The Confidence Index 2000 Equity Indexed Annuity Agent Training Outline

Transcription

1 The Confidence Index 2000 Equity Indexed Annuity Agent Training Outline Great Interest Benefits, Excellent Flexibility, Higher Annuity Sales The Confidence Index 2000 group annuity is issued by National Western Life Insurance Company, Austin, TX, group policy form , group certificate form C-99 and in Florida, Policy Form XF-03. See the certificate/policy for actual contract provisions. Participation Rates, Asset Fee Rates, and interest rates subject to change. Producer commission levels are based on a General Agent (Level 3) Contract. Certain limitations and exclusions apply. Products not approved in all states. "Standard & Poors ", "S&P ", S&P 500," "Standard & Poors 500" and "500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by National Western Life Insurance Company. The Confidence Index 2000 Annuity is not sponsored, endorsed, sold or promoted by Standard & Poors and Standard & Poors makes no representation regarding the advisability of purchasing the product. For Agent Training Only -- This document has not been approved under the advertising laws of your state for dissemination to individual purchasers. June, 2005 SA-9199.Rev

2 NWL s Confidence Index is a Fixed Annuity that earns interest based on either A) a formula linked in part to the S&P 500 Index, AND/OR B) a declared fixed interest rate. Principal GUARANTEED against loss if the Index falls. (Assuming no withdrawals during the 15-year term) It provides ALL Traditional Annuity Benefits: Safety Tax-deferral Liquidity Interest Return Equity-index linked interest provides an opportunity to earn more interest, without giving away any safety, because interest is based on a formula that is linked in part to the S&P 500 Index. The Confidence Index 2000 Annuity offers this greater opportunity to earn more indexed interest while providing more safety, more flexibility, and the option to select either indexed interest or fixed interest, or a balance of both. Excellent Liquidity 10% Free Withdrawals of Account Value or Systematic Interest Withdrawals after 1st year Annuitize at full value after only 5 years Up to 60% Loan available (of fixed account) 15-year Flexible Premium Equity Indexed Annuity Guaranteed Return of Premium plus minimum amount of interest if held for the full 15-year term, assuming a single premium is paid and there are no partial withdrawals. 2

3 General Agent Commissions (Level 3) Age of Annuitant Style III Ages 0-70 NQ % Ages NQ % Ages NQ % Ages NQ 8.25 % Ages 0-75 Q % Renewals 7.00 % Qualifies for Vienna / Prague 2006 Incentive Trip! Prior to agent s first NWL indexed annuity sale, Agent must review and understand the product s Consumer Information Summary and Disclosure (SA-9163 and in Florida, SA-9163-FL) and return a signed Equity Indexed Annuity Training Acknowledgment (SA-9190) to the NWL Home Office. 3

4 Equity Indexed Interest Features Annual Reset or Annual Ratchet Design. Indexed Interest is calculated annually and is linked in part to the S&P 500 Index using the Average of the Index Values as determined by the monthly Index Dates. 100% Current Participation Rate 100% Guaranteed for the first Certificate/Policy year and may change annually as declared by NWL at anniversary. Guaranteed Minimum Participation is 20% (0% in California). Annual Asset Fee Rate An Annual Asset Fee is deducted when calculating the annual interest. The Asset Fee Rate is set annually and may fluctuate. The maximum Asset Fee Rate is 8.00%. The Fee is influenced by actual option prices, market volatility, interest rates, and dividend yields. A 2.00% Annual Asset Fee Rate is ASSUMED during this presentation, verify current fee at , x Interest Options Available at Issue: Option A - 100% indexed, linked in part to S&P 500 ; Option B - 100% fixed interest rate, or Option C - 50% indexed & 50% fixed rate PLUS the Principal Transfer Option... the OPTION TO SWITCH annually among any of 3 Interest Options prior to any anniversary 4

5 Confidence Index 2000 HIGHLIGHTS 100% Participation Rate for the first Certificate / Policy Year Annual Reset - Monthly Averaging - No Caps Participation Rate -- Annual Asset Fee (12 Monthly Index Values averaged annually, with the percent increase multiplied by a Participation Rate less an Asset Fee.) Confidence Index 2000 Annuity Style III***: 2.25% Higher first year Commissions;120% Minimum Guaranteed Value after 15 years*, a 2.75% minimum guaranteed fixed interest rate, and current annual Asset Fee Rate**. *based on a single premium paid and no withdrawals **Asset Fee Rates are subject to change at any time. ***In Florida Style III only, 107.7% Minimum Guaranteed Value after 15 years*, a 2.00% minimum guaranteed fixed interest rate, and current annual Asset Fee Rate**. 3 Interest Strategies & Principal Transfer Option A) 100% equity indexed interest, B) 100% fixed interest rate, or C) 50% indexed & 50% fixed 5

6 Confidence Index 2000 Combining variations of Minimum Guarantees, and First-Year Asset Fees In Florida Annuity Feature Style III Style III only Minimum Guaranteed Certificate/Contract Value 120% 107.7% after 15 years* Minimum Guaranteed Fixed Interest Rate 2.75% 2.00% Premium Bonus First-year 0% 0% Premium Bonus Years 2-5 0% 0% First Year Asset Fee Rate** Current Current Gen Agt Commission*** Ages % 13.00% *Based on a single premium paid and no withdrawals **Asset Fee Rates are subject to change at any time. ***Based on Level 3 General Agent Commissions 6

7 Calculation of Hypothetical Historical Interest: 1999 If Confidence Index 2000 Certificate / Policy Issue Date was 1/1/1999,* Starting Index Value was 1, (12/31/98 closing) Monthly Date Index Value Monthly Date Index Value 1/30/99 1, /31/99 1, /28/99 1, /30/99 1, /31/99 1, /31/99 1, /30/99 1, /30/99 1, /31/99 1, /31/99 1, /30/99 1, /31/99 1, (12 index dates added) 15, * This Confidence Index 2000 example is purely for hypothetical illustration purposes and should never be viewed as an indicator of future performance. 1. Index Average = 15, / 12 = 1, (determine Index Average) 2. 1, , = (Index Average) - (Beginning Index) / 1, = 8.25% (determine annual percent gain) % x 1.00 (Participation Rate) = 8.25% (Multiply by 100% Assumed 1st-year Participation) % % = 6.25% (subtract Assumed Current Annual Asset Fee Rate) 6. Hypothetical Annual Interest Credited: 6.25% 7

8 Calculation of Hypothetical Historical Interest: 1998 If Confidence Index 2000 Certificate / Policy Issue Date was 1/1/1997, and 1/1/98 was the beginning of the RENEWAL year, the Starting Index Value would have been (12/31/97 closing) Monthly Date Index Value Monthly Date Index Value 1/30/ /31/98 1, /28/98 1, /30/ /31/98 1, /31/98 1, /30/98 1, /30/98 1, /31/98 1, /31/98 1, /30/98 1, /31/98 1, (12 index dates added) 13, * This Confidence Index 2000 example is purely for hypothetical illustration purposes and should never be viewed as an indicator of future performance. 1. Index Average = 13, / 12 = 1, (determine Index Average) 2. 1, = (Index Average) - (Beginning Index) / = 12.10% (determine annual percent gain) % x 0.70 (Participation Rate) = 8.47% (Multiply by 70% Assumed Renewal Participation Rate) % % = 6.47% (subtract Assumed Renewal Asset Fee) 6. Hypothetical Annual Interest Credited: 6.47% 8

9 Calculation of Hypothetical Indexed Interest: 1992 If Confidence Index 2000 Certificate / Policy Issue Date was 1/1/92, the beginning Index Value would have been Monthly Index Monthly Index Date Value Date Value 1/31/ /31/ /28/ /31/ /31/ /30/ /30/ /31/ /31/ /31/ /30/ /31/ Total of 12 monthly Index Values: 5, * This Confidence Index 2000 example is purely for hypothetical illustration purposes and should never be viewed as an indicator of future performance. 1. Index Average = 5, / 12= (determined index average) = 0.03 (Index Average) - (Beginning Average) / = 0.00% (determine annual percent gain) % x 0.01%= 0.00% (multiply by 100% Assumed 1st-year Participation) % % (ASSUMED Asset Fee)= 0.00% (subtract Assumed Asset Fee) 6. NO Increase or Decrease in Account Value. Balance of Asset Fee is forgiven and never applied. Asset Fee deductible from CURRENT interest only. 9

10 4 Important Liquidity Options 60% Loan of Account Value (of Amount at Fixed Interest) Non-qualified or Qualified (not IRAs), 30 days after issue. Cash loan secured by Certificate/Contract Value; loan interest paid annually 7.4% in advance (equal to 8% in arrears) or added to amount of loan. Certificate/Contract Value securing cash loan currently earns Option B fixed interest rate, but is guaranteed to be no less than the Minimum Guaranteed Interest Rate. $500 minimum loan amount. There are income tax consequences to annuity loans. 10% No-Penalty Annual Withdrawals, & Systematic Interest Withdrawals Based on Account Value, may be taken ONCE annually after the first anniversary. Withdrawals are non-cumulative. Systematic Interest may be withdrawn instead of 10% free amount based on previous year s interest earned. Withdrawn amount earns full year s interest in year of withdrawal and is charged interest for that part of the year after the withdrawal. Full Account Value after 5 Years if Income Settlement Option Elected Guaranteed Lifetime Income; Life with Guaranteed Period; Life with Installment Income; Period Certain Income (5 year minimum); Interest Only Proceeds (5 year minimum); Joint Survivorship Annuity. Death Benefit is Full Account Value if an Income Settlement Option is elected by the Beneficiary, 5-year minimum; Cash Surrender Value if single-sum benefit paid. This also means that the full Account Value is available as a single-sum death benefit after 15 years. 10

11 Minimum Guaranteed Certificate/Contract Value 80.0% of 1st-year Premiums, and 87.5% of Renewal Year Premiums Accumulated at Interest (assumes single premium only and no withdrawals) In Florida Single Deposit: Style III Style III Guaranteed Rate: 2.75% 2.00% Year 1 (EOY) 82.20% 81.60% Year % Year % Year % Year % Year % Year % Year % Year % Year % 97.52% Year % Year % Year % Year % Year % % DOES NOT GUARANTEE Minimum Interest Return Annually. The Minimum Guaranteed Certificate/Contract Value is a second or alternate calculation of the Cash Surrender Value or Death Benefit. On surrender or death, the Minimum Guaranteed Certificate/Contract Value calculation is compared to the actual Account Value less surrender charge on surrender or compared to the Account Value only on death. No surrender charge ever applies to the Minimum Guaranteed Certificate/Contract Value at the time of surrender or death. The owner or beneficiary receives the greater of the two calculations. 11

12 Substantial Early Withdrawal Charge Early Withdrawal Charge applies for 15 years from ISSUE DATE on all amounts in excess of 10% penalty-free withdrawal provision. SEPARATE Withdrawal Charge Schedules for 1st-year premiums & interest, and renewal years premiums & interest. Withdrawals are made FIRST from RENEWAL premiums and interest, so lower penalty schedule applies first. Certificate / Policy Year First-year % Renewal % N/A Certificate / Policy Year After First-year % Renewal % The Early Withdrawal Charge must be substantial in order to provide the interest benefits and agent compensation. The penalty is intended to enforce long-term persistency. Client SUITABILITY is very important. The agent should carefully consider the client s income, financial net worth, and liquidity needs as far as they are foreseeable. The client or beneficiary should not pay an early withdrawal charge. There is NO Market Value Adjustment. 12

13 Confidence Index 2000 Annuity Features 15-year Term in which early withdrawal charges apply. Full Account Value available after 15 years. Maximum Annuitant Ages 0-85 NQ Funds & Roth IRAs 0-75 Qualified Funds Deposit: $10,000 minimum initial; $100 subsequent premium $500,000 maximum premium without prior approval Complete Annual Statements of Annuity Plan NO UP FRONT SALES CHARGES apply. If applicable, premium taxes and/or other legal assessments will reduce certificate / policy values. Flexible Premium Deferred Annuity Group Policy Form issued to Consumers Nationwide Trust, as Group Policies F0606-Non-qualified; F0607-IRA; F0608-Roth IRA; F0609-Other Qualified. Certificate C-99 and state variations are not available in all states. In Florida, Policy Form XF-03. Certain other limitations and exclusions may apply. The Confidence Index 2000 Annuity is Much More! Equity-Indexed or Fixed Interest PLUS High Agent Compensation Long Term Annuity Yet Quite Liquid Withdrawal Penalties Yet Manageable An Opportunity to Earn Interest, with Flexibility 13