training) Deadline: June 1, 2013 (60-day transition period applies) Lincoln is providing a 60-day transition period from the effective date June 1, 2013 until August 1, 2013 to allow agents sufficient time to become compliant with the product-specific training requirement in Minnesota. The Annuity and LTC State Education and Training Requirements charts and the NAIC Annuity Training Q&A are available on producer websites on the Life and Annuity Compliance page, and represent Lincoln s interpretation of the current state law. Send questions regarding the NAIC training requirements to AskAnnuityNAIC@LFG.com Access to Training How to complete the training LIMRA and RegEd are the primary vendors for Lincoln; click on the following to visit their websites or copy and paste the addresses into your internet browser: LIMRA: RegEd: The step-by-step instructions for registering and accessing the training can be found on the Life and Annuity Compliance page of producer websites. Some firms require their producers to take the NAIC training with other vendors. Producers should check with their back office for clarification if they are unsure. LIMRA s NAIC Portal Not Available via Internet Explorer 10 At this time, LIMRA s NAIC portal is not configured for Internet Explorer (IE) 10 and cannot be accessed with that browser version. LIMRA is currently developing a method to enable this functionality. In the interim, users can access the site in IE 6/7/8/9 or another internet browser, such as Firefox or Chrome. If that isn t an option, producers can complete the NAIC training through RegEd instead. RegEd is also free. RegEd Users: Access to General Annuity Training in Kansas, Michigan, Idaho and Mississippi For Kansas, Michigan, Idaho and Mississippi, producers can access the state general annuity training and Lincoln s product-specific training through all four vendors (LIMRA/Kaplan, RegEd, QuestCE and SuccessCE). However, producers in these states who take the state general annuity training on RegEd must temporarily access the training differently than they have in the past. While all four states have approved RegEd s training course 390, producers must access the course via the Optional Insurance Catalog on RegEd in order to satisfy the state requirement. Producers can t access the state course through the Producer Status Page like they normally would. RegEd is targeting turning on Kansas, Michigan, Idaho and Mississippi on the Producer Status Page soon. For Agent/Broker Use Only Not To Be Used With The General Public. Page 5 of 6

6 Product Availability The state product availability charts can be found on producer websites. Looking for an Article? The Index of Articles for past issues of the Fixed Annuity Lincoln Leader can be found on the Lincoln Leader archive page of producer websites. Fixed Annuity Contact Information Sales Desk Product questions/ Sales ideas/ Illustrations/ Website training Operating hours: 8AM 7PM ET Partner Solutions Appointments/ Contracting/ Compensation Operating hours: 8AM 6PM ET Annuity Sales Desk Agent Use Only Sales Desk: , Option 2 FixedAnnuitySales@LFD.com Appointments/Contracting Call Center: , Option 1, Option 2 New Contracting Paperwork Submission: Contracting@LFG.com Fax: NAIC Training Questions: AskAnnuityNAIC@LFG.com Appointment Status Updates: LicensingStatus@LFG.com Compensation Call Center: , Option 1, Option 1 Commissions@LFG.com New Business and Post-Issue Operating hours:8:30am 5:15PM ET Contact Centers For agent/client use Operating hours:8am 7PM ET (8AM 5:30PM ET Fridays) FAX Numbers New business: (fax) Post issue: (fax) Pre-Issue Good Order (GO) Team Telephone number: Overnight Servicing Address Lincoln Financial Group Individual Annuity Operations 1300 South Clinton Street Fort Wayne, IN Servicing Address Lincoln Financial Group P.O. Box 2348 Fort Wayne, IN Fixed and Fixed Indexed Annuity: Lincoln SmartIncome, Lincoln Insured Income, Lincoln Long-Term Care and annuitization: Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value Products and features subject to state availability. Some of these products are only available in select distribution channels. Check your selling agreement for availability. Lincoln fixed, fixed indexed and immediate annuities are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. The "contract" may be referred to as a "certificate" in certain states. The certificate is a group annuity certificate issued under a group annuity contract issued by The Lincoln National Life Insurance Company to a group annuity trust. Contractual obligations are subject to the claims-paying ability of The Lincoln National Life Insurance Company. Contracts sold in New York are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. The contractual obligations are subject to the claims-paying ability of Lincoln Life & Annuity Company of New York. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations The Lincoln National Life Insurance Company, Fort Wayne, IN LCN Newsletter compiled and edited by Ellen Hollis, Lincoln Insurance and Retirement Solutions, Product and Distribution Support. Please send any comments or suggestions regarding the Fixed Annuity Lincoln Leader newsletter to: Ellen.Hollis@LFG.com For Agent/Broker Use Only Not To Be Used With The General Public. Page 6 of 6