Versa-Flex PRO-NY. Flexible Premium Adjustable Life Insurance. Flexible and Efficient. Client Guide VFPRO-NY-1C

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1 Versa-Flex PRO-NY Flexible Premium Adjustable Life Insurance Flexible and Efficient Client Guide VFPRO-NY-1C

2 Life insurance helps provide financial protection and income replacement in the event of the insured s death, through the form of a tax-free 1 death benefit paid to policy beneficiaries. It can be an integral part of any long-term financial plan. VERSA-FLEX PRO-NY As Your Life Changes, So Should Your Life Insurance Policy. What a difference a few years can make in your life. Anything can change it: Having a baby Buying a bigger house Opening a second office Retiring When changes alter your life, they also impact the amount and scope of your life insurance needs. This is why flexible premium adjustable life insurance, commonly referred to as universal life, offers an advantage. Universal life lets you revise your policy without surrendering or exchanging it to better meet new financial and life insurance needs as they arise. Versa-Flex PRO-NY 1 universal life insurance has the power to change with you. You control a flexible death benefit protection and your premiums. Pay as little as your planned no-lapse premiums or pay up to the policy limits, according to any schedule you choose. Your policy s cash value will earn at least the guaranteed crediting rate and you may supplement your income through tax-free 2 policy loans and withdrawals from your policy s accumulated value. If your life insurance needs change, you can adjust your coverage to match. 1 Policy Form #P08VP1-NY. 2 For federal income tax purposes, tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC Sections 72, 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 1 Investment and Insurance Products: Not a Deposit Not Insured by any Federal Government Agency Not FDIC Insured No Bank Guarantee May Lose Value

3 PACIFIC LIFE & ANNUITY COMPANY Universal Life Insurance Benefits Flexible premiums Flexible death benefit coverage Guaranteed interest crediting rate Supplemental income potential Versa-Flex PRO-NY Features Adjust your premium and death benefit to meet ongoing needs (see pages 3 4) Guarantee up to 20 years of no-lapse protection (see page 4) Earn at least 3% guaranteed interest rate in your accumulated value (see page 5) Low-cost policy loans and withdrawals to help supplement your income (see page 6) Increase or convert your coverages without requiring new evidence of insurability (see page 7) Optional riders that include the ability to help preserve your policy if you become disabled (see page 7) Flexible and Efficient Versa-Flex PRO-NY 2

4 Flexibility That Works For You Inside Versa-Flex PRO-NY VERSA-FLEX PRO-NY Versa-Flex PRO-NY s flexibility is apparent before you make your first premium payment. Set Your Premiums With Versa-Flex PRO-NY, the amount and frequency of your premium payments are flexible within limits. Your policy will stay in force as long as it has enough accumulated value to pay monthly charges. To help keep you on track, we will send you premium reminders on a regular basis. And you can choose the frequency of your reminders on an annual, semi-annual, quarterly, or monthly basis. Monthly premiums must use electronic funds transfer. Universal Life Insurance generally requires additional premium payments after the initial premium. If either no premiums are paid, or subsequent premiums are insufficient to continue coverage, it is possible that coverage will expire. Choose Your Coverages You can combine up to three coverage types to build your life insurance protection. Basic Coverage This is where your protection begins. Basic Coverage provides a foundation of life insurance protection on the primary insured. Once you establish an amount of Basic Coverage, you can enhance your insurance protection with Additional Coverage and/or SVER Coverage, based on your financial goals. To determine which coverage options are right for you, talk with your life insurance producer, who can provide you with illustrations that will explain how adding the different coverage options can affect your policy values. Adjust Your Insurance Coverage Your policy s death benefit amount is also flexible. If changes in your life create a need for more, or less, life insurance coverage, you may increase or decrease your policy face amount to meet your needs. Increases may be subject to medical underwriting and may result in higher insurance charges. Decreases may only occur once per year after the first policy year. After any decrease, you must have at least a minimum Basic Coverage amount of $1,000. A reduction in face amount will not necessarily result in a proportionate reduction of all associated policy fees and charges. 3

5 Level Death Benefit PACIFIC LIFE & ANNUITY COMPANY Increasing Death Benefit Select Your Death Benefit Option Choose one of the following Death Benefit Options at issue and you may switch it as often as yearly. A (Level) B (Increasing) Level Death Benefit C (Return of Premium) 3 Death Benefit Level Death Benefit Increasing Death Benefit Premium Withdrawals Amount Death Benefit Equals... plus accumulated value plus sum of premiums, less any withdrawals Good for... Cost Efficiency Minimizes cost of insurance charges as accumulated value grows Increasing Death Benefit Growing Protection Captures power of accumulated Death Benefit value to increase death benefit protection Estate or Business Planning Harnesses power of premium dollars to increase death proceeds for beneficiaries Premium Withdrawals Amount Guarantee Your Death Benefit The Short-Term No-Lapse Guarantee Rider 4 is automatically included on all eligible policies. Provided you pay at least the Short-Term No-Lapse Premiums as scheduled, your policy is guaranteed to not lapse from 4 to 20 years, depending on your age at policy issue. Paying only the Short-Term No-Lapse Guarantee Premiums will not guarantee cash value accumulation. If you discontinue paying the Short-Term No-Lapse Death Premiums, Benefit the no-lapse feature will terminate before the guaranteed duration. Additional premiums will be required to continue the policy Premium beyond the guaranteed duration. Note that if withdrawals or loans are taken, Withdrawals additional premiums beyond the Short-Term No-Lapse Amount Premiums are required to keep the no-lapse guarantee in force. 3. The maximum issue age for Death Benefit Option C is 80. The maximum Death Benefit calculated will not exceed the amount shown in the Policy Specifications as the Option C Death Benefit Limit except as described in the Death Benefit Qualification Test, Tax Qualification as Life Insurance, and Modified Endowment Contract Tax Status sections of the Policy. 4. Short-Term No-Lapse Guarantee Rider (Form #R02NL5-NY1). Riders will likely incur additional charges and are subject to availability, restrictions, and limitations. When considering a rider, request a policy illustration from your life insurance producer to see the rider s impact on your policy s values. 4

6 VERSA-FLEX PRO-NY Versa-Flex PRO-NY can build accumulated value, which you can use for income. Build Tax-Deferred Accumulated Value With Versa-Flex PRO-NY, your policy can build accumulated value, which you may use for supplemental income. Moreover, any accumulated value growth in your life insurance policy is tax-deferred. Your policy s accumulated value is comprised of the: Sum of your premium payments less premium loads Minus policy charges (see page 8) Plus credited interest Understanding the Crediting Rate Each year, your policy s accumulated value will earn at least 3.00% we guarantee it. We may credit a higher rate from year to year. While the current rate your policy earns may vary, it will never fall below a minimum guaranteed rate of 3.00%. 5

7 PACIFIC LIFE & ANNUITY COMPANY Turn Tax-Deferred Growth into Tax-Free 5 Income Your policy s accumulated value grows tax-deferred. Later, you can access this accumulated value through tax-free 5 withdrawals and loans to supplement your income. Withdrawals Tax-free 5 up to sum of premiums paid Available after first policy year Minimum Amount: $200 Maximum Amount: Accumulated value minus total policy debt, $500, and any applicable surrender charges $25 fee for each withdrawal (currently waived) Automated Income Option Enjoy the convenience of policy loans and withdrawals that are electronically deposited into the checking or savings account of your choice. Eligibility limits apply. See your policy for details. Policy Loans Generally tax-free 5 Minimum Amount: None Maximum Amount: Accumulated value minus total policy debt, three times the most recent monthly charges, and any applicable surrender charges Loan interest rate charged is offset by interest rate credited. See chart below. Policy Year All Policy Years (guaranteed) All Policy Years (current) Annual Interest Charged Annual Interest Credited Annual Net Cost 3.25% 3.00% 0.25% 3.25% 3.25% 0.00% 5 For federal income tax purposes, tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC Sections 72, 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 6

8 VERSA-FLEX PRO-NY Options to Enhance and Protect You may elect optional riders to enhance the protection and flexibility of your policy. For details, request a rider 6 and see your illustration. Freedom to Exchange Your Policy for a New One With the automatically included Conversion Rider (Form #R03CON-NY1), you may convert this policy to any other life insurance product we make available for such conversions during your eighth policy year. No new evidence of insurability will be required and any applicable surrender charges on the original policy will be waived. Flexibility for Growing Families The Guaranteed Insurability Rider (Form #R93-GI-NY1) allows the primary insured to buy additional insurance without new evidence of insurability at certain ages from 22 to 40 or within 31 days of a qualifying event, such as a marriage or birth or adoption of a child. Help Keeping Your Policy In Force if Disabled Choose the Waiver of Charges Rider (Form #R84-WC- NY1) to have all policy charges waived upon a total disability. Or, choose the Disability Benefit Rider (Form #R84-DB-NY1) to have a monthly disability benefit added to your accumulated value up to age 65. Help Preventing Heavily Loaned Policies from Lapsing If you plan on taking the maximum allowable policy loans from your policy, the Overloan Protection II Rider (Form #R08OLP-NY1) 7 can help protect against policy lapse in later years, after you have stopped taking distributions. There are eligibility requirements both to qualify for and exercise the rider and a one-time charge applies to exercise it. Additionally, term insurance may be purchased on any member of the primary insured s immediate family through the Annual Renewable Term Rider Additional Insured (Form #R08RTA-NY1) and on the primary insured s children aged 14 days to 25 years through the Children s Term Rider (Form #R98-CT-NY1). 7 6 Riders will likely incur additional charges and are subject to availability, restrictions, and limitations. When considering a rider, request a policy illustration from your life insurance producer to see the rider s impact on your policy s values. 7 The potential tax consequences of the Overloan Protection II Rider have not specifically been ruled on by the IRS or courts. Clients should consult their tax advisor.

9 PACIFIC LIFE & ANNUITY COMPANY This chart tracks the premium flow of a Versa-Flex PRO-NY policy from your premium payment to cash surrender value. Each premium you pay is reduced by premium load, then applied to accumulated value. Adjustable Death Benefit Accumulated Value Grows tax-deferred at current interest rate Reduced by monthly policy charges Income Potential Tax-free 8 policy loans and withdrawals may be taken from the accumulated value. Your Policy s Charges The cost of the life insurance and benefits provided through the policy is deducted monthly in the form of policy charges, which include an Administrative Charge, Coverage Charge, Cost of Insurance Charge, and any applicable rider charges. Additionally, a premium load is deducted from each premium payment. To understand how the policy charges will affect your policy s cash value, request a personalized illustration that includes the Analysis of Charges report. 8 For federal income tax purposes, tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC Sections 72, 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 8

10 VERSA-FLEX PRO-NY Pacific Life & Annuity Company The Power to Help You Succeed Offering insurance since 1868, Pacific Life provides a wide range of life insurance products, annuities, and mutual funds, and offers a variety of investment products and services to individuals, businesses, and pension plans. Pacific Life counts more than half of the 100 largest U.S. companies as its clients. For additional company information, including current financial strength ratings, visit Pacific Life online at Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Client count as of June 2014 is compiled by Pacific Life using the 2014 FORTUNE 500 list. 9

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12 This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life & Annuity, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. Pacific Life & Annuity Company Newport Beach, CA (888) Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance products and their guarantees, including optional benefits and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the brokerdealer, insurance agency or their affiliates from which this product is purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Non-guaranteed elements are not guaranteed by definition. As such, Pacific Life & Annuity Company reserves the right to change or modify any non-guaranteed element. This right to change non-guaranteed elements is not limited to a specific time or reason. Pacific Life s individual life insurance products are marketed exclusively through independent third-party life insurance producers, which may include bank affiliated entities. Some of these selling entities may limit availability of some optional riders based on their client s age and other factors. Your life insurance producer can help you determine which optional riders are available and appropriate for you. VFPRO-NY-1C /15