- Provides minimum, guaranteed, periodic withdrawals for the life of the contract owner/annuitant.

Transcription

1 FOR INCOME Lincoln Lifetime Income SM Edge At-A-Glance Lincoln Lifetime Income SM Edge is subject to firm and state availability. Check your selling agreement or contact the Annuity Sales Desk for more information. Refer to the Lincoln Lifetime Income SM Edge Guaranteed Lifetime Withdrawal Benefit Rider for more information. Lincoln Lifetime Income SM Edge Single / Joint Life Options Income Base (IB) Rider Year Maximum Income Base A fixed indexed annuity rider, available for an additional cost, that provides guaranteed withdrawals for the life of the contract owner/annuitant (Single Life Option) or for the lives of the contract owner/annuitant and spouse (Joint Life Option). Currently, this rider can only be elected at issue of any Lincoln fixed indexed annuity product. The client must elect either the single life or joint life option when the contract is issued. This election is irrevocable and therefore, cannot be changed. Single Life Option: Joint Life: - Provides minimum, guaranteed, periodic withdrawals for the life of the contract owner/annuitant. - Eligible for lifetime payout of a Lifetime Benefit Amount, subject to certain conditions, starting at age No spousal continuation of the rider. - Must be spouses. - Provides minimum, guaranteed, periodic withdrawals for the lives of the contract owner/annuitant and his/her spouse. - Eligible for lifetime payout of a Lifetime Benefit Amount, subject to certain conditions, starting at age 50 of the youngest spouse. - At first death, surviving spouse has ability to continue the rider. The value used to calculate the withdrawal benefit and rider charge under this rider. It is not available as a lump sum withdrawal, death benefit, or annuitization. The Income Base for new issues is equal to: The initial premium (plus premium bonuses, if applicable) The IB is increased by: (1) 5% Annual Enhancements (during the Enhancement Period); or (2) Account Value Step-ups; and (3) additional premiums. It is decreased by Non-Conforming Withdrawals. The Income Base is recalculated each rider anniversary. The 12-month period starting with the contract issue date and then starting with each Rider anniversary date after that. $10,000,000. This maximum takes into consideration the combined Income Base from all Lincoln living benefit riders for all Lincoln contracts (or contracts issued by our affiliates) applicable to an individual (and spouse, if the Joint Life Option is elected). For Agent/Broker Use Only Not to be Used With the General Public Page 1 of 6

2 5% Annual Compounded Enhancement On each Rider Year anniversary, the Income Base will be increased by 5%. This 5% Enhancement will be credited to the Income Base annually for the earlier of age 85 or 15 years (also known as the Enhancement Period). Additional premiums must be in the contract for at least one Rider Year before the 5% Enhancement is applied to that premium (except for premiums made within the first 90 days of contract issue). Once the Lifetime Benefit Amount is initiated through Income election with the Lincoln Lifetime Income SM Edge Distribution Request Form the 5% Enhancement is not available on any Benefit Year anniversary in which there is a withdrawal. The factor used to determine the Lifetime Benefit Amount will be locked-in at the time the Income Withdrawal election is made. Account Value Step- Up / Automatic Annual Step-Up Additional Premiums Flexible Premium Contracts: Lincoln OptiChoice SM Lincoln OptiPoint Lifetime Benefit Amount (LBA) / Income Withdrawal On each Rider Year anniversary, if the Accumulation Value is higher than the previous Income Base plus the 5% Enhancement (if applicable), then the IB will automatically step-up to the Accumulation Value. If the step-up to the Accumulation Value occurs the following applies: The Lifetime Benefit Factor could increase if the client has moved into a new age band. The Rider charge can increase if a step-up occurs after the first 5 rider years. The client may opt out of the Automatic Annual Step-Up within 25 days due to the charge increasing. The client would be notified with the Reallocation Notice in any year the Rider charge has increased. - If the client opts out of an Automatic Annual Step-Up, the 5% Enhancement would still be applied, if occurring during the Enhancement Period. Account value step-ups are allowed during Rider Years in which a withdrawal is taken. Additional premiums increase the Income Base dollar-for-dollar. Not allowed if the account value equals zero. Total additional payments after the 1 st year are currently limited to $25,000 per year, for cumulative amount of $100,000. Amounts above the additional premium limit may be permitted subject to Home Office approval. The Lifetime Benefit Amount is equal to Income Factor applied to the Income Base. Income Factor percentages are shown in the following section. The applicable percentage is determined by the age at the time the Income Withdrawal is initiated with the Lincoln Lifetime Income SM Edge Distribution Request Form (AN10100). An Income Withdrawal amount, up to the Lifetime Benefit Amount, may be withdrawn each year. The Income Withdrawal can be taken in one year and skipped the next, and it may be paid for life, assuming certain conditions are met. Provisions are as follows: The factor used to determine the Lifetime Benefit Amount will be locked-in at the time the Income Withdrawal election is made (unless an Account Value step-up occurs). Unused Lifetime Benefit Amounts cannot be carried over to following year. The Income Withdrawal is not subject to surrender charges or Market Value Adjustment. Must meet age restrictions the Lifetime Benefit Amount is available beginning at age 50 (youngest spouse). Disallows the 5% Enhancement. An Income Withdrawal will count toward the 10% free withdrawal amount. Does not decrease the Income Base. The LBA will continue for life if the contract value is reduced to zero and the Income Base is positive. An Income Withdrawal cannot be initiated in any year in which a Non-Conforming Withdrawal has been taken. For Agent/Broker Use Only Not to be Used With the General Public Page 2 of 6

3 Lifetime Benefit Income Factors / Income Base Rate Factors used in determining the Lifetime Benefit Amount are as follows: Lifetime Benefit Income Factors / Base Rates Age Single Life LBA Income Factors Joint Life LBA Income Factors % 3.5% % 4.0% % 4.5% % 5.0% % 5.5% % 6.0% % 6.5% % 7.0% % 7.5% % 8.0% Income Bonus Rate Factor*: Number of Years Income Bonus Rate Lincoln OptiChoice SM and Lincoln New Directions Income Bonus Rate Lincoln OptiPoint 5-Yr wait 0.50% 0.25% 10-Yr wait 1.00% 0.60% * Additional Income Bonus Rate Factor applies if there have been no withdrawals during the first 5 or 10 year waiting period. This includes withdrawals of the free amount and withdrawals that occur before the Lifetime Benefit Amount is initiated. The Income Bonus Rate Factor is determined when the first withdrawal (Non-Conforming or Income Withdrawal) is taken. Examples of Lifetime Benefit Income Factors Lincoln OptiChoice SM and Lincoln New Directions 5-Yr Wait: Assume the client purchases rider at age 50 and starts income 5 years later at age 55. The LBA Income Factor would be 5.0%. [4.5% LBA Income Factor for age % for 5-year wait] 10-Yr Wait: the client requests the Lifetime Benefit Amount 10 years later at age 60. The LBA Income Factor would be 6.0%. [5.0% LBA Income Factor for age % for 10 year wait] Lincoln OptiPoint 5-Yr Wait: Assume the client purchases rider at age 50 and starts income 5 years later at age 55. The LBA Income Factor would be 4.75%. [4.5% LBA Income Factor for age % for 5-year wait] 10-Yr Wait: the client requests the Lifetime Benefit Amount 10 years later at age 60. The LBA Income Factor would be 5.60%. [5.0% LBA Income Factor for age % for 10 year wait] Lincoln OptiChoice SM and Lincoln New Directions Withdrawal in Yr 2: Assume the client purchases rider at age 50 and takes a withdrawal in year 2. The Income Bonus Rate is set at 0.0%. The client then requests the Lifetime Benefit Amount 5 years later at age 55. The LBA Income Factor would be 4.5%. [4.5% LBA Income Factor for age 55 (no bonus rate applies)] For Agent/Broker Use Only Not to be Used With the General Public Page 3 of 6

4 Increase of LBA Excess Withdrawals / Non-Conforming Withdrawals The Lifetime Benefit Amount (LBA) may be increased due to any of the following: 5% Enhancement (the Income Base would increase) Account Value Step-up (the Income Base would increase and the Income Factor may increase for attained age) Nursing Home Enhancement (more generous withdrawal of 10%) Additional Premium (the Income Base would increase) A Non-Conforming Withdrawal is any withdrawal taken outside the parameters of the Lifetime Benefit Amount. This includes Withdrawals in excess of the Lifetime Benefit Amount. Any withdrawals prior to age 50 (youngest spouse for the Joint Life Option). Withdrawals that occur prior to the time that the Income Withdrawal is requested using the Lincoln Lifetime Income SM Edge Distribution Request Form. A Non-Conforming Withdrawal will reduce the Income Base on a pro-rata basis and will reduce the LBA. Withdrawals from Individual Retirement Annuity (IRA) contracts will be treated as if they are within the Lifetime Benefit Amount (even if they exceed the Income Withdrawal Amount), but only if the following conditions apply: Required Minimum Distribution (RMD) Withdrawals Lifetime Benefit Payout Phase Nursing Home Enhancement Rider Charges The withdrawals are taken after the Income Withdrawal has been initiated with the Lincoln Lifetime Income SM Edge Distribution Request Form. The RMD is distributed in systematic monthly or quarterly installments using Lincoln s AWS system in the amount needed to satisfy the required minimum distribution (RMD) rules under Internal Revenue Code Section 401(a)(9). Certain other conditions may apply. While RMD withdrawals do not negatively affect the LBA eligible for lifetime payment, the RMD amount itself will not be paid for life if it exceeds the LBA. The LBA may be paid for life, assuming certain conditions are met. Refer to the Rider for details. The Income Withdrawal has been initiated with the Lincoln Lifetime Income SM Edge Distribution Request Form (AN10100). The accumulation value is zero and the Income Base is positive. Only the LBA is payable for life. Any Non-Conforming Withdrawals made can reduce or even eliminate the lifetime payment of the LBA. Allows withdrawals of 10% of the Income Base, minus any withdrawals, in a Rider Year due to confinement to a nursing home, subject to certain conditions. Applicable if the Covered Life is at least age 65 and nursing home confinement occurs after the 5 th Rider year. Current charge for Single and Joint Life riders will be 0.65%. The charge is guaranteed for the first 5 rider years. After the first 5 rider years the charge can be increased: On a class-basis if the charge for the class increases On an individual-basis, if a step-up to the Account Value occurs. On an individual-basis, if the cumulative premium amount exceeds $100,000 (with prior home office approval). The guaranteed maximum charge is 1.00%. The fee for the Rider is deducted annually from the Accumulation Value, and is taken first from the Fixed Account. For Agent/Broker Use Only Not to be Used With the General Public Page 4 of 6

5 Issue Ages The maximum election age is 85 (under age 86). There is no minimum issue age (check for state variations) follow base contract minimum age requirements. Minimum Premium Amount Maximum Amount State Availability The minimum contract size for Lincoln Lifetime Income SM Edge is $25,000. The Income Base cannot go above $10 million without Home Office approval. A 5% Enhancement and/or Account Value step-up cannot increase the IB beyond the maximum of $10 million without Home Office approval. This is for a total of all Lincoln living benefit riders. Lincoln Lifetime Income SM Edge requires state approval prior to issue. Check current state availability before proposing this rider to a client. Market Availability Lincoln Lifetime Income SM Edge is available for purchase with nonqualified and qualified (IRAs and Roth IRAs) annuity contracts. Product Availability Death Benefit Spousal and Non- Spousal Continuation Termination Compensation Lincoln Lifetime Income SM Edge is available on the following products: Lincoln New Directions Lincoln OptiChoice SM Lincoln OptiPoint The death benefit is equal to the account value of the base contract. There is no integration with the death benefit and no payout of the Income Base upon death of the contract owners or annuitant. At the time of death, if the contract value equals zero, there is no death benefit. Election of Lincoln Lifetime Income SM Edge does not impact the death benefit on the base contract. The spousal continuation options work differently for the Single Life and Joint Life options. Clients wanting true spousal continuation must select the Joint Life option upon election of the rider this election is irrevocable. A non-spouse Joint Life is not available. After the fifth anniversary of the effective date of the rider, the owner may terminate the rider by notifying Lincoln in writing. There are certain conditions under which the rider is automatically terminated. Refer to the Rider for details. No additional compensation will be paid for the sale of contracts with Lincoln Lifetime Income SM Edge. For Agent/Broker Use Only Not to be Used With the General Public Page 5 of 6

6 Sample Illustration The following is an example of what Lincoln Lifetime Income SM Edge illustration could look like if elected at age 60 (on a single life-basis). The chart shows what the Lifetime Benefit Amount would be if income was started during each year. Since the illustration is assuming that no withdrawals have been taken prior to the Income Withdrawal is initiated, the additional Income Factor Bonus is added to the applicable Lifetime Benefit Amount Income Factor after 5 years and 10 years respectively. This example is for Lincoln New Directions or Lincoln OptiChoice SM illustrating the Income Factor Bonus of 0.50% (5-year wait) and 1.0% (10-year wait). Lincoln Lifetime Income SM Edge 5% Roll Up Age Income Base Lifetime Benefit Amount 60 $100,000 $5, $105,000 $5, $110,250 $5, $115,763 $5, $121,551 $6, $127,628 $7,658 Income Factor Bonus of 0.50% Applied 66 $134,010 $8, $140,710 $8, $147,746 $8, $155,133 $9, $162,889 $11,402 Income Factor Bonus of 1.00% Applied Fixed indexed annuities are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company. Contract may be referred to as certificate in certain states (certificate may not be available in all 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. Fixed Indexed Annuities Include: Lincoln OptiChoice SM flexible premium deferred annuity (contract form , or state variation), Lincoln OptiPoint flexible premium deferred annuity (contract form , or state variation), Lincoln New Directions single premium deferred annuity (contract form , or state variation. Lincoln Lifetime Income SM Edge, a fixed indexed annuity rider, Form AE-245. Fixed indexed annuities are not available in 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 /9/2011 For Agent/Broker Use Only Not to be Used With the General Public Page 6 of 6