Eagle Star Personal Pensions & Associated Policies Freedom in Retirement Plan - Personal & Personal (Rebate) Single Contribution Pension Plan - Personal & Income Protection Plan Customer Guide
Introduction This guide applies to the range of Eagle Star Personal Pension Plans and associated policies. Zurich Life wants to make sure that you purchase a policy that meets exactly with your requirements. This guide is designed to give you all the information required to make an informed purchase decision. Part 1 of this guide covers the following products: Eagle Star Freedom in Retirement Plan - Personal; and Eagle Star Single Contribution Pension Plan - Personal. Much of the information provided in the first part of this guide is common to both products. Where this is not the case, the guide will make this clear. In addition, if you purchase an Eagle Star Freedom in Retirement Plan, you have the option of purchasing an Eagle Star Income Protection Plan as an associated policy. This product is described in Part 2 of this guide. Part 3 of this guide must be fully completed by your financial advisor and is applicable to the following products: Eagle Star Freedom in Retirement Plan - Personal Eagle Star Single Contribution Pension Plan - Personal Eagle Star Income Protection Plan. This guide is incomplete unless Part 3 is completed by your financial advisor. Part 1 This part of the guide is applicable to the following products: Eagle Star Freedom in Retirement Plan - Personal; and Eagle Star Single Contribution Pension Plan - Personal. Information about the policy 1. Make sure the policy meets your needs! The i. Freedom in Retirement Plan and the Single Contribution Pension Plan are personal pension policies approved under Sections 784 and 785 of the Taxes Consolidation Act, 1997. The primary purpose of these policies is to provide an income and/or a lump sum for you when you retire. 1
ii. iii. iv. v. 2. i. ii. The Freedom in Retirement Plan policy is a pension plan into which you can choose to pay regular and/or single premiums. For the Freedom in Retirement Plan - Personal (Rebate) single premium payments are not permitted. Regular premiums can be paid monthly, quarterly, half-yearly or yearly. The Single Contribution Pension Plan policy is a pension plan into which you can choose to pay one or a series of single premiums. A personal pension policy is a long-term financial commitment (to pay regular premiums in the case of the Freedom in Retirement Plan or a lump sum in the case of the Single Contribution Pension Plan) designed to provide an income and/or lump sum on your retirement. Your income at retirement will depend on the total amount invested, less your policy charges, the investment returns earned and the cost of the pension/annuity at retirement. You should be satisfied as to the long-term nature of this commitment with regard to your needs, resources and circumstances before entering into a contract. Warning: If you have taken out this policy in complete or partial replacement of an existing policy, please take special care to satisfy yourself that this policy meets your needs. In particular, please make sure you are aware of the financial consequences of such replacement and of any possible financial loss as a result. If you are in doubt about this, please contact your insurer or insurance intermediary/financial advisor. What happens if you want to cash in the policy early or stop paying premiums? As this is an approved personal pension policy, it cannot be surrendered, encashed or assigned, due to Revenue requirements. You may transfer the value of your policy at any stage to another personal pension plan approved by the Revenue Commissioners. If you stop paying regular premiums on the Freedom in Retirement Plan, then the policy is referred to as paid-up. On making the policy paid-up, any protection benefits will be reduced to nil, and no further premiums will be requested by Zurich Life. Your policy will continue to benefit from investment growth, and Zurich Life will continue to deduct charges from the paid-up policy. For the Freedom in Retirement Plan - Personal (Rebate), note that if you do not pay a premium in each and every 13-month period, you will lose your entitlement to a refund of management charges; for a description of this refund, please see your policy document, which you 2
will receive when your policy is issued; a copy of the policy document is available from Zurich Life on request. iii. In the early years of a regular premium Freedom in Retirement Plan policy, the value may be somewhat less than the total premiums paid. For both the Freedom in Retirement Plan and the Single Contribution Pension Plan, please note that policy values are related to the value of the underlying investments and are therefore not guaranteed. The value of the underlying investments can fall in value as well as rise. An Early Encashment charge may apply to your policy. Details of this charge will be stated in your policy document. 3. What are the projected benefits under the policy? i. Freedom in Retirement Plan Personal The following illustrations are prepared for a male client aged 39 years and 6 months whose current earnings are 30,000 p.a. with a selected retirement age of 65. Premium Details Pension Contribution: 200 Net Contribution: 118 Tax Relief: 82 (based on a tax rate of 41%) Frequency of Payment: Monthly Zurich Life will provide you with illustrations based on your own exact details when your policy is issued. 3
lllustrative table of projected benefits and charges A B C D E = A + B - C - D End of Year Total amount of premiums paid into the policy to date Projected investment growth to date Projected expenses & charges to date Projected total cost of protection benefits to date Projected policy value 1 2,400.00 73.01 143.91 0.00 2,329.10 2 4,872.00 286.73 337.48 0.00 4,821.25 3 7,418.16 650.93 584.05 0.00 7,485.04 4 10,040.70 1,175.87 887.06 0.00 10,329.52 5 12,741.93 1,872.38 1,250.18 0.00 13,364.13 10 27,513.31 8,347.97 4,109.09 0.00 31,752.19 15 44,637.39 21,092.61 9,138.35 0.00 56,591.66 20 64,488.90 42,239.58 17,055.20 0.00 89,673.28 25 87,502.23 74,507.74 28,771.62 0.00 133,238.35 Maturity 90,014.77 78,471.88 30,195.24 0.00 138,291.40 Important: These illustrations assume premiums increase at 3% per annum and a gross investment return of 6% per annum. This rate is for illustration purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated. The effect of deductions, excluding the cost of deductions for protection benefits, is to reduce the projected investment yield by 2.4% per annum. The projected maturity values above are after an investment term of 25 years and 6 months and assume that 306 monthly premiums have been paid. The premium payable includes the costs of all charges, protection benefits, expenses and intermediary/sales remuneration. Projected Pension Details Estimated fund at retirement: 138,291.40 220.16% of final salary Option One (no tax-free lump sum) Member s pension per month: 550.35 10.51% of final salary Option Two (with tax-free lump sum) Tax-free lump sum: 34,572.85 55.04% of final salary Member s pension per month: 412.76 7.89% of final salary where the final salary is 62,813 and is calculated using 3% salary escalation per annum. 4
Important notes These illustrations assume that the total contribution will be used for pension purposes only and that no protection benefits are provided. The figures for the Illustrative Retirement Fund and pension are based on the following: a. b. c. the continuation of current risk benefit and expense charges. in relation to the pension figure(s), the assumed annuity rate, which assumes 2% escalation, a 5-year guarantee and is payable monthly in advance. The actual annuity rate will depend on the selection of dependant s pension, guaranteed period and the escalation rate, as well as interest rates prevailing when the annuity is purchased. the contribution increase rate, which is assumed to be 3% per annum. ii. Single Contribution Pension Plan Personal The following illustrations are prepared for a male client aged 44 years and 6 months whose current earnings are 60,000 p.a., investing 10,000 with a selected retirement age of 65. Zurich Life will provide you with illustrations based on your exact policy details when your policy is issued. Illustrative table of projected benefits and charges A B C D = A + B - C End of Year Total amount of premiums paid into the policy to date Projected investment growth to date Projected expenses & charges to date Projected policy value 1 10,000 588.25 700.35 9,887.90 2 10,000 1,201.51 785.99 10,415.52 3 10,000 1,840.83 870.71 10,970.12 4 10,000 2,507.31 954.27 11,553.04 5 10,000 3,202.13 1,036.43 12,165.70 10 10,000 7,145.06 2,164.86 14,980.20 15 10,000 12,000.18 3,554.36 18,445.82 20 10,000 17,978.50 5,265.31 22,713.19 Maturity 10,000 18,647.64 5,456.81 23,190.83 Important: These illustrations assume a rate of return of 6% per annum. This rate is for illustration purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated. 5
The effect of deductions, excluding the cost of protection benefits, is to reduce the projected investment yield by 1.8% per annum. The projected maturity values above are after an investment term of 20 years and 6 months. The premium payable includes the cost of all charges, expenses and intermediary/sales remuneration. Projected Pension Details Estimated fund at retirement: 23,190.83 21.40% of final salary Option One (no tax-free lump sum) Member s pension per month: 94.34 1.04% of final salary Option Two (with tax-free lump sum) Tax-free lump sum: 5,797.71 5.35% of final salary Member s pension per month: 70.75 0.78% of final salary where the final salary is 108,367 and is calculated using 3% salary escalation per annum. Important notes The figures for the Illustrative Retirement Fund and pension benefits are based on the following: a. b. c. the gross investment return stated. The assumed gross investment return is not a forecast because the value of units may grow at a faster or slower rate than assumed, and the value of units may be expected to fall from time to time as well as rise. the continuation of current expense charges. in relation to the pension figure(s), the assumed annuity rate assumes 2% escalation, a 5-year guarantee and is payable monthly in advance. The actual annuity rate will depend on the selection of dependant s pension, guaranteed period and the escalation rate, as well as interest rates prevailing when the annuity is purchased. 6
4. i. What intermediary/sales remuneration is payable? Freedom in Retirement Plan Personal Illustrative table of intermediary/sales remuneration End of Year Premium payable in that year Projected total intermediary/sales remuneration payable in that year 1 2,400.00 971.65 2 2,472.00 117.71 3 2,546.16 133.83 4 2,622.54 150.95 5 2,701.22 169.10 10 3,131.46 273.23 15 3,630.22 407.72 20 4,208.41 583.81 25 4,878.71 812.55 Maturity 2,512.54 421.10 Important: The above table assumes that premiums increase at 3% per annum and a gross investment return of 6% per annum. ii. Single Contribution Plan Personal Illustrative table of intermediary/sales remuneration End of Year Premium payable in that year Projected total intermediary/sales remuneration payable in that year 1 10,000 153.00 2 0 107.38 3 0 111.94 4 0 116.70 5 0 121.66 10 0 149.80 15 0 184.46 20 0 227.13 Maturity 0 115.95 Important: The above table assumes a gross investment return of 6% per annum. 7
5. i. ii. 6. i. ii. iii. Are returns guaranteed and can the premium be reviewed? Please note that the sample illustrations assume a rate of return on investment. This rate is for illustration purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated. You may need to review your contributions to meet your desired retirement benefits should investment performance be less than that assumed. If you purchase a Freedom in Retirement Plan, then you will have the option of adding protection benefits to your policy. You may choose to include life assurance benefit and/or waiver of premium benefit on your policy. Zurich Life will make deductions from your unit account each month to pay for the cost of providing any waiver of premium and life cover benefits. This deduction is made up of two elements: the level of the benefit and the rate Zurich Life charges. The rate Zurich Life charges will generally rise as you get older. The rates are not guaranteed and may be reviewed by the Appointed Actuary. Your financial advisor will inform you of an estimated long-term cost of providing associated optional protection benefits. This is a projected average cost of these benefits over the lifetime of your policy. The actual cost for these benefits will vary during the lifetime of the policy. The projected average cost will increase in line with the sum insured. Can the policy be cancelled or amended by the insurer? The policy can normally only be cancelled or materially amended by Zurich Life as a result of changes required by Government legislation and/or requirements imposed by the Revenue Commissioners. Zurich Life has the right to increase the level of charges deducted from your policy in certain circumstances. These circumstances are described in the policy document, which you will receive when your policy is issued. A copy of the policy document is available from Zurich Life on request. Zurich Life will normally increase your policy fee (if any) on the Freedom in Retirement Plan each year by the rate of increase in the Consumer Price Index or some other suitable index of inflation, but can also increase your policy fee by a higher amount in certain defined circumstances described in the policy document, which you will receive when your policy is issued. A copy of the policy document is available from Zurich Life on request. 8
iv. In order to continue contributing into your Freedom in Retirement Plan or to make further lump sum contributions to your Single Contribution Pension Plan, you must continue to be eligible to do so. To be eligible, you must normally be chargeable to tax in respect of relevant earnings from any trade, profession, office or employment that you carry on or hold in Ireland, and you must not be in pensionable employment in respect of these earnings. If you cease to be eligible to contribute to the policy, you should notify Zurich Life immediately. v. If you purchase a Freedom in Retirement Plan and choose optional protection benefits, failure on your behalf to disclose a material fact may invalidate the contract and result in all or part of any claim being rejected. A material fact is one that may influence the assessment and acceptance of the application by Zurich Life. It is vital that you let Zurich Life know ALL material facts relating to this contract, including any material fact that comes to light between the date you sign the application and the date the policy document is issued. If you are in any doubt as to what constitutes a material fact, you should inform Zurich Life of that fact in any event. The same applies for any statement or declaration that you made to Zurich Life and is subsequently found to be untrue. If knowingly or recklessly made, this may lead to the policy being terminated. The same applies to any fraudulent attempts to obtain benefits under this policy. vi. If waiver of premium benefit is selected on the Freedom in Retirement Plan, then the following requirements apply: Change of Occupation You should notify Zurich Life if you take up an additional occupation, change occupation or retire at any time during the term of the policy. Failure to do this could result in any claim for waiver of premium benefit being declined. If a change in occupation (including retirement or taking up an additional occupation) changes the risk in Zurich Life s view, then the benefit may be cancelled or the charge for the benefit may be reviewed. Territorial Limits If a life insured travels or resides outside the territorial limits for more than 13 weeks in any 52-week period, then written permission must be obtained from Zurich Life to keep waiver of premium benefit in force. If you do not inform Zurich Life, then Zurich Life has the right not to pay benefits. Below are the current territorial limits: 9
Norway; Switzerland; and The European Union (as constituted at the start date of the policy). Time Limits on Submission of Claims It is very important to realise that there is a time limit within which you should notify Zurich Life in relation to waiver of premium benefit claims. Failure to notify Zurich Life within this time limit may result in a claim being declined or a delay in payment of a claim. Details of this time limit will be contained in your policy document, a copy of which is available on request from Zurich Life. If you have selected waiver of premium benefit, on the Freedom in Retirement Plan, then the following applies: Exclusions It is important to point out that risk benefits will not be paid for certain causes of claim. These are referred to as exclusions and will be outlined in your policy document, a copy of which is available on request from Zurich Life. 7. Information on taxation issues Premiums Under current legislation, you can claim tax relief on any premiums paid into a personal pension policy as an expense in the year of payment, subject to the maximum percentage of Net Relevant Earnings listed below. These contributions are referred to as Section 784 premiums. Zurich Life will issue you with a Retirement Annuity Certificate, which you should include with your tax returns in order to obtain this relief. Age Maximum % of net relevant earnings Under 30 15% 30 39 20% 40 49 25% 50 54 30% 55 59 35% 60 and over 40% Note that a monetary maximum (currently 150,000) applies to the Net Relevant Earnings allowable for tax relief purposes. 10
Under current legislation, you can also pay Section 785 premiums to provide life assurance benefits on the Freedom in Retirement Plan. The Section 785 premium must form part of your overall Section 784 limit and is not in addition to it. Benefits Taxation of Retirement Benefits Under current legislation, at retirement you may decide to take up to 25% of the maturity value as a tax-free lump sum with the balance of the maturity value used to purchase an annuity, an Approved Retirement Fund (ARF)/Approved Minimum Retirement Fund (AMRF) or a taxable lump sum subject to certain restrictions. Income paid from an annuity contract or an ARF/AMRF is taxable as income. Taxation of Death Benefit Lump sum death benefits, if any, will be payable to your personal representatives and will form part of your estate for taxation purposes. Any spouse s pension that becomes payable does not form part of the estate for tax purposes, but will be taxable as income. Maximum Pension Fund and Tax-free Lump Sum There is a limit on the size of retirement funds and on the size of tax-free lump sum that can be taken at retirement. The maximum pension fund is currently 5.418 million. If your pension fund exceeds this at retirement, you will have to pay tax at 41% on the excess, in addition to the tax you would normally pay on your purchased retirement benefits. The maximum tax-free lump sum that can be taken at retirement is 1.35 million. Pension Funds The Eagle Star pension funds are tax exempt. As such, they are not subject to Capital Gains Tax and Income Tax. This ensures the maximum possible growth for your pension contributions. However, withholding taxes may be deducted at source from dividends and other income arising from investments in certain countries in which the funds invest. In most cases, part or all of these withholding taxes can be reclaimed, but where they cannot, the income of the funds will be reduced by such taxes. Insurance Levy The Government has recently announced an insurance levy of 1% to be applied on a range of life assurance policies. Where this is applicable to your policy Zurich Life will alter your premium or benefits accordingly. 11
8. i. Additional information in relation to your policy Descriptions of Benefits and Options Retirement Benefit You may retire at any time after age 60, provided rules imposed by the Revenue Commissioners at the time are complied with. You must take the policy benefits by age 75. You may retire before age 60 on the grounds of ill-health if Zurich Life s Chief Medical Officer is satisfied that you have become permanently incapable of carrying on your own occupation or any other occupation of a similar nature to which you are trained or fitted, provided rules imposed by the Revenue Commissioners at the time are complied with. An Early Encashment Charge may apply to your policy on retirement. Details of this charge will be stated in your policy document. Transfer Benefit Subject to Revenue requirements you can transfer your pension fund to another pension provider. An Early Encashment Charge may apply to your policy on transfer. Details of this charge will be stated in your policy document. Under current legislation, you may choose to use your pension fund s maturity value to purchase a retirement benefit in one or more of the following forms: a tax-free lump sum retirement benefit of up to 25% of your pension fund s maturity value; an Approved Retirement Fund (ARF) and/or an Approved Minimum Retirement Fund (AMRF); a pension annuity, with or without annual increases in payment and with or without guaranteed payment periods; and a contingent pension annuity payable to your spouse or other dependants on your death. Death Benefit Zurich Life will pay the death benefit to your estate on proof of your death before your normal retirement date (subject to Revenue limits). The full value of any units held by your plan is payable on death. 12
Optional Risk Benefits (available on the Freedom in Retirement Plan only) Life Cover Should you die before you retire, the full value of your plan will be paid out to your dependants (subject to Revenue limits). You can also choose to provide extra life cover, which will be charged by deducting units from your pension fund. It can be either inclusive or exclusive of the value of your pension plan. Waiver Of Premium This provides for the payment of premiums by Zurich Life if you are unable to work due to accident or illness for a period longer than 26 weeks. It covers the pension premium. The cost of waiver of premium will be charged by deducting units from your pension fund. Other Policy Options The PensionSTAR Option If either PensionSTAR (Annuity) or PensionSTAR (ARF) is selected, then Zurich Life automatically redirects any regular contributions and automatically switches units between funds at predefined future dates. In its current form, Zurich Life redirects Freedom in Retirement Plan contributions as follows: PensionSTAR (Annuity) Years to go Target Fund 25 or more Dynamic Less than 25, at least 15 Less than 15, at least 5 Less than 5 Performance Balanced Active Fixed Income With five years to go to retirement, your unit holdings will gradually be switched into the Active Fixed Income Fund. This applies to both the Freedom in Retirement Plan and the Single Contribution Pension Plan. 13
PensionSTAR (ARF) Years to go Target Fund 25 or more Dynamic Less than 25, at least 15 Less than 15 Performance Balanced With five years to go to retirement, your unit holdings will gradually be switched into the Balanced Fund. This applies to both the Freedom in Retirement Plan and the Single Contribution Pension Plan. Annual Policy Increases On the Freedom in Retirement Plan, Zurich Life has put in place a mechanism that allows you to protect the value of your retirement savings. It operates as follows: The life cover benefit and premiums will be increased each year at your policy anniversary. The minimum amount of the increase will be in the same proportion as the increase in the Consumer Price Index, although Zurich Life may offer increases greater than this; the annual premium increase offered will be no less than 5%. You will not have to provide Zurich Life with any medical evidence to obtain these increases in benefit. If you select the Save More Tomorrow option, your premium increases will be based on an index of salary inflation selected by Zurich Life, or your salary raise if this is notified to Zurich Life before the policy anniversary. You have a choice of three options - to commit 10%, 20% or 30% of future salary increases. You are not obliged to accept the increase offered. You may choose a lower level of increase or no increase at all. Otherwise, Zurich Life will increase the benefit and premium automatically. Zurich Life will not be obliged to offer any further annual increases if you have turned down two successive increases. 14
Unit Fund Switching For this product, you can only switch within the Matrix range of funds. This means that you can move your unit holdings within the different Matrix funds available. You may not move your unit holdings into any Eagle Star funds other than the Matrix range of funds. The first four switches you make in each policy year are free of charge. A charge will be made for each subsequent switch. This charge is currently 20 and was last set on 1st January 2002. It is guaranteed not to increase by more than the increase in the Consumer Price Index since the charge was last set. There is no charge if unit switching is done as part of the PensionSTAR option. If you choose to switch out of the Eagle Star SuperCAPP Fund, a market level adjustment may be applied. There are also limits on the amount that may be switched into the SuperCAPP Fund, in order to protect the interests of all SuperCAPP Fund investors. These limits vary from time to time. Details of current limits are available from Zurich Life on request. Premium Redirection In the case of the Freedom in Retirement Plan, you can redirect your future pension contributions between the different funds available. This gives you extra flexibility in funding for retirement. The first four redirections you request in each policy year are free. A charge will be made for each subsequent premium redirection. This charge is currently 20 and was last set on 1st January 2002. It is guaranteed not to increase by more than the increase in the Consumer Price Index since the charge was last set. There are limits on the amount that may be redirected into the SuperCAPP Fund, in order to protect the interests of all SuperCAPP Fund investors. These limits vary from time to time. Details of current limits are available from Zurich Life on request at any time. Premium Holiday Provided at least two years contributions are paid in full, it is possible to stop paying into the pension fund for up to one year on the Freedom in Retirement Plan. So, you can take a temporary break from work, such as maternity/paternity leave, without losing your existing benefits. Single Premium You can make a lump sum contribution to your pension plan at any stage, provided it is at least 500. You can choose the fund in which to invest your lump sum contribution. There are limits on the amount that may be invested as a lump sum into the SuperCAPP Fund, in order to protect the interests of all SuperCAPP Fund investors. These limits vary from time to time. Details of current limits are available from Zurich Life on request at any time. 15
Open Market Option At the date of retirement, you may elect to use your retirement benefit to purchase an ARF/AMRF or pension annuity from another approved provider. In this instance, Zurich Life would make available to the other provider the value of your retirement benefit less any lump sum or ARF/AMRF benefit already taken. Zurich Life s liability under the policy will cease at this date. ii. Choice of Funds Matrix Your investment can buy units in one or more of the following funds through Matrix. Each fund has a different degree of risk and potential return. For up-to-date information on the funds available visit the Funds section at www.zurichlife.ie 16
Note: For this product, you can only switch within the Matrix Range of Funds. Fund Name Fund Description Indicative Equity Exposure (% of the value of the fund) Fund Manager ACTIVE MANAGEMENT Equity Concentrated Funds 5 5 Global A unit-linked fund offering a global portfolio of 25 equities, spread across five sectors.* 5 5 Europe A unit-linked fund offering a regional portfolio of 25 European equities, spread across five sectors.* 5 5 Asia Pacific 5 5 Americas Geographic Funds Irish Equity Eurozone Equity American Select European Select Global Equity Funds International Equity Dividend Growth Global Select Managed Funds Dynamic Performance Balanced Cautiously Managed Secure A unit-linked fund offering a regional portfolio of 25 Asia Pacific equities, spread across five sectors.* A unit-linked fund offering a regional portfolio of 25 equities in the Americas, spread across five sectors.* An actively managed unit-linked equity fund which seeks to maximise growth through capital gain and income from a diversified portfolio of Irish equities. A unit-linked fund offering an actively managed portfolio of equities denominated in euro. A unit-linked fund offering a concentrated actively managed portfolio of primarily US equities.* A unit-linked fund offering a concentrated actively managed portfolio of continental European equities.* A unit-linked fund offering an actively managed portfolio of global equities.* A unit-linked fund offering a portfolio of international equities whose dividend yields tend to be higher than their markets dividend yields and in addition have the capacity to further increase dividends.* A unit-linked fund offering an actively managed portfolio of global equities.* An aggressively managed unit-linked fund with a high equity content.* A unit-linked fund offering a portfolio of equities with some exposure to bonds.* A unit-linked fund offering a balanced portfolio of equities and bonds.* A unit-linked fund offering a well-diversified portfolio of bonds, equities and cash.* A unit-linked cash fund where unit prices are guaranteed never to fall. Unitised With Profits Fund SuperCAPP A unitised with-profits fund that aims to deliver a regular return, consistent with prevailing long-term interest rates while maintaining the potential for higher growth than a bank deposit account. Returns are distributed through Annual and Special Dividends. Dividend distributions aim to provide SuperCAPP policyholders with a smoothed accumulation of returns over time.* 100% Eagle Star 100% Eagle Star 100% Eagle Star 100% Eagle Star 100% Eagle Star 100% Eagle Star 100% Threadneedle 100% Threadneedle 100% Eagle Star 100% Eagle Star 100% Threadneedle 75%-100% Eagle Star 65%-90% Eagle Star 50%-75% Eagle Star 20%-50% Eagle Star 0% Eagle Star 20%-40% 1 Eagle Star 17
Fund Name Fund Description Indicative Equity Exposure (% of the value of the fund) Fund Manager ACTIVE MANAGEMENT Fixed Interest/Bond Funds Long Bond An actively managed unit-linked long bond fund. 0% Eagle Star Active Fixed Income An actively managed unit-linked bond fund.* 0% Eagle Star Fund Name Fund Description Indicative Equity Exposure (% of the value of the fund) Deposit Funds Deposit Plus A unit-linked cash fund currently investing in a variable rate deposit account provided by Allied Irish Banks, p.l.c. INDEX TRACKER / EXCHANGE TRADED FUNDS Geographic Funds India Equity Europe ex-uk Index Japan Index UK Index Sector Fund TopTech 100 Commodities Fund Global Commodities Property Equity Funds European (Ex-UK) Property Australasia Property STRATEGY FUNDS Green Resources Earth Resources Diversified Assets A unit-linked fund that aims to track the performance of the MSCI India Index by investing in an Exchange Traded Fund (ETF).* A unit-linked fund investing in an index fund (UCITS) which aims to achieve a return in line with the MSCI Europe ex-uk Index.* A unit-linked fund investing in an index fund (UCITS) which aims to achieve a return in line with the MSCI Japan Index.* A unit-linked fund investing in an index fund (UCITS) which aims to achieve a return in line with the MSCI UK Index.* A unit-linked fund that invests in leading technology and biotechnology companies. The fund invests in the shares of the NASDAQ-100 index via an Exchange Traded Fund (ETF).* A unit-linked fund that aims to track the performance of the Goldman Sachs Commodities Index Total Return (GSCI) via an Exchange Traded Fund (ETF).* A unit-linked fund that invests in leading European (excluding UK) real estate companies. The fund aims to track the performance of the FTSE EPRA/ NAREIT Europe ex UK Dividend + Index via an Exchange Traded Fund (ETF).* A unit-linked fund that invests in leading Australasian real estate companies. The fund aims to track the performance of the FTSE EPRA/ NAREIT Asia Dividend + Index via an Exchange Traded Fund (ETF).* A unit-linked fund that targets exposure to the alternative energy and water sectors. The fund gains access to these sectors by investing in two Exchange Traded Funds (ETFs).* A unit-linked fund that gives exposure to a range of diverse assets: oil, alternative energy, precious metals and agriculture. The fund aims to gain access to the performance of these assets by investing in a number of Exchange Traded Funds (ETFs).* A unit-linked fund that gives exposure to four asset classes: equities, bonds, property and commodities. The following Eagle Star funds are used to gain access to these asset classes: the International Equity Fund, the Active Fixed Income Fund, the European (Ex-UK) Property Fund, the Australasia Property Fund, the Global Commodities Fund.* 0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70% - 80% * Some or all of the assets are invested outside the eurozone, so currency fluctuations may impact on the fund s performance. 1 The fund s exposure to equity volatility is normally controlled by limiting maximum losses and gains for the majority of the equity portfolio. Allied Irish Banks p.l.c is regulated by the Financial Regulator. 18
Information on the SuperCAPP Fund The Eagle Star SuperCAPP Fund is a unitised with-profits fund that aims to deliver a regular return to policyholders consistent with prevailing longterm interest rates while maintaining the potential for higher growth than a bank deposit account. The fund currently comprises a core portfolio of high quality Government bonds complemented by equity investments that are held to generate returns in excess of annual dividend distributions. The SuperCAPP Fund s asset mix is managed to ensure that the fund s exposure to bond and equity markets remains consistent with the stated investment aim. The fund s exposure to equity volatility is normally controlled to avoid excessive changes in dividends from year to year. This is achieved by limiting the maximum losses and gains for the majority of the equity portfolio. Eagle Star active management of the equity portfolio aims to earn returns in excess of Annual Dividends while limiting the fund s exposure to extreme losses. In addition to the Annual Dividends, Special Dividends reflecting the underlying asset growth may be payable on money withdrawn from the fund once the policy has been in force for at least five years. This mechanism provides a smoothed distribution of the fund s investment earnings over time. You will receive dividend information on an annual basis. If your maturity value includes units in the SuperCAPP Fund, a market level adjustment may be applied in order to protect the interests of all SuperCAPP Fund investors. No market level adjustment is applied to the Death Benefit or at your chosen retirement date. If you wish to switch units into or out of the SuperCAPP Fund or redirect more of your future contributions into the SuperCAPP Fund, there are monetary limits applied in order to protect the interests of all SuperCAPP Fund investors. These limits vary from time to time due to investment market movements. Details of current limits are available from Zurich Life on request at any time. iii. iv. Term Of Policy Your policy will normally cease at your chosen retirement date, but you may choose to extend the term, subject to any Revenue rules at that time. Circumstances Under Which The Policy May Be Terminated In the event that you wish to terminate the contract, you should write to your insurance broker/ financial advisor or Zurich Life, quoting your policy number, and you will be advised of the options available in accordance with the terms and conditions of the policy and any Revenue rules at that time. 19
v. See pages 27 and 28 for details of Satisfaction Period, Law Applicable to Policy and Zurich Life s Complaints Procedure as applicable to the Freedom in Retirement Plan - Personal and the Single Contribution Pension Plan - Personal. Part 2 This part of the guide is applicable to the following product: Eagle Star Income Protection Plan. Information about the policy 1. i. ii. iii. iv. 2. i. ii. Make sure the policy meets your needs! The purpose of this policy is the provision of an income payable if the life insured becomes totally disabled. This policy is a regular premium protection plan. This policy is a long-term financial commitment necessitating a regular premium payment for the term of the policy. Regular premiums can be paid monthly, quarterly, half-yearly or yearly. You should be satisfied as to the nature of this commitment with regard to your needs, resources and circumstances before entering into a contract. Warning: If you have taken out this policy in complete or partial replacement of an existing policy, please take special care to satisfy yourself that this policy meets your needs. In particular, please make sure you are aware of the financial consequences of such replacement and of any possible financial loss as a result. If you are in doubt about this, please contact your insurer or insurance intermediary/financial advisor. What happens if you want to cash in the policy early or stop paying premiums? This policy never acquires a cash value and is not appropriate for retirement funding or savings purposes. As this is a protection plan, if the premiums cease to be paid, no encashment value will be paid, and the policy will be terminated, after which Zurich Life will have no further liability under this policy. 20
3. What are the projected benefits under the policy? This policy does not acquire a surrender or maturity value. Its purpose is to provide a monthly income to the life insured if he/she becomes totally disabled and is totally unable through sickness or accident to follow his/her own occupation and is not following any other occupation for profit or reward. This monthly income is payable after an initial deferred period and until the earlier of the following: the life insured is no longer totally disabled; the life insured returns to work, retires or dies; and the policy expires at the end of the insurance term. The premium includes the cost of the insurance, all charges, expenses, intermediary and sales remuneration. Premiums are payable throughout the term of the policy. The following illustrations are based on a male client aged 39 years and 6 months whose benefits cease at 65. Escalation in Payment: 5% Occupation Class: 2 Disability Income: 15,000 p.a. Frequency of Premium Payments: Monthly Deferred Period: 26 weeks Premium Details Income Protection Tax Relief Premium: 46.93 (based on a tax rate of 41%): 19.24 Net Premium: 27.69 Zurich Life will provide you with illustrations based on your own exact details when your policy is issued. 21
Illustrative table of projected benefits and charges A B C D E = A + B - C - D End of Year Total amount of premiums paid into the policy to date Projected investment growth to date Projected expenses & charges to date Projected cost of protection benefits to date Projected policy value 1 563.16 0.00 379.36 183.80 0.00 2 1,151.66 0.00 763.75 387.91 0.00 3 1,766.65 0.00 1,145.79 620.86 0.00 4 2,409.31 0.00 1,524.05 885.26 0.00 5 3,080.88 0.00 1,889.21 1,191.68 0.00 10 6,920.23 0.00 3,510.63 3,409.59 0.00 15 11,704.75 0.00 4,426.54 7,278.21 0.00 20 17,667.13 0.00 4,485.71 13,181.42 0.00 25 25,097.34 0.00 5,155.75 19,941.59 0.00 Maturity 25,943.61 0.00 6,002.02 19,941.59 0.00 The projected costs of Protection Benefits may exceed the premium paid in later policy years, but any excess is met by Zurich Life out of reserves set up from expenses and charges in earlier policy years. 4. What intermediary/sales remuneration is payable? Illustrative table of intermediary/sales remuneration End of Year Premium payable in that year Projected total intermediary/sales remuneration payable in that year 1 563.16 619.48 2 588.50 39.70 3 614.98 41.49 4 642.66 43.36 5 671.58 45.31 10 836.91 56.46 15 1,042.94 70.36 20 1,299.69 76.49 25 1,619.66 60.45 Maturity 846.27 27.94 22
Important notes The premiums payable on the Income Protection Plan shown in the tables above have not been included in the tables of projected benefits and intermediary/sales remuneration for the Freedom in Retirement Plan - Personal. This is because your Income Protection Plan must be issued as a separate policy due to Revenue requirements. The figures for the illustrative table of projected benefits and charges are based on an increase of 3% per annum in risk benefits and an increase of 4.5% per annum in premiums. This illustration is based on a protection term of 25 years and 6 months and assumes that 306 monthly premiums have been paid. 5. i. ii. Can the premium be reviewed? The premium calculated at the start of the policy is projected to sustain the benefits selected for the term of the policy. However, the premium is not guaranteed for the term of the policy and will be reviewed every five years. At the time of a premium review, the Appointed Actuary will take into account the following: the monthly income protection benefit; the age, gender, deferred period, payment increase rate, and any morbidity alterations of the life insured; the premiums already received under the policy; the benefit charge rates (which are reviewed annually in the light of claims experience), the emergence of significant factors that affect morbidity or other risks, the rates charged by Zurich Life s reinsurer for these risks and any relevant published data on morbidity; the expenses of administering the policy, including allowance for the effect of inflation as measured by the Consumer Price Index or some other suitable index of expense inflation; and past investment performance and expected future investment performance. If there is an increase in premium following a premium review and should you choose not to pay this increase, then your benefit will be reduced to a level that, in the opinion of the Appointed Actuary, your premium can maintain. 23
6. i. ii. iii. Can the policy be cancelled or amended by the insurer? The policy can normally only be cancelled or materially amended by Zurich Life as a result of changes required by Government legislation and/or requirements imposed by the Revenue Commissioners. Any failure on your behalf to disclose a material fact may invalidate the contract and result in all or part of any claim being rejected. A material fact is one that may influence the assessment and acceptance of the proposal by Zurich Life. It is vital that you let Zurich Life know ALL material facts relating to this contract, including any material fact that comes to light between the date you sign the application and the date the policy document is issued. If you are in any doubt as to what constitutes a material fact, you should inform Zurich Life of that fact in any event. The same applies for any statement or declaration that you made to Zurich Life and is subsequently found to be untrue. If knowingly or recklessly made, this may lead to the policy being terminated. The same applies to any fraudulent attempts to obtain benefits under this policy. The following important requirements apply: Change of Occupation You should notify Zurich Life if you take up an additional occupation, change occupation or retire at any time during the term of the policy. Failure to do this could result in any claim for income protection benefit being declined. If a change in occupation (including retirement or taking up an additional occupation) changes the risk in Zurich Life s view, then the benefit may be cancelled or the charge for the benefit may be reviewed. Territorial Limits If a life insured travels or resides outside the territorial limits for more than 13 weeks in any 52-week period, then written permission must be obtained from Zurich Life to keep income protection benefit in force. If you do not inform Zurich Life, then Zurich Life has the right not to pay benefits. Below are the current territorial limits: Norway; Switzerland; and The European Union (as constituted at the start date of the policy). 24
Time Limits on Submission of Claims It is very important to realise that there is a time limit within which you should notify Zurich Life in relation to income protection benefit claims. Failure to notify Zurich Life within this time limit may result in a claim being declined or a delay in payment of a claim. Details of this time limit will be contained in your policy document, a copy of which is available on request from Zurich Life. Exclusions It is important to point out that income protection benefit will not be paid for certain causes of claim. These are referred to as exclusions and will be outlined in your policy document, a copy of which is available on request from Zurich Life. 7. Information on taxation issues The Plan is issued in compliance with Section 471 of the Taxes Consolidation Act, 1997. Premiums Under Section 471 of the Taxes Consolidation Act, 1997, premiums up to a limit of 10% of total income qualify for tax relief. Benefits Under current legislation, all benefits received from an Eagle Star Income Protection Plan are subject to income tax in the hands of the life insured. Insurance Levy The Government has recently announced an insurance levy of 1% to be applied on a range of life assurance policies. Where this is applicable to your policy Zurich Life will alter your premium or benefits accordingly. 8. i. Additional information in relation to your policy Descriptions of Benefits and Options Primary Benefit: Income Protection When you apply for Income Protection, you will have a number of choices about the type of benefit. These are described as follows: 25
A choice of deferred period of 13, 26 or 52 weeks. The deferred period is the period after which you become totally disabled and before which benefit will not be payable. The shorter the deferred period you select, the higher your premium. A choice of rates of escalation in payment of 0%, 3% or 5%. This is the rate at which your benefit will increase in the event that you make a claim for income protection benefit. The higher the rate of escalation selected, the higher your premium. A choice of the annual level of income protection benefit. The maximum benefit payable cannot be more than 75% of average gross monthly earnings in the twelve months prior to becoming totally disabled, less the monthly income the life insured receives from the following: other insurance against disability; any continuing salary, wages, profit or commission; any other earned income; any pension, including any early retirement disability pension (whether being claimed or not); any State disability/sickness benefits; and the monthly amount of any profit received from the sale of a business or of any award granted to the life insured from a tribunal or court or out-of-court settlement as a result of his/her disability. Part payment of benefit is allowed for partial loss of earnings provided the life insured remains totally disabled. Automatic Additional Benefit: Waiver Of Premium This provides for the payment of premiums by Zurich Life if you are unable to work due to accident or illness for a period longer than 26 weeks. Annual Policy Increases While you are not claiming disability benefit, Zurich Life has put in place a mechanism that allows you to protect the value of your monthly income benefit. It operates as follows: The monthly income protection benefit will be increased each year at your policy anniversary. The amount of the increase will be in 26
the same proportion as the increase in the Consumer Price Index, although Zurich Life may offer increases greater than this. You will not have to provide Zurich Life with any medical evidence to obtain these increases in benefit. You are not obliged to accept the increase offered, you may choose a lower level of increase or no increase at all. Otherwise, Zurich Life will increase the benefit automatically. An increase in the premium will be calculated to maintain the increase in the benefit. The rate of increase in the premium can be expected to be greater than the rate of increase in the benefit as the life insured gets older. Zurich Life will not offer any further annual increases if you have turned down two successive increases. ii. Term of Policy This policy is a protection policy, designed to provide a monthly income in the event of total disablement until the life insured attains selected retirement age or age 65 if this is lower, when the benefit will cease. Your chosen selected retirement age, to a maximum of age 65, will determine the term of the insurance contract. iii. Circumstances Under Which The Policy May Be Terminated In the event that you wish to terminate the contract, you should write to your insurance broker/financial advisor or Zurich Life quoting your policy number. This following section of the guide is applicable to the Freedom in Retirement Plan - Personal, the Single Contribution Pension Plan - Personal and the Income Protection Plan. 1. Satisfaction period On receipt of your policy documentation, you will have an opportunity to cancel the policy if you feel it will not meet your needs. To do this, return your policy document, Policy Certificate and a signed cancellation request to Zurich Life within 30 days. On receipt of the above, Zurich Life will refund all the premiums paid on your policy, and Zurich Life s liability for any benefits will cease. Zurich Life may adjust any single premium refunded for any negative fluctuation in investment markets during this period. 27