flexible life insurance protection enhanced cash value accumulation potential

Transcription

1 AXA Equitable Life Insurance Company Athena Indexed Universal Life SM flexible life insurance protection enhanced cash value accumulation potential

2 your changing protection and financial needs Life never stands still. And, neither do your financial needs. During your younger years, you may have a compelling need to protect your family from financial hardship should anything happen to you. Or, you may want to protect a business you ve built. As the years roll by, your emphasis may shift from protection to cash accumulation for any one of a number of reasons. You may want to build your dream house, provide for your children s education, or create an additional source of retirement income. Later in life, the thought of leaving a legacy may be uppermost in your mind. How do you best plan for such varied and changing needs? AXA Equitable can show you the way. For more than 150 years, AXA Equitable has been a pioneer in creating innovative financial strategies that help people like you protect their financial well-being and build a sound financial future. And now, AXA Equitable has created another innovative, flexible life insurance policy that can grow with you, your family and your business to help provide the protection and cash accumulation you need in all stages of life. Another innovative financial strategy from AXA Equitable. Table of Contents Introduction 1 From Day One 2 Through the Years 4 In the Future 12 Policy Enhancements 15 The Advantages of Athena Indexed Universal Life SM 16

3 Athena Indexed Universal Life SM a flexible source of protection and cash accumulation Athena Indexed Universal Life SM combines the long-term protection guarantees of a universal life insurance policy with the cash accumulation potential of equity index-linked interest options a blend of benefits vital to your long-term financial strategy: Immediate, Affordable Protection for Your Family or Business The death benefit provided by your Athena Indexed Universal Life SM policy can help preserve your family s quality of life and keep your business running should anything happen to you. Guaranteed Downside Protection with Cash Value Accumulation Potential Athena Indexed Universal Life SM offers interest crediting linked to major market indices, so you can participate in the upside potential (up to a cap) of the equities markets with built-in guaranteed downside protection against declines in the applicable equity indices. Income for Retirement and Other Needs When the time is right, you can access your policy cash value through a tax-favored combination of withdrawals and policy loans. Legacy Planning / Estate Protection Your Athena Indexed Universal Life SM life insurance benefit can help satisfy your estate-tax obligations so you can pass along more of your estate to your loved ones, or provide a legacy for a favorite charity. Ongoing Flexibility Within limits, Athena Indexed Universal Life SM allows you to change your premium payments, the amount of your death benefit (subject to certain requirements), and your index-linked interest option allocations so you can adapt your policy s benefits to life s changes. Guarantees described in this brochure are based on the claims-paying ability of AXA Equitable Life Insurance Company.

4 from day one protection for your family and your business Affordable, Reliable Life Insurance Coverage Life insurance can play a key role in a sound financial plan. As a universal life insurance policy, Athena Indexed Universal Life SM offers affordable coverage, assuring that funds will quickly become available upon the death of the insured person, no matter how soon or unexpectedly that occurs. From the very first day your policy becomes effective, it protects your family or business from the uncertainties we all face in life. Safeguarding Your Family s Standard of Living Think about how your loved ones would fare if anything should happen to you. Would your spouse be able to continue making the rent or mortgage payments, pay for the kids education, and afford the expenses of daily living? Your Athena Indexed Universal Life SM death benefit helps protect those who depend on you after you are gone so that they can continue to maintain their lifestyle. And, with potential cash value accumulation, you can help your family in the future. Athena Indexed Universal Life SM Helping to make sure your family s financial needs are met: Your children s education Mortgage payments and other home costs Expenses of daily living Loan repayment or credit card debt Health insurance and health care costs Funeral expenses Estate preservation 2 from day one

5 Preserving the Value of Your Business by Insuring Yourself, Your Partners, Your Key Employees Life insurance can be a highly effective tool to help protect the value of the business you ve built. Depending on your business needs, you can use your Athena Indexed Universal Life SM policy in a number of ways to guard your enterprise and your family s interests: As a source of funding for a buy-sell agreement, which can ensure that your family receives the full fair-market value of your business interest if you are no longer around to lead the company. As key-person insurance, which can offset the financial impact of losing a key employee. important note Be sure to consult a financial professional to learn how life insurance can be used as part of an overall estate or business continuation plan. For employerowned and business-owned life insurance policies, additional federal income tax rules need to be considered, including employee eligibility and consent, as well as tax reporting requirements. As part of an executive/retirement benefits program for you and your employees, which can heighten your company s attractiveness as an employer. Athena Indexed Universal Life SM offers these benefits, but also cash value accumulation. If you don t use your policy s death benefit for one of these business needs, the cash value can be used to help your business down the road in any number of ways. from day one 3

6 through the years flexibility to meet changing needs Customize Your Premiums Like traditional universal life policies, your Athena Indexed Universal Life SM policy offers premiumpayment flexibility that can help accommodate your life s changing circumstances. In the event that cash flow becomes more limited after you ve paid your initial premium, you may be able to reduce or even skip premium payments, as long as there is enough account value in your policy to pay your policy s monthly deductions. Of course, skipping or reducing premium payments will result in lower cash value accumulation values and could increase the chance your policy could lapse in the future. You can also increase premium payments within specified limits if you wish to make up for premiums you previously reduced or skipped, or if your goal is simply to build cash value more quickly. Increase or Decrease Your Face Amount During your lifetime, your need for insurance protection may change. With Athena Indexed Universal Life SM, you can increase or decrease your policy s Face Amount to accommodate your needs (subject to conditions stated in the policy). Evidence of insurability is necessary for increases and pro rata surrender charges may apply to decreases. Regardless of any change to the policy s Face Amount, Athena Indexed Universal Life SM has a 20-year declining surrender charge. The surrender charge varies by gender, tobaccouser status and the issue age of the Insured. A new tier of surrender charges will apply after a Face Amount increase. Refer to your policy for specific information regarding your surrender charge. Change Your Death Benefit Option For greater flexibility, Athena Indexed Universal Life SM offers a choice of two death benefit options. If you re looking for lower-cost protection, you could choose the Level Death Benefit, which always equals the policy s Face Amount. If you anticipate that your need for protection will grow in the years ahead, you may want to consider the Variable Death Benefit, which is equal to the Face Amount plus the policy s account value. What s more, if your needs change, you may be able to change your death benefit option. Evidence of insurability may be required and other limitations may apply. 4 through the years

7 Guaranteed Downside Protection with an Opportunity for Strong Cash Value Accumulation Targeted Toward Future Income Today s Americans are facing a greater and greater need for future income, particularly for their retirement years. Athena Indexed Universal Life SM can help because, in addition to death benefit protection, it provides a cash value component. Your cash value is based on the amount of premiums you pay, the interest credited to your policy account, and the policy charges deducted. Downside Protection: No Direct Exposure to the Equity Markets While interest credited to portions of your policy account can be based on the upward movement of one or more equity market indices, you have a guaranteed floor that protects your cash value against losses. So, even if the underlying indices fall, your life insurance cash value is safe as the applicable index-linked interest options account with be credited at 0%. Athena Indexed Universal Life SM is not a variable life insurance policy and the policy does not directly participate in any investments underlying the indices, however cost of insurance and other policy charges will still impact your cash value. Upside Potential Based on Indexed Options Athena Indexed Universal Life SM may often credit higher levels of interest than a traditional universal life policy. That s because, with an Athena Indexed Universal Life SM policy, you can choose to base your interest crediting on the movement of equity indices rather than just receiving a fixed rated of interest. Tax-Deferred Cash Value Compounding The interest credited to your policy s cash value is generally free of federal income taxes until it is withdrawn. Due to compounding, as your cash value grows larger, it can potentially continue to grow faster and faster. through the years 5

8 Four Indexed Options to Choose From You Choose Your Allocation With Athena Indexed Universal Life SM, you can choose to have your policy account dollars allocated to any combination of four indexed options where your cash value can grow (up to a cap) based on the movement of major equity indices. Three of the index-linked interest options are structured with one-year maturities and one of the index-linked interest options has a three-year maturity. Restrictions on the amount you can allocate to these options may be applied; however, you will receive notice of any such restrictions. Diversification Four Market-Linked Indexed Options Based on Major Equity Indices The 1-Year S&P 500 Price Return index Index-Linked Interest Option* Based on the Standard & Poor s 500 Price Return index (S&P 500), which tracks the market capitalization (the aggregate price, or value) of the 500 most widely held large-cap U.S. stocks and is generally regarded as the benchmark for broad U.S. stock market performance. The 1-Year Russell 2000 Price Return index Index-Linked Interest Option* Based on the Russell 2000 Price Return index, which is generally regarded as the benchmark for U.S. small-cap funds. Russell 2000 tracks the market capitalization of the 2,000 smallest companies listed on the Russell 3000 index, which includes the 3,000 largest companies in the U.S., based on market capitalization. The 1-Year MSCI EAFE Price Return index Index-Linked Interest Option* Based on the MSCI EAFE Price Return index, which tracks the market capitalization of 22 individual country indices (as of May 2010) in Europe, Australasia and the Far East and is broadly accepted as a benchmark of international equity shares. The 3-Year S&P 500 Price Return index Index-Linked Interest Option*,1 Also based on the Standard & Poor s 500 Price Return index (S&P 500). Note that these indices reflect the movement of stock prices only and do not account for dividends. 1 Not available in New York. 6 through the years

9 Diversification by Market and Time Period Having access to options driven by a number of different equity indices enables you to participate in a greater scope of market opportunities U.S. large-cap stocks, U.S. small-cap stocks, and foreign stocks as well as in the Guaranteed Interest Account, which is discussed below. You can also diversify by time. For each of the 1-year options, you can allocate policy account dollars to new independent one-year time periods called Segments that begin each month. Similarly, in the case of the 3-Year S&P Indexed Option, you can allocate to additional 3-year Segments each month. Money allocated to the index-linked interest options must stay in the Segment for one or three years, depending on the option you choose. Plus the Guaranteed Interest Account In addition to the indexed options, you can place policy cash value in the Guaranteed Interest Account, which credits a rate of interest guaranteed to never be less than 2%. AXA Equitable can declare a higher interest at any time as well as change that declared rate at any time. There are different declared interest rates for the unloaned portion and loaned portion (if any) of the Guaranteed Interest Account. Interest is compounded daily in the Guaranteed Interest Account. through the years 7

10 Guaranteed Downside Protection with Upside Potential Your Interest Credits The Athena Indexed Universal Life SM index-linked interest options can deliver upside potential (up to a cap) based on index movements without all of the potential downside typically associated with equity markets because of the beneficial way the indexed options interest credits are calculated. % X 100% Index Performance Rate Guaranteed Participation Rate 1 Index Performance Rate: 2 Participation Rate Guaranteed to be 100% Point-to-Point Evaluation A simple point-to-point method is used to determine the index performance rate for each indexed option Segment: This is the difference between the index s value at the beginning and end points of the 1-year or 3-year segment, expressed as a percentage increase or decrease. The participation rate is the percentage of the index growth on which your interest credit will be based (subject to the cap and floor described below). With Athena Indexed Universal Life SM, your participation rate is guaranteed to be at least 100%. If market conditions warrant, AXA Equitable reserves the right to raise the participation rate above 100% in the future. 8 through the years

11 Hypothetical Growth Cap up to... 12% $ Interest Credit not less than... 0% Guaranteed Floor 3 Growth Cap 4 Guaranteed Floor: No Negative Performance There is an upward limit on the rate of return an index-linked interest option can credit over each 1-year or 3-year Segment. While AXA Equitable can increase or decrease these growth caps, for new Segments, once the growth cap is set for a specific Segment, it will not change. The growth cap will be set on or before the Segment Start Date. For the 1-year index-linked interest options it is guaranteed to never be lower than 3% and the growth cap for the 3-Year S&P 500 Indexed Option is guaranteed never to be lower than 10%. Your financial professional can give you information on the growth caps that currently apply. If the index of an indexed option loses value over the 1- or 3-year Segment, the interest credit would equal 0% (the guaranteed floor) and the portion of your policy account allocated to the index-linked interest option would not decrease except due to the effect of monthly deductions and any unpaid loan interest. Even More Protection Your policy also offers a 2% annual interest guarantee that is available independent of the performance of the indexed options. (Refer to Policy Enhancements section, page 15, for more details.) through the years 9

12 The Index-Linked Interest Options in Action Here are some hypothetical examples illustrating how the growth caps and guaranteed floors can affect your credited interest. These examples do not attempt to predict actual future values. Examples: Hypothetical Growth Cap = 12% Cap = 12% Cap = 12% 9% 9% Credit 14% 12% Credit If your 1-Year S&P 500 Indexed Option experienced growth of 9% over a 1-year Segment, your interest credit rate would be 9%, since that is lower than the 12% growth cap. If the same indexed option experienced growth of 14%, then the interest credit rate would be limited to the growth cap of 12%. Examples: Guaranteed Floor = 0% 2% 2% Floor = 0% Floor = 0% Credit -4% 0% Credit If your 1-Year Russell 2000 Indexed Option experiences growth of 2% over a 1-year Segment, your interest credit rate would be 2%. If the same index fell 4% over a 1-year segment, your interest credit would be 0%, since the 0% guaranteed floor is greater than -4%. 10 through the years

13 Allocating Dollars to the Index-Linked Interest Options and the Guaranteed Interest Account An Overview Guaranteed Interest Account Athena Holding $ Indexed Universal for Indexed Account Indexed Option B Segment $ Life SM Policy Option B Segment Holding Account for Indexed Option A Segment Indexed Option A Segment $ Premium Allocations You pay premiums into your policy. Based on the instructions you provide, we allocate net premiums in the amount of dollars you ve specified into the Guaranteed Interest Account and into Holding Accounts, each of which is associated with an indexed option you ve chosen. The money in the Holding Accounts (plus interest credited, and less certain deductions such as premium charges) will be transferred into a new Segment of each specified indexed option on the Segment Start Date (generally the 15th of the month), subject to satisfying the requirements necessary to establish a new Segment. Once money is transferred into a Segment, it cannot be transferred out of the Segment until that Segment s Maturity Date. At each Segment Maturity, as long as your policy has remained continuously in force during the Segment term, the Segment s point-to-point index growth is evaluated and we credit interest to the indexed option Segment, subject to the growth cap, participation rate and guaranteed floor. Segment Distribution Allocations You may have the Segment Maturity Value allocated: Into a new Segment of the same indexed option, Into a Segment of one or more of the other indexed options, or Into the Guaranteed Interest Account (the unloaned portion). If allocated to an indexed option at Segment Maturity, the money first goes into the appropriate Holding Account and is then transferred into a new Segment at the next Segment Start Date. 2 If you do not specify maturity allocations, the money will be transferred to the Holding Account for the same indexed option and then transferred into a new Segment at the next Segment Start Date. In order to establish a new Segment, certain requirements must be met as specified in the policy. And remember, you can also transfer money from the Guaranteed Interest Account into new Segments of the indexed options. Money removed from an indexed option Segment before maturity due to policy surrender, lapse or a death benefit payment, is not credited with any interest based on index performance. Money removed due to monthly deductions, withdrawals or loans is credited with interest on a pro rata basis. Partial withdrawals, loan and policy charges are first taken from the Guaranteed Interest Account and any Holding Accounts and thereafter pro rata from any Segments. Amounts in a Segment may not be transferred out of the Segment until the Segment Maturity Date. 2 Subject to certain requirements being satisfied. See your policy for more detailed information. through the years 11

14 in the future income for retirement and other needs As an Athena Indexed Universal Life SM policyholder, you can look forward to the day when your accumulated cash value could help you realize your long-term financial goals. When the time is right, you may be able to conveniently access your cash value free of current income taxes through a combination of withdrawals and policy loans. Athena Indexed Universal Life SM Downside Protection combined with Upside Potential to help you realize your long-term goals: Supplementing your retirement income Funding your children s education Providing financial support to your children or parents Buying a dream house Starting or building a business Paying taxes on withdrawals from qualified plans Traveling and other recreational activities Dealing with unexpected emergencies 12 in the future

15 Partial Withdrawals Potentially Free of Current Income Taxes After the first policy anniversary, you can withdraw money from your policy s net cash surrender value. Under current federal tax rules, withdrawals up to your policy s cost basis (total premiums paid) are generally considered to be a tax-free return of premiums (see Important Tax Notes below). Withdrawing additional amounts would result in taxable income. You should note that surrender charges may apply. Of course, your cash value will be reduced by the amount of any withdrawals you make. And if you ve selected the Variable Death Benefit (Face Amount plus cash value), withdrawals will reduce your death benefit as well. Income-Tax-Free Policy Loans You may take a policy loan up to the net cash surrender value any time after your policy is issued. The loans can be taken free of current income tax as long as certain requirements are met (see Important Tax Notes below). Outstanding loans do accrue interest that is generally not deductible. That interest can, however, be somewhat offset by interest credited on your policy s cash value. In certain circumstances described in the policy, taking a loan may restrict your ability to allocate money to future Segments. important tax notes Under current federal income tax rules, partial withdrawals are generally income-tax-free up to your basis in the policy. Additional withdrawals are includible in income. Different tax rules apply to Modified Endowment Contracts (MECs) and for certain withdrawals during the policy s first 15 years. Loans taken will be free of current income tax as long as the policy remains in force until the Insured s death, does not lapse or mature and is not a MEC. This assumes any loan balance will eventually be repaid with income-tax-free death benefits. Loans and partial withdrawals reduce the policy s death benefit and increase the chances a policy may lapse even if you are in a period of coverage under the No Lapse Guarantee (NLG) Rider (see page 15 for more on the NLG). If the policy lapses, matures, is surrendered or becomes a MEC, any loan balance will be treated as distributed and taxable under general rules for policy distributions, that is, taxable to the extent it exceeds any remaining tax basis in the policy. If a policy is or becomes a MEC, all distributions (including loans) are taxable as ordinary income to the extent of gain in the policy, and may also be subject to an additional 10% premature distribution tax penalty unless the taxpayer is 59½ or older or another exception applies. The IRS places a limit on how much money can go into life insurance premiums and how quickly premiums can be paid in order for the policy to retain all of its tax benefits. One set of limits determines how much premium can be paid into your policy. Another set of limits (7-pay limits), if exceeded, can cause the policy to be deemed a MEC. Changes made to a policy, for example, a decrease in benefits, can impact the tax limits that apply to your policy and its status as a MEC. In some cases this can cause us to take action to assure your policy qualifies as life insurance, including distributions at the time of change or in the future, which may be includible in income. Speak to your financial professional and refer to your policy and illustration for further information before making policy changes or taking any withdrawals and loans. in the future 13

16 Leaving a Legacy for Your Beneficiaries Income-Tax-Free You can use the death benefit of your Athena Indexed Universal Life SM policy to provide legacies to your family members or others you select to be your beneficiaries. These legacies can be paid to your named beneficiaries free of federal income tax. Estate-Tax-Free Your legal and tax advisors can counsel you on how policy ownership may be structured by giving up incident of ownership in the policy so that the proceeds are outside the Insured s or Owner s estate. The policy s death benefit is not subject to probate as long as it is paid to a named beneficiary and not to the estate of the Insured. The death benefit proceeds of your policy can be used to help satisfy your estate tax obligations and thereby maximize the amount of estate assets that benefit your heirs. This may alleviate the necessity of your heirs having to sell a business or precious tangible assets in order to pay estate taxes and other associated costs. Ideal for Charitable Giving You can direct proceeds from your policy to be used as a contribution to your favorite charity. This can enable you to make a larger contribution than might otherwise be possible. And, you can make this gift while assets earmarked for your family members are kept intact. For more details on this, see the Fact Card and talk to your financial professional. 14 in the future

17 policy enhancements riders and endorsements available with Athena Indexed Universal Life SM No two individuals or families have the same needs. That s why AXA Equitable makes available a number of special riders and endorsements that can be used to enhance certain aspects of your Athena Indexed Universal Life SM policy. The No Lapse Guarantee Rider The No Lapse Guarantee (NLG) Rider is automatically included with your Athena Indexed Universal Life SM policy. 3 The NLG guarantees that your policy will not lapse for a period of up to ten years from your policy s register date, depending on the issue age of the Insured. Please note, you must maintain a certain level of premium and meet other criteria to keep the NLG in effect. In addition, withdrawals, policy loans and any accrued loan interest may cause your policy to lapse even if you are in a period of coverage under the NLG. 2% Interest Guarantee Endorsement This endorsement is automatically part of each Athena Indexed Universal Life SM policy, providing an additional source of protection at no further cost. The endorsement provides a minimum accumulation value using an interest rate of 2%. The minimum value, if higher, is used to determine the a) adequacy of your policy value to cover monthly deductions to prevent policy lapse, b) your cash surrender value at full surrender, c) your death benefit and d) amount you have available for a policy loan. A Choice of Optional Policy Riders Depending on your current or anticipated future needs, you can tailor your Athena Indexed Universal Life SM policy by taking advantage of one or more optional policy riders. These riders offer benefits such as: Providing high early cash flow for business planning needs or for minimizing the amount of outside collateral needed for purchasing your policy with premium financing, Preventing the policy from lapsing due to an overloan, or Providing a legacy to a charity. The Fact Card in the back pocket of this brochure as well as your financial professional can provide more information about the optional riders and their costs, and can help you determine which, if any, you may need. 3 The NLG is not included if the Return of Premium Death Benefit Rider (ROPR) is elected. In Illinois, the No Lapse Guarantee Rider is called the Death Benefit Protection Rider. policy enhancements 15

18 Athena Indexed Universal Life SM The advantages you need now, through the years and into the future Immediate, affordable financial protection for your family Federal income-tax-free death benefit Security for your business Downside protection Legacy planning Estate preservation Flexible premiums Choice of death benefit options Flexibility to increase or decrease your Face Amount Tax-deferred cash value accumulation Interest crediting with market-upside participation Potential for partial withdrawals and loans free from current income taxation No Lapse Guarantee Rider An array of other optional riders Talk to your financial professional about how Athena Indexed Universal Life SM can protect what s important to you while it gives you the cash accumulation opportunity of a lifetime. 16 Athena Indexed Universal Life SM

19 A the na ( -the n ) n. In Greek mythology, Athena is the goddess of wisdom, the practical arts and the protectress.

20 Athena Indexed Universal Life SM *S&P, Standard & Poor s, S&P 500 and Standard & Poor s 500 TM are trademarks of Standard & Poor s and have been licensed for use by AXA Equitable. Athena Indexed UL SM is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s does not make any representation regarding the advisability of investing in the product. The Russell 2000 index is a trademark of Russell Investments and has been licensed for use by AXA Equitable. Athena Indexed UL SM is not sponsored, endorsed, sold or promoted by Russell Investments and Russell Investments makes no representation regarding the advisability of investing in the product. The product referred to herein is not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such product or any index on which such product is based. The policy contains a more detailed description of the limited relationship MSCI has with AXA Equitable and any related products. Please be advised that this brochure is based on our general understanding of federal income tax rules for U.S. individuals and is not intended as legal or tax advice. Accordingly, any tax information provided in this brochure is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and you should seek advice based on your particular circumstances from an independent tax advisor. This brochure is not intended to be a complete description of the Athena Indexed Universal Life SM insurance product. Please refer to your actual policy and the policy illustration for more complete details. Athena Indexed Universal Life SM is a flexible premium universal life insurance policy with index-linked interest options. These policies have limitations. Certain types of policies, features and benefits may not be available in all jurisdictions or may be different. For costs and complete details of coverage, contact your financial professional. Athena Indexed Universal Life SM is a service mark of AXA Equitable Life Insurance Company, New York, NY Athena Indexed Universal Life SM is issued by AXA Equitable Life Insurance Company (AXA Equitable), New York, NY, and distributed by AXA Network, LLC and its subsidiaries and AXA Distributors, LLC. AXA Equitable, AXA Network and AXA Distributors are affiliated companies and do not provide tax or legal advice. Policy form #ICC or state variations 2011 AXA Equitable Life Insurance Company. All rights reserved Avenue of the Americas, New York, NY 10104, (212) G26238 GE (2/11) Cat. # (2/11)