ING LifePay Plus & ING Joint LifePay Plus

Transcription

1 ING LifePay Plus & ING Joint LifePay Plus Available with an ING Variable Annuity Issued by ING USA Annuity and Life Insurance Company Your future. Made easier. SM

2 Solving America s Income Challenge While the turn of the century came and went without consequence, there s been a shift to the retirement landscape that is impacting a new generation of retirees: the Baby Boomers. The retirement of the 21st century is different than anything that came before it. Americans are living longer and retiring younger. In a recent survey, 67% of respondents retired prior to age Meanwhile, research indicates a couple age 65 has a 50% chance that one or both of them will live to age This could mean a year retirement. Guaranteed sources of income traditionally depended upon are becoming obsolete. Fewer corporations offer pension plans than in the past. Similarly, Social Security will have a difficult time supporting so many retirees for longer retirements. It s estimated that by 2017, Social Security benefit payments will begin to exceed Social Security tax income. 3 To complicate matters further, inflation continues to erode the value of your retirement nest egg. In 25 years, at just a 3% annual rate of inflation, your expenses could more than double what they are today. 4 1 Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Retirement Confidence Survey 2 Annuity 2000 Mortality Table, Society of Actuaries 3 Social Security Administration, U.S. Department of Labor, Bureau of Statistics A Variable Annuity Can Help You Prepare for Retirement Destination: Retirement. It s the exciting moment you ve been working toward throughout your whole life. The good news is you re in the home stretch. But making it all the way can be difficult without careful planning. That s where variable annuities may play a key role. Finding Guaranteed Income Sources Currently, there are three primary sources of guaranteed income in retirement: 1. Social Security the future of which is uncertain; 2. Corporate pensions rapidly disappearing as life expectancies continue to rise and corporations realize lifetime payments cost more than in the past; and finally, 3. Annuities subject to the claims-paying ability of the issuing company. The Basics Variable annuities are long-term investments designed for retirement planning. They are contracts between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date. Variable Annuities offer the opportunity to allocate premiums among fixed and variable investment options that have the potential to grow income tax-deferred, until an income stream begins. Optional benefits are available for an additional cost. Variable annuities can help you accumulate assets for retirement and provide a guaranteed source of income that can last for life. There are two phases to a variable annuity contract: the accumulation phase and the income phase. Accumulation Phase your assets are invested in various portfolios that you choose and have the potential to grow tax-deferred. Optional living benefits provide protection against loss of current and future income during this phase, while death benefits provide protection for your beneficiaries. 5 Income Phase you can choose to receive income from a variety of payout options including a lifetime income stream. Annuity income is defined as a series of periodic payments, a part of which may be a return of your premium. 5 All withdrawals reduce the death benefit and may reduce the value of any optional benefits. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax, a surrender charge, and if taken prior to age 59 ½, an IRS 10% premature distribution penalty tax may apply.

3 The Power of Tax Deferral A variable annuity allows you to defer paying taxes on earnings until you take withdrawals. At that time your earnings will be taxed as ordinary income which differs from person to person. Over time, tax deferred investing may allow you to accumulate more assets than with a taxable investment. IRAs and other qualified plans already offer tax deferral like that provided by a variable annuity. You should purchase a qualified annuity contract only if you want the additional features like death benefits and the ability to receive lifetime income, taking into account that these benefits are available for an extra cost. Protect Your Income. Protect Your Family. How will you be paid during retirement? Traditional income sources, Social Security and pension plans, may not be able to support your lifestyle. Additionally, an increasing number of corporations are eliminating pension plans as it becomes more costly for them to pay these benefits. To help you set up a retirement strategy that will help to cover all of your expenses and allow you to maintain a comfortable lifestyle, variable annuities offer living benefits that can protect your retirement income. These living benefits are optional riders available for an additional cost that allow you to secure a minimum amount of income that may last for the rest of your life, no matter how the market performs. If providing a legacy for your beneficiary is a concern, variable annuities offer death benefits that can protect your contract value when you pass away. Death benefits can help you create, protect and grow a lasting legacy, regardless of stock market conditions. Invest for Success Since living and death benefits provide guarantees that protect your income and beneficiaries, you should carefully consider how to allocate investments within your variable annuity. Discuss investing your annuity assets with your financial professional in order to make an educated decision about what investments are best for you. Taking advantage of the growth potential of the stock market may help you combat the effects of inflation. ING variable annuities offer some of the best money managers in the industry, as well as some of the most innovative investment options. Allocate assets into risk-based, rules-based, brand-based and customized strategies. These strategies offer a diversified mix of management styles to help you make proper asset allocation decisions best suited to meet your long-term retirement needs. An ING variable annuity provides you the opportunity to accumulate assets for retirement, protect your beneficiaries in the event of a tragedy, and provide and protect your income in retirement. Annuity products are based on the financial strength and claims paying ability for ING USA Annuity and Life Insurance Company, who is solely responsible for all obligations under its policies. 1

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5 me when you need it ING LifePay Plus and ING Joint LifePay Plus are minimum guaranteed withdrawal benefits that can be elected with the purchase of an ING variable annuity for an extra fee. Both benefits provide a flexible alternative for lifetime income in retirement. Additional information about ING LifePay Plus and ING Joint LifePay Plus can be found on the pages that follow. ING LifePay Plus Guarantees lifetime income Annual Ratchet opportunities for life 6% Step-Up provides income protection in down or flat markets The ING Income Optimizer can be added for tax-efficient income You do not have to annuitize the contract to begin receiving the benefit The ING LifePay Plus Death Benefit will provide an additional component to your elected death benefit. ING LifePay Plus Cost: Additional 1.00% annually of Guaranteed Withdrawal Base Maximum Annual Charge: 1.50%. Charges can only increase upon a Ratchet during the Lifetime Withdrawal Phase. You are guaranteed no increase for the first five contract years. ING LifePay Plus Issue Age: 0-80 ING Joint LifePay Plus Guarantees lifetime income for you and your spouse ING Joint LifePay Plus offers protection for married contract owners who want to make sure that their spouse can continue withdrawals even after the contract owner s death. (Couples must be married at the time of contract purchase. Spouses cannot be changed after the rider is issued.) ING Joint LifePay Plus Cost: Additional 1.20% annually of Guaranteed Withdrawal Base Maximum Annual Charge: 1.70%. Charges can only increase upon a Ratchet during the Lifetime Withdrawal Phase. You are guaranteed no increase for the first five contract years. ING Joint LifePay Plus Issue Age: 0-80 (Both Spouses must meet the age requirement.) In the states of NJ and OR, ING Joint LifePay Plus is only available with qualified contracts. You should consider the investment objectives, risks and charges, and expenses of the variable annuity and its underlying variable annuity investment options carefully before investing. The prospectus for the variable annuity and underlying variable annuity investment options contain this and other information. You may obtain free prospectuses by calling your financial advisor or Read the prospectus carefully before investing. 3

6 ING LifePa Planning for a Lifetime of Income If you are looking for a guaranteed stream of income that will last your entire retirement, ING LifePay Plus may be the answer. When you add the ING LifePay Plus minimum guaranteed withdrawal benefit to your contract, you not only position yourself to capture gains during up markets, but you also protect income during declining markets. Here's how it works: Your initial guaranteed withdrawal base equals all premiums paid before the first withdrawal. 6 The guaranteed withdrawal base determines the amount of your guaranteed lifetime income. 4

7 y Plus Maximize Your Income Potential Capture Gains in an Up Market On each contract anniversary, if your contract value is higher than the current guaranteed withdrawal base, the Annual Ratchet locks in this amount as your new guaranteed withdrawal base 6. This is referred to as the Annual Ratchet. Protect Yourself in a Down Market For each of the first ten complete contract years after the rider is issued, you will have the opportunity to outperform the Annual Ratchet. On the contract anniversary of any year that you did not take a withdrawal, ING USA 7 will look back to the guaranteed withdrawal base on the previous contract anniversary and increase it by 6% of the initial guaranteed withdrawal base, or the guaranteed withdrawal base on the most recent Annual Ratchet, reduced for excess withdrawals and increased for additional premiums. Whenever that amount is greater than your contract value or the Annual Ratchet, it will become the new guaranteed withdrawal base. This is called the 6% Step-Up. Investment Guidelines With ING LifePay Plus, you have access to all of the investment options available through your ING variable annuity contract. You may choose your own investment allocations when you allocate at least 30% of the contract among the designated Fixed Allocation Funds. Designed to be balanced allocation portfolios, you may also choose to invest up to 100% of your contract in any specified accepted funds. The opportunity for a 6% Step-Up is available in the first 10 contract years only. In order to receive lifetime income the first withdrawal must occur on or after age If withdrawals taken prior to age reduce your contract to $0, you will not be eligible for lifetime withdrawals. 6 On products offering a bonus, the premium credits will be excluded from the withdrawal base calculation for a period of 36 months. 7 ING USA is the marketing name for ING USA Annuity and Life Insurance Company. 5

8 Protect Your Retirement Income Lifetime Withdrawal Phase With ING LifePay Plus, you decide when to take income through withdrawals until the contract is annuitized. Your Maximum Annual Withdrawal, or MAW, is the maximum amount that can be withdrawn in any contract year without reducing your withdrawal guarantee for future years. Your initial MAW is determined by applying the appropriate MAW percentage multiplied by the guaranteed withdrawal base. When you begin taking withdrawals on or after age , your income will continue up to this amount for life with the potential to increase every year with the Annual Ratchet. Withdrawals taken prior to age , or withdrawals in excess of your MAW, will reduce the guaranteed withdrawal base pro rata. This means that the guaranteed withdrawal base will be reduced by the same percentage the withdrawal represents of the contract value, inclusive of all charges. This reduction can be greater or less than the actual dollar amount of the withdrawal. If withdrawals taken prior to age , or withdrawals in excess of your MAW, reduce your contract to $0, you will not be eligible for lifetime withdrawals. Determining Your Maximum Annual Withdrawal If you capture an Annual Ratchet after you have entered a higher MAW age band, your income will automatically reset to the higher income percentage. In rising stock markets, this can help protect your income stream against inflation. The following table will help you determine how much income you can take each year during the Lifetime Withdrawal Phase: ING Income Optimizer ING LifePay Plus provides guaranteed lifetime income, the potential for continued market growth and the flexibility to access your account value. However, because any gains earned on your investment are withdrawn first, a large portion of that income may be lost to taxes. Traditional annuitization, on the other hand, provides more tax-efficient payments that consist of both principal and gains; but you lose your account value. When ING Income Optimizer 8 is elected, you get the best of both worlds the guaranteed lifetime income of ING LifePay Plus, the tax-efficiency of traditional annuitization, and the liquidity, flexibility, and growth potential of your account value until you reach age 95. ING Income Optimizer is available for non-qualified contracts only and requires that at least 40% of the contract must be allocated among the designated Fixed Allocation Funds. ING LifePay Plus Death Benefit The ING LifePay Plus Death Benefit will initially be equal to the premiums paid. Withdrawals up to the Maximum Annual Withdrawal will reduce the ING LifePay Plus Death Benefit dollar-for-dollar. Withdrawals taken prior to age , or in excess of your MAW, will reduce the ING LifePay Plus Death Benefit pro rata. If the ING LifePay Plus Death Benefit is greater than the death benefit elected, the ING LifePay Plus Death Benefit will be payable in lieu of the elected Death Benefit. The Annual Ratchet and 6% Step-Up features do not apply to the ING LifePay Plus Death Benefit. 8 Additional restrictions and limitations apply. Refer to the current prospectus for complete product details. ING LifePay Plus: Age: Income %: 4% 5% 6% 7% 6

9 Capture Gains in an Up Market $350,000 $355,000 $292,560 $276,000 $257,600 $243,800 $230,000 $215,000 $325,000 $335,000 $16,250 (5% MAW) $16,750 $17,500 $17,750 Contract Start Age Automatic Annual Ratchet On each contract anniversary, if your contract value is higher than it was the previous year, the Annual Ratchet locks in this amount as your new guaranteed withdrawal base. Step-Up By combining the 6% Step-Up and the Annual Ratchet, your guaranteed withdrawal base will grow in up or down markets. Automatic Annual Ratchet Your Maximum Withdrawal amount will be reset if the contract value on each contract anniversary is higher than your current withdrawal base. Protect Yourself in a Down Market $284,000 $248,000 $260,000 $272,000 $212,000 $224,000 $236,000 $14,200 (5% MAW) Contract Start Age Step-Up Even in a declining market, your guaranteed withdrawal base can increase with the 6% Step-Up. If your contract is decreased to zero you will receive the Maximum Annual Withdrawal every year for life. However, no other contract benefits will be received. This is a hypothetical illustration to show how the ING LifePay Plus rider works in a fluctuating market and is not indicative of any performance of any investment. Variable annuities fluctuate in value and you may receive more or less than the principal amount invested at redemption. Withdrawals greater than the Maximum Annual Withdrawal will reduce the guarantee pro rata. Maximum fees and expenses are included in this hypothetical illustration. This illustration assumes withdrawals beginning at age 66. If withdrawals were to start prior to age 65, the MAW percentage would be 4% and the withdrawal amount would be lower than what is illustrated. Withdrawals of taxable amounts will be subject to ordinary income tax and, if taken prior to age , a 10% IRS penalty tax may apply. Early withdrawals that are greater than the contract free amount may be subject to a surrender charge. Withdrawals may reduce the living and death benefit guarantees. If your contract is an IRA, withdrawals up to your Required Minimum Distribution amount will not be treated as excess withdrawals. Guarantees are based on the financial strength and claims-paying ability of ING USA Annuity and Life Insurance Company, who is solely responsible for all obligations under its policies. Certain broker dealers may require annuitization to occur once the oldest annuitant attains age 95. Upon annuitization, any living and death benefits are terminated. (Does not apply to custodially-held accounts). 7

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11 Questions& Answers Can I add ING LifePay Plus or ING Joint LifePay Plus to an existing contract? Yes. Contracts that do not have a living benefit and were issued after November 1, 2004 can have this benefit added. You can elect to add the benefit at any time, but the charges and benefits will not begin until the next quarterly contract anniversary. After the benefit has been added, the 6% Step-Up will not be applied until one complete year following your next contract anniversary, as long as there are no withdrawals during that time. How does ING LifePay Plus and ING Joint LifePay Plus treat Required Minimum Withdrawals? If your contract is an IRA or qualified contract, withdrawals up to your Required Minimum Distribution amount that are taken in accordance with your rider terms will not be considered excess withdrawals and will not incur a surrender charge. What happens if the Fixed Allocation percentage drops below 30% due to market performance? ING LifePay Plus and ING Joint LifePay Plus give you the option to choose your own investment allocations if you allocate 30% to a Fixed Allocation Fund. If your fixed allocation percentage drops below 30% due to market performance, your portfolio will be rebalanced annually. However, if you make additional allocations, make a withdrawal, or rebalance your portfolio, and your fixed allocation percentage drops as a result, your fixed allocation percentage will automatically be increased to 30%. Does my contract have to be jointly owned if I elect ING Joint LifePay Plus? No. ING Joint LifePay Plus offers the option for a spouse to continue the contract and withdrawals if the contract owner passes away. To elect ING Joint LifePay Plus, your contract can be joint with both husband and wife owners, or, it can be a single owner contract with the owner s spouse listed as the sole primary beneficiary. The costs for single and joint contracts are the same. Can I take less or more than my Maximum Annual Withdrawal each year? You can certainly take less than your Maximum Annual Withdrawal in a given year. In fact, you can skip taking a withdrawal altogether if you choose. However, you may not carry over any amount not taken to the next year. If you take more than your Maximum Annual Withdrawal, your Guaranteed Withdrawal Base and Maximum Annual Withdrawal will be reduced pro rata in the same proportion as contract value is reduced by the portion of the withdrawal that is considered excess. If excess withdrawals reduce your account value to zero, your income will stop and the contract and rider will end. 9

12 Client Services Our friendly Customer Service staff is ready to help you. You will receive quarterly statements, confirmations of every financial transaction, and access to 24-hour, automated, telephone customer service. For more information please contact: ING Variable Annuity Customer Service 909 Locust Street Des Moines, IA You should consider the investment objectives, risks and charges, and expenses of the variable annuity and its underlying investment options carefully before investing. The prospectuses for the variable annuity and underlying investment options contain this and other information. You may obtain free prospectuses by calling your financial professional or Please read the prospectuses carefully before investing. All guarantees are based on the financial strength and claims paying ability of ING USA Annuity and Life Insurance Company, who is solely responsible for all obligations under its policies. Annuity products are issued by ING USA Annuity and Life Insurance Company (Des Moines, IA). Variable annuities are distributed by Directed Services LLC (West Chester, PA). Both companies are members of the ING family of companies. Variable annuities are long-term investments designed for retirement planning. They are a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you. Additionally, variable annuities offer the opportunity to allocate premiums among fixed and variable investment options that have the potential to grow income tax-deferred, until an income stream begins. These payments, called annuity income, will begin either immediately or at a future date and a part of which may be the return of your premium or principal. This income is guaranteed by the issuing insurance company for a specified period of time or for the life of the annuitant. Optional benefits and riders are available for an additional cost. Variable insurance products are subject to investment risk, are not guaranteed and will fluctuate in value. In addition, there is no guarantee that any variable investment option will meet its stated objective. This material was written to support the promotion or marketing of the transaction or matters addressed herein. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under the U.S. federal tax laws. Each taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. All withdrawals reduce the death benefit and may reduce the value of any optional benefits. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax, a surrender charge, and if taken prior to age 59½, a 10% federal tax penalty may apply. Withdrawals from the Fixed Account also may be subject to an MVA. See the prospectus for details. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than the original amount invested. IRAs and other qualified plans already provide tax deferral like that provided by the annuity. For an additional cost, the annuity provides additional features and benefits, including death benefits and the ability to receive a lifetime income. If other options are available, you should not purchase a qualified annuity unless you want these additional features and benefits, taking into account their cost. Benefit rider forms: IU-RA-4010 and IU-RA ING North America Insurance Corporation cn ING, A Global Leader In Financial Services ING USA Annuity and Life Insurance Company is a subsidiary of ING Groep N.V. (ING), a leading international financial services organization with roots dating back to Today, ING has an impressive global position: Provides financial services to more than 75 million private, corporate and institutional clients. Employs more than 124,600 people in more than 50 countries. Has $770 billion in assets under management as of December 31, Ranks 9th in the 2008 Forbes Global 2000 as measured by a composite ranking of sales, profits, assets and market value. Ranks 7th in the 2008 FORTUNE Global 500 as measured by revenue. The assets of ING have no impact on ING USA Annuity and Life Insurance Company's ability to meet its obligations or upon the performance of its products. Insurance product obligations are the sole responsibility of ING USA Annuity and Life Insurance Company /01/2009