Inheritance Life Plus

Transcription

1 Positioning Guide Inheritance Life Plus Fixed, single-premium universal life insurance Policies issued by American General Life Insurance Company, a member of American International Group, Inc. (AIG) Increase the inheritance your clients leave their loved ones FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION.

2 Sales Idea: Big inheritance, small price tag Key Benefits of Inheritance Life Plus Tax-advantaged way to transfer wealth 1 Guaranteed death benefit Opportunity to leverage assets Liquidity Guaranteed Return of Premium No medical exam: Simplified application and issue process Instantly increase client s estate value, income-tax free 1 Your clients may have the power to substantially increase the wealth that they leave to their family and charities. And, they can likely do so in a way that avoids paying income taxes on the inheritance. 1 However, most people are unaware that they have this power. This is an opportunity for you to share your knowledge with them and enhance the value that you bring to your client relationship. Present Inheritance Life Plus to them. Immediately increase your client s legacy Inheritance Life Plus offers many attractive features and benefits, but one stands out above the rest the ability to transform a given amount of money into a larger taxefficient death benefit 1 even at older ages. If your client has a lump sum of money that they do not intend to spend in their lifetime, show them this great opportunity. How to use this guide This booklet will show you how to present Inheritance Life Plus as a powerful financial opportunity. It starts with STYLE, an easy-to-remember acronym that captures 5 key benefits: safety, tax efficient, yield, liquidity, and easy application. The booklet also contains tips to identify prospects and close the sale, detailed product information and in-depth answers to frequently asked questions. Not A Deposit Not Insured By Any Federal Government Agency May Lose Value No Bank or Credit Union Guarantee Not FDIC/NCUA/NCUSIF Insured

3 Inheritance with S.T.Y.L.E. Safety No worry of stock market or interest rate risk. It s backed by the insurance company that guarantees it. Your client can be confident that their money is safe. Guaranteed death benefit will never be less than the initial death benefit 2, 3 With the guaranteed return of premium feature, the cash surrender value will never be less than the single premium you paid (minus loans and withdrawals) 4 Tax efficient Your client and their beneficiaries can avoid unnecessary income taxes. Under current tax law: Earnings grow tax-deferred in an interest-bearing cash value account 1, 5 Beneficiaries do not pay income taxes on monies received, they receive the entire amount from a life insurance policy 1 Yield Your client can instantly increase the inheritance that they leave to their loved ones. The one-time premium produces a larger death benefit 6 The death benefit or accumulation value, whichever is larger, is paid directly to their beneficiaries. Plus, because Inheritance Life Plus is a life insurance policy, there s no delay in payment of funds due to probate proceedings 7 Liquidity If they need to use this money, they have several ways to access it: After the first policy year, clients may take partial withdrawals of up to 10 percent of the policy s accumulation value (less outstanding loans) without surrender charges 8, 9 Policy loans are available at any time 10 If your client is diagnosed as terminally ill (with 24 months or less to live, 12 months in Florida), a one-time acceleration of up to 80 percent of the death benefit is available, up to a maximum of $250,000, not available in Montana and New York If they have a chronic illness, (severe cognitive impairment or unable to perform activities of daily living) a one-time acceleration of the up to 70 percent of the death benefit is available, net of policy loans, up to a maximum of $250,000, not available in California, Montana, and New York Surrender charges are waived upon a qualifying medical stay (confined in a licensed hospital or nursing facility) for either the client or their spouse, or if they have a chronic illness as certified by a licensed healthcare practitioner, not available in Connecticut and New Jersey Easy app Inheritance Life Plus utilizes a simplified application and issue process. Clients only have to answer five questions to determine if they are eligible We will notify them promptly if the application is approved No medical exam is necessary if they qualify

4 Start identifying prospects You have many customers who will benefit from learning about Inheritance Life Plus. Do them a favor. Follow these steps and help them build a stronger legacy for their families and favorite charities. Know the profile Inheritance Life Plus is generally most appealing to customers who: Are years old and are in generally good health. Have moderate wealth, adequate emergency reserves and sufficient retirement income. Have a lump sum they don t anticipate that they will need during their lifetime. Want something with growth potential but low risk. Are sensitive to taxes. Listen for conversation cues When you hear a customer say any of these phrases, it should be like a bell ringing one that tells you they may benefit from learning about Inheritance Life Plus. I ll probably never spend this money. I wish I could leave more to my children. I m a strong supporter of my (church/college/charity). Is there a way to pass this account to my children without probate? Annuities are great, but I don t like the fact that my beneficiaries have to pay taxes on them. I would probably give some of this money to my family now, but I want to be able to access it just in case. Ask two simple yet powerful questions Q. When do you plan to spend this money? A. For many of your moderately wealthy clients, the answer will be never. Q. If there were a way to safely turn this money into a larger inheritance while still being able to access your money would you be interested in learning about it? A. This is a gentle way to introduce Inheritance Life Plus in a way that s hard to refuse. Closing the sale Remember, when you offer something that helps accomplish your clients goals, it s only natural to help them get started and that s all closing really is. Are you comfortable describing the benefits of Inheritance Life Plus, but a little uneasy about actually closing the sale? Just follow these steps for natural, stress-free closing. Ask pre-closing questions First, use pre-closing questions to draw a series of positive responses from your customer. Pre-closing questions ask for the customer s feelings without asking for a final decision. Examples How do you like that feature? How does this sound so far? What do you like most about Inheritance Life Plus? Does this sound like it will accomplish something good for your family?

5 Converting prospects into clients American General Life continually adds tools which make it easy for you to turn a prospect into a client. Call us to get the most current materials. Here s a sampling of what we will provide you: Client-approved literature That your customers can take with them to share with family or friends Comprehensive selling tools Including a handy laminated card for at-a-glance death benefit calculations, and guides that take you step-by-step through the application process In bank promotional materials Table tent cards and flyers to display Training tools Help you train your bank staff to produce leads for you Seminar kit Checklist of how to plan your seminar event, presentation with script, letters or postcards to invite potential clients, thank you notes to send afterwards All materials subject to upline s approval for availability. Reinforce positive responses Each time the customer responds positively, reinforce those feelings. Here s how: Reinforcing Techniques Nonverbal gestures Paraphrasing Build on what they ve said Examples A smile and an understanding nod of agreement. Customer: I like how it increases what I leave to my children. You: Yes, it s amazing how this policy takes a given amount of money and builds a larger benefit. Customer: I like how the surrender value is at least what I pay in. You: And this policy provides so many ways to access its benefits if you need to. Use a natural closing technique After receiving several positive replies to your pre-closing questions, it s only natural to start the application using one of these techniques: Technique Assume Close Ask for a small decision that assumes they re ready to take action. Choice Close Ask for a decision about some aspect of the product. Examples Which beneficiaries should we include on the application? We can target a certain death benefit and I ll calculate the premium needed, or if you have a certain amount of money you d like to dedicate to the plan, I ll tell you how much of a death benefit it can create. Which approach would you like to take?

6 Policy Type Issue Ages Underwriting Class Single Premium Amount Min/Max Lifetime Death Benefit Guarantee Interest Rate Credited to Accumulation Value Policy Loads Deducted from Accumulation Value Surrender Charge as a Percentage of Accumulation Value Return of Premium Guarantee Access to Cash Values 11 Available Riders 12 PRODUCT HIGHLIGHTS Fixed single-premium universal life insurance Issuing companies: American General Life Insurance Company (AGL) The United States Life Insurance Company in the City of New York (US Life) (age last birthday/actual age) Preferred and Standard Male/Female distinct rates (Unisex where required by law) Issue Age Min. Premium Max. Premium Issue Age Min. Premium Max. Premium $10,000 $ 75, $10,000 $125, $10,000 $100, $10,000 $ 200, $10,000 $100, $10,000 $ 75,000 Premium amounts, applied for and in force combined, above the limit will not be accepted for this product. Initial death benefit guaranteed regardless of cash surrender value 3 Loan balance may result in negating guarantee Partial withdrawals reduce death benefit The interest rate is based on current interest environment and credited to accumulation value at end of each month, after deductions for policy loads and cost of insurance charges Minimum annual guaranteed interest rate is 2 percent prior to deductions for policy loads and cost of insurance charges Current monthly administration fee is $8. Guaranteed monthly administration fee is $10 Monthly expense charge per $1,000 of specified amount Policy loads are taken beyond age 100 AGL, US Life Issues Ages Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year %, 4% 5%, 4% 5%, 4% 4%, 3% 4%, 3% 3%, 3% 2%, 2% 0%, 0% %, 4% 4%, 4% 4%, 4% 3%, 3% 3%, 3% 2%, 3% 1%, 2% 0%, 0% Surrender charges are calculated as a percentage of accumulation value, subject to the maximums stated in the policy. Cash surrender value will never be less than premium paid (less withdrawals and loans) Policy Loans Available at any time Partial Withdrawals Partial withdrawals allowed after first policy year, policy owner can withdraw up to 10 percent of policy s accumulation value (less any outstanding policy loans) without paying surrender charges Withdrawal amounts above 10 percent available but subject to surrender and withdrawal charges Terminal Illness Rider (not available in Montana and New York) Accelerated death benefit rider provides benefit be paid upon notification insured is diagnosed with a terminal illness with 24 months or less to live (12 in Florida). Provides for one time acceleration of up to 80 percent of death benefit net of policy loans, subject to maximum benefit of $250,000. Chronic Illness Rider (not available in California, Montana, and New York) Accelerated death benefit rider provides benefit be paid if insured is chronically ill (if determined by a Licensed Health Care Practitioner as having severe cognitive impairment or unable to perform 2 out of 6 Activities of Daily Living). Provides one-time acceleration of up to 70 percent of death benefit, net of policy loans, up to maximum benefit of $250,000 Waiver of Surrender Charge Rider (not available in Connecticut and New Jersey) The surrender charges are waived if insured, or insured s spouse, has a qualifying medical stay or is chronically ill

7 Frequently asked questions The following are frequently asked questions regarding Inheritance Life Plus. If you have additional questions, please contact your American General Life Companies representative. 1. What is the target market for Inheritance Life Plus? Inheritance Life Plus is appropriate for anyone in generally good health between the ages of 40 and 85 and interested in a simple, secure, and fast wealthtransfer planning tool. For many clients looking to use a lump sum payment (at least $10,000) to fund a CD or annuity, Inheritance Life Plus delivers a significantly larger death benefit in addition to a tax-advantaged way of transferring wealth. Plus, it is simple and fast with our simplified issue process. 2. What makes Inheritance Life Plus different from other life insurance products? Inheritance Life Plus is unique in several ways. First and foremost it is a single premium product rather than a continuous pay product, which positions it well as an alternative to annuities or CDs. It is designed for simplified issue underwriting based on 5 questions which determine either a preferred or standard risk class with no medical exams. Additionally, the death benefit is guaranteed for life and the cash surrender value is guaranteed never to be less than the premium paid (minus any loans or withdrawals). Inheritance Life Plus is a good fit for those clients who have a lump sum of money they don t anticipate needing in the future, want to leave a legacy to their beneficiaries, and yet still desire access to the funds. 3. Does Inheritance Life Plus use a net rate approach? No. Many, if not most, early single premium life insurance contracts follow the net rate approach. Typically, mortality charges, commission expense, other expenses, and profit load are subtracted from the earning rate to calculate a net rate. For example, if the policy earns 7 percent, deduct 200 basis points (bps) for mortality, 75 bps for expense and profit, and 125 bps for compensation. This gives you 3 percent net rate. Net rate is then applied to the Policy year-end cash value and results in the new cash value. For example, if the cash value at year end is $100,000 and the net rate is 3 percent, then the current cash value will be $103,000. This is not the approach used for Inheritance Life Plus. Inheritance Life Plus uses traditional universal life processing with a declared crediting rate and monthly deductions, including COI s that vary by age, sex, and risk class. As a result, a net rate is not calculated as defined above. Using a single net rate approach creates distribution risk in the pricing because the mortality charge is not a constant spread over the account value. Because we don t use this calculation method, there is less distribution risk, and Inheritance Life Plus is more competitive over the entire range of issue ages/risk classes. 4. Can an annuity be exchanged for life insurance? No. Annuities cannot be exchanged for life insurance. The annuity must be surrendered first, and then the proceeds could be paid into a life insurance policy. 5. Can a 1035 exchange from another life insurance product be made into Inheritance Life Plus? Yes. A 1035 exchange may be made from another life insurance contract into Inheritance Life Plus. Of course, suitability for the exchange should always be reviewed with your clients. 6. Are all Inheritance Life Plus policies considered Modified Endowment Contracts (MEC s)? When a sale occurs, it should be anticipated the policy will be a MEC. The only way it would not be a MEC is if there was a 1035 exchange from another life insurance contract. However, because the focus of this market is not replacement sales, most policies issued will be MECs How often do crediting rates change? Rates can change any time, but generally will not change more than 3-5 times per year for new issues. Once a policy is issued, rates can change at any time but as company policy, rates for new issues will not change during the first year. After about 3 years all policies grade into a portfolio. 8. What underwriting information is reviewed? An MIB database inquiry, which covers medical information obtained during previous life insurance submissions, as well as an Rx database inquiry are made to assist in determining a risk class based upon prescription history. 9. Is annuitization available? The policy allows normal payout options at death but does not have an annuitization option on surrender value. 10. How is the death benefit calculated? The death benefit is determined by the premium amount, age of the insured, risk class (standard or preferred), and gender (except where unisex required by law). Continues on back

8 Frequently asked questions (Continued) 11. Is there an agent chargeback provision in addition to the client surrender charge? Yes, there will be a 100 percent chargeback on commission paid for full surrender during the policy first year. 12. What special regulations and provisions apply in the state of New York? Specific regulations apply in New York regarding replacements (NY Reg 60). Every New York policy requires that a Definition of Replacement (USL1002-N) be completed and submitted with the application. If any questions are answered yes, then additional paperwork is required before the application can be taken. If a replacement is involved, Notice to Exiting Insurer (USL1003-N) must be completed and sent to the existing insurer. An application cannot be accepted until the exiting insurer has provided information to the agent, or 20 days have elapsed since the form was sent. 13. What if a client needs to access cash value within the first 2-3 years? A client who needs to access cash values within the early years of the contract can do so via loans or withdrawals. After the first year they can take partial withdrawals up to 10 percent of the policy s accumulation value without incurring surrender charges. Remember, in cases where the policy is considered a MEC, distributions prior to age 59½ would be subject to a 10 percent federal tax penalty under current tax law. 1 Based on current federal income tax laws. 2 Partial withdrawals and policy loans reduce the death benefit amount. 3 Guarantees are backed by the claims-paying ability of the issuing insurance company. 4 The premium returned does not take into account any time value of money. 5 The minimum guaranteed interest rate is 2 percent prior to deductions for policy loads and cost of insurance charges. 6 No increases or decreases to the death benefit are allowed. The company will not accept any additional premium payments. 7 Subject to state probate laws. 8 Surrender charges apply for the first seven policy years. 9 Partial withdrawals reduce the death benefit on a pro rata basis. Withdrawals above 10 percent of the accumulation value (less any outstanding policy loans) may be taken but are subject to surrender and withdrawal charges. 10 The policy will terminate if the policy loan amount is greater than the cash value at any time. 11 In most cases, the single premium at certain ages will result in a Modified Endowment Contract (MEC). With a MEC, partial withdrawals, loans and surrenders will generally be taxed as regular earnings. Under current tax law, distributions will also be subject to a 10 percent federal tax penalty on the taxable portions if the owner is under 59-1/2. Clients should always consult their tax advisors regarding their particular circumstances. 12 There may be a charge for each rider selected. See the rider for details regarding the benefit descriptions, limitations, charges and exclusions. All riders are not available in all states. Adding or deleting riders and increasing or decreasing coverage under existing riders may have tax consequences. Policy owners should consult a qualified tax advisor. See the rider form for complete details. Policies issued by: American General Life Insurance Company (AGL), Policy Form Numbers 11440, ICC , Rider Form Numbers 11401, 06422, 11400, except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life), Policy Form Numbers 11440N, 11440NU, Rider Form Number 06422N. Issuing companies AGL and US Life are responsible for financial obligations of insurance products and are members of American International Group, Inc. (AIG). Policies and riders not available in all states. These product specifications are not intended to be all-inclusive of product information. State variations may apply. Please refer to the policy for complete details. IMPORTANT: Prior to soliciting business, be certain that you are appropriately licensed and appointed with the insurer and that the product has been approved for sale by the insurer in that state. If uncertain, contact your American General Life Insurance Company representative for assistance. AIG All rights reserved. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION. AGLC REV0614