Product Training for Annuity Agents

Transcription

1 Product Training for Annuity Agents The information contained herein is solely for the purpose of providing our producers general information pertaining to our annuity products. None of this information will affect the terms of our annuity contracts. In the event of any conflict, the terms of the annuity contract will prevail. Because annuity products must conform to the individual laws applicable to each state in which they are sold, there will be some state-specific variances of the information contained herein. Further, some products may not be available for sale in all states. For complete details about any of our products, including state-specific provisions, please refer to the policy contract and the applicable product disclosure form. Additional information may be obtained from our annuity marketing department by calling Page 1 of 18

2 The annuity products offered by Liberty Bankers Life and The Capitol Life Insurance Company are all fixed rate annuities. The companies do not offer variable annuities or equity indexed annuities. Our annuity products may be separated into the following five distinct groups of product types: Multi-Year Rate Guarantee (MYG) Deferred Annuities Bankers Series Rate-enhanced MYG Deferred Annuities Bankers Elite Series Traditional Deferred Annuities Liberty Series Specialty Deferred Annuities Single Premium Immediate Annuities Following is a brief description of the specific products contained in each group. Page 2 of 18

3 Multi-Year Rate Guarantee (MYG) Deferred Annuities Bankers Series The MYG deferred annuities offered by the companies all contain the following common features: They are single premium annuities. Additional premiums may not be added after issue. Credited rates are guaranteed for the length of the surrender charge period. The minimum single premium is $10,000. The maximum amount of total premium accepted without prior approval is $500,000 for all issue ages. They may be issued as non-qualified or as an IRA or Roth IRA. They contain a Market Value Adjustment (MVA). (discussed later) The death benefit is: The accumulated value on the death of the annuitant/owner. o No surrender charges or MVA. The surrender value on the death of the owner, if other than the annuitant. o Surrender charges and MVA will be applied when determining the death benefit. The following chart briefly describes the specific product differences. (Please consult the policy form and product disclosure for complete details.) Page 3 of 18

4 Multi-Year Rate Guarantee (MYG) Deferred Annuities Bankers Series Maximum Issue Age (Annuitant and/or owner) Initial Rate Guarantee Period Surrender Charges Tables s how surrender charge percent based on the contract year and issue age of the annuitant. Bankers 3 Bankers 5 Bankers 5 Premier Bankers 5 Premier Plus Bankers 7 Bankers 7 Premier years 5 years 5 years 5 years 7 years 7 years Yr % 2 7% 3 6% 4+ none Yr % 2 7% 3 6% 4 5% 5 4% 6+ none Yr % 2 7% 3 6% 4 5.5% 5 4.5% 6+ none Yr % 2 7.3% 3 6.4% 4 5.5% 5 4.5% 6+ none Yr % 8% 2 11% 7% 3 10% 6% 4 8% 5% 5 6% 4.5% 6 5% 3.5% 7 4% 2.5% 8+ none none Yr % 8.1% % 7.1% % 6.1% 4 8.5% 5.1% 5 6.5% 4.5% 6 5.5% 3.5% 7 4.5% 2.5% 8+ none none Page 4 of 18

5 Rate-Enhanced Multi-Year Rate Guarantee Deferred Annuities Bankers Elite Series The Rate-Enhanced MYG deferred annuities offered by the companies all contain the following common features: They are single premium annuities. Additional premiums may not be added after issue. The initial credited rate is guaranteed for the length of the surrender charge period. The minimum single premium is $10,000. The maximum amount of total premium accepted without prior approval is $500,000 for all issue ages. They may be issued as non-qualified or as an IRA or Roth IRA. They contain no penalty-free liquidity features or benefit riders. They contain a Market Value Adjustment (MVA). (discussed later) The death benefit is: The surrender value on the death of the annuitant/owner. o Surrender charges and MVA will be applied when determining the death benefit. The following chart briefly describes the specific product differences. (Please consult the policy form and product disclosure for complete details.) Page 5 of 18

6 Rate-Enhanced Multi-Year Rate Guarantee Deferred Annuities Bankers Elite Series Maximum Issue Age (Annuitant and/or owner) Initial Rate Guarantee Period Surrender Charges Tables s how surrender charge percent based on the contract year and issue age of the annuitant. Bankers Elite 3 Bankers Elite 5 Bankers Elite 7 Bankers Elite years 5 years 7 years 9 years Yr % 2 7.0% 3 6.2% % Yr % 2 7.0% 3 6.2% 4 5.3% 5 4.4% % Yr % 2 7.0% 3 6.2% 4 5.3% 5 4.4% 6 3.5% 7 2.7% % Yr % 2 7.0% 3 6.2% 4 5.3% 5 4.4% 6 3.5% 7 2.7% 8 1.8% 9 0.9% % Page 6 of 18

7 Traditional Deferred Annuities Liberty Series Traditional deferred annuities offered by the companies all contain the following common features: The initial rate at issue is guaranteed for the first contract year. The rate for subsequent years will be established on each anniversary date and will never be below a 1% guaranteed minimum. The minimum initial premium is $5,000. The maximum amount of total premium accepted without prior approval is $500,000 for all issue ages. They may be issued as non-qualified or as an IRA or Roth IRA. They contain a Market Value Adjustment (MVA). (discussed later) The death benefit is: The accumulated value on the death of the annuitant / owner o No surrender charges or MVA. The surrender value on the death of the owner, if other than the annuitant. o Surrender charges and MVA will be applied when determining the death benefit. The following chart briefly describes the specific product differences. (Please consult the policy form and product disclosure for complete details.) Liberty USA 100 and Liberty USA 500 Products are suspended from sales as of November 30, 2012 until further notice. Page 7 of 18

8 Maximum Issue Age (Annuitant and/or owner) Minimum Premium Initial First Year Interest Rate Enhancement Surrender Charges Tables show surrender charge percent based on the contract year and issue age of the annuitant. Traditional Deferred Annuities Liberty Choice Liberty Select Liberty USA 100 Liberty USA $5,000 Single $100 monthly additions $5,000 Single $100 monthly additions 1.00% 1.50% Yr % 2 7% 3 6% 4 5% 5 4% 6+ none Yr % 8% 2 11% 7% 3 10% 6% 4 8% 5% 5 6% 4% 6 4% 3% 7 2% 2% 8+ none none $10,000 single Additions not permitted 1.00% 1.25% for premiums of $100,000 or more Yr % 9% 2 11% 8% 3 10% 7% 4 9% 6.5% 5 8% 5.5% 6 7% 4.5% 7 6% 3.5% 8 5% 2.5% 9 4% 1.5% 10 none none $10,000 single Additions not permitted 5.00% 5.25% for premiums of $100,000 or more Yr % 13% 2 15% 12% 3 16% 11% 4 13% 10.5% 5 12% 9.5% 6 11% 8.5% 7 10% 7.5% 8 9% 6.5% 9 8% 5.5% 10 none none Liberty USA 100 and Liberty USA 500 Products are suspended from sales as of November 30, 2012 until further notice. Page 8 of 18

9 Specialty Deferred Annuities The specialty deferred annuities offered by the companies all contain the following common features: The initial credited rate is guaranteed for one contract year. The minimum initial premium is $10,000. The maximum amount of total premium accepted without prior approval is $500,000 for all issue ages. They may be issued as non -qualified or as an IRA or Roth IRA. The death benefit is: The accumulated value on the death of the annuitant / owner o No surrender charges or MVA. The surrender value on the death of the owner, if other than the annuitant. o Surrender charges and MVA will be applied when determining the death benefit. The following chart briefly describes the specific product differences. (Please consult the policy form and product disclosure for complete details.) Bankers 1 and Bankers Accumulator Products are suspended from sales as of November 30, 2012 until further notice. Page 9 of 18

10 Specialty Deferred Annuities Maximum Issue Age (Annuitant and/or owner) Additional Premiums Allowed? Initial Rate Guarantee Period Surrender Charges Tables show surrender charge percent based on the contract year and issue age of the annuitant. Bankers 1 Bankers Accumulator No Yes, if $1,000 or more 1 year 1 year Yr % 2+ none None Bankers 1 and Bankers Accumulator Products are suspended from sales as of November 30, 2012 until further notice. Page 10 of 18

11 Single Premium Immediate Annuities The single premium immediate (SPIA) annuities offered by the companies all contain the following common features: The minimum single premium is $25,000. The maximum amount of total premium accepted without prior approval is $500,000 for all issue ages. They may be issued as non-qualified or as an IRA or Roth IRA. They provide for a fixed income to be paid either as a life income or fixed period of time. Term certain periods are available for five to thirty years (but may not extend beyond attained age 100). Lifetime income payments may be determined on the basis of single life or joint lives. o Lifetime income for a single life may be guaranteed for 5, 10, 15, or 20 years. Income payments may be made monthly, annually, semi-annually, or quarterly. The maximum issue age is: o 80 if the income is based on life expectancy or expectancies. o 90 if the income will be paid only for a fixed number of years. Page 11 of 18

12 How Interest is Credited Interest is credited daily to the accumulated value of our deferred annuity contacts. All interest rates are expressed as annual effective yields. This means that the actual, or nominal, rate is lower than the effective yield. For example, if we state that the current credited rate is 4.5%, we actually use 4.4% to determine the amount of interest to be credited to the contract. But, when the daily equivalent of 4.4% interest is credited and compounded every day throughout the year, the effective yield at the end of the year will be 4.5% if no withdrawals are made during that time. The companies determine current interest rates from time to time that will be applicable to policies issued after the effective date of the credited rate. However, once a contract is issued, the rates to be used in determining values on that contract are guaranteed. After the initial rate guarantee period has expired, the companies will determine a rate to be credited to the contract for the following contract year. In no event will this rate be less than the minimum guaranteed interest rate specified in the contract. V5.0 Copyright 2012 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public. Page 12 of 18

13 Liquidity Features All of our MYG deferred annuities, Traditional deferred annuities and Bankers 1 have the following liquidity features. These features are not available on our rate- enhanced MYG (Elite Series) deferred annuities. Monthly interest checks may be requested if the monthly interest earnings are $100 or more. o Monthly interest checks will vary slightly from month to month, based on the number of days in the month. Accumulated interest may be withdrawn two times per contract year. All other withdrawals will be subject to any remaining surrender charges and Market Value Adjustment. On IRAs only, the following additional liquidity features are available: Surrender charges will not apply to withdrawals made if they are made in order to comply with Internal Revenue Code section 72(t)(2)(iv). Withdrawals made after the first contract anniversary necessary to meet the IRS required minimum distribution requirements based on the value of the contract on the preceding December 31. o Withdrawals made in the first contract year to meet the IRS required minimum distribution requires that are in excess of interest earnings will be subject to surrender charges. Because Bankers Accumulator has no surrender charges, withdrawals may be made at any time, just as long as the accumulated value remaining after the withdrawal is at least $10,000. Page 13 of 18 V5.0 Copyright 2012 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public.

14 Owners, Annuitants and Beneficiaries All of the deferred annuities issued by the companies provide for a death benefit payable upon the death of the owner. Please refer to the pages above that describe the common features of each group of deferred annuities for specific information on how the death benefit is determined for each group. If the owner of a non-qualified annuity is a natural person and is not the annuitant, we do not pay a death benefit when the annuitant dies. Instead, the owner is required to name a new annuitant within 60 days of the annuitant s death. If a new annuitant is not named, the owner becomes the annuitant. Once a new annuitant is named, the annuitant cannot be changed while the annuitant is still living. When the owner dies, the beneficiary becomes the new owner. If the sole beneficiary is the deceased owner s surviving spouse, the surviving spouse may elect to continue the annuity as his/her own. If the beneficiary is not the surviving spouse or if there are multiple primary beneficiaries, the entire contract must be distributed: o Within five years of the owner s death, or o Over the life expectancy of the beneficiary. These distributions must begin within one year of the owner s death. The companies do not allow more than one annuitant to be named on deferred annuity contracts. Page 14 of 20 V5.0 Copyright 2012 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public.

15 Owners, Annuitants and Beneficiaries continued Joint ownership of a deferred annuity contract is discouraged. However, the companies will allow joint owners ONLY if the joint owners are married to one another; non-spousal joint ownership is not permitted. If spousal joint owners are named, the following precautions should be taken: The joint ownership should be With Right of Survivorship so that full ownership will transfer to the survivor when the first joint owner dies. The sole primary beneficiary should name both spouses and include language relating to the survivor of the two, i.e. John Doe and Mary Doe, or to the survivor. o Example: John and Mary purchase a deferred annuity and name themselves as joint owners. John is the annuitant and the beneficiary is as just described. In the event Mary dies first, the death benefit payable on account of her death is payable to John. John, being the sole beneficiary, may continue the contract as discussed above. In the event John dies first, sole ownership passes to Mary under the rights of survivorship. Mary is also the surviving beneficiary. Mary will then name herself as the new annuitant. She should also review and update the beneficiary designation as required in light of John s death. Without a change, when she dies all primary beneficiaries will be dead, so the benefits will pass to any named contingent beneficiaries. If there are no contingent beneficiaries, the death proceeds will be paid to Mary s estate. Children should NOT be included in the primary beneficiary designation; otherwise the surviving spouse will not be able to continue the contract. o Children should be listed only as contingent beneficiaries. Page 15 of 18 V5.0 Copyright 2012 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public.

16 Additional Benefits All of our MYG deferred annuities and Traditional deferred annuities that are issued on a non-qualified basis contain the following additional benefits. These benefits are not available on our rate- enhanced MYG (Elite Series) deferred annuities. Please refer to the specific rider form for complete details. Nursing Home Benefit o After the first contract year, up to 50% of the accumulated value may be withdrawn without surrender charges if the annuitant is confined to a nursing home for 90 consecutive days. o The annuitant must provide evidence of confinement in a state licensed nursing facility or intermediate care facility that provides continuous 24 hour a day nursing service under the supervision of a licensed medical practitioner. o Confinement must begin after the policy issue date. Disability Benefit o After the first contract year, up to 50% of the accumulated value may be withdrawn without surrender charges if the annuitant is disabled for 90 consecutive days. o Disability must begin after the policy issue date. o The Annuitant must provide evidence of an inability to conduct his or her normal occupational duties. Terminal Illness Benefit o After the first contract year, up to 50% of the accumulated value may be withdrawn without surrender charges if the annuitant is diagnosed with a non-correctable medical condition that is expected to result in death within 12 months of the date of being diagnosed by a licensed physician who is not related to the annuitant. o This benefit is not available on policies issued in the state of Texas. V5.0 Copyright 2013 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public. Page 16 of 20

17 Market Value Adjustments The Market Value Adjustment (MVA) is an adjustment we will make to the accumulated value during the surrender charge period upon: 1. The full surrender of the annuity contract, 2. The portion of any partial withdrawal that is subject to a surrender charge, or 3. Any withdrawal and/or the death benefit on the Rate-Enhanced MYG (Elite Series) Deferred Annuities. MVAs apply only to those products in the Multi Year Rate Guarantee (MYG) Deferred Annuities group, the Rate-Enhanced MYG Deferred Annuities group, and the Planned Rate Deferred Annuities group, discussed earlier. The MVA may increase or decrease the accumulated value, depending on whether general interest rates have fallen or risen from the time the annuity was purchased. If interest rates have risen, the accumulated value can be lower. Conversely, if interest rates have fallen, the accumulated value can be higher. We use the Treasury Constant Maturity Series (TCMS), published by the Federal Reserve, to measure changes in interest rates. The duration of the TCMS is the same as the contracts surrender charge period, if available, otherwise we use the duration that most closely matches the surrender charge period. As an example of how the MVA might affect the accumulated value, assume that when a contract with a 5 year surrender charge is issued, the TCMS is 2.50%. At the end of the third year, if the TCMS is 25 basis points higher, the accumulated value could be reduced 0.48%. Conversely, if the TCMS has fallen by 25 basis points, the accumulated value could be increased by 0.49%. V5.0 Copyright 2013 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public. Page 17 of 18

18 Please sign and date this page and return it to us via: Course Completion Fax: (254) or As a representative of Liberty Bankers Life Insurance Company and/or The Capitol Life Insurance Company, it is important that you understand the company guidelines on sales suitability, regulatory compliance and market conduct. Our Conduct and Compliance Guide for the Producer is designed to give you an overview of our guidelines in these areas. By accepting appointment with our Company, you agree to be bound by the provisions of these guidelines. If you have any questions about the material in the guidelines, please contact us. AGENT STATEMENT: By signing below, I acknowledge that I have reviewed and understand the Product Training for Annuity Agents in its entirety. Printed name of agent Agent s Signature Date Signed Page 18 of 18 V5.0 Copyright 2013 Liberty Bankers Life. All Rights Reserved. For producer training purposes only. This information is not approved for use with the public. R ghts Reserved For producer tra n ng purposes on y Th s nformat on s not approved for use w th the pub c