Frequently Asked Questions

Can crediting rate caps and participation rates change over time?

Yes. Caps and participation rates are dependent upon the economic environment, but will never drop below the guaranteed minimum levels as specified in the contract. These are declared by the company and can change as often as monthly.

Are the caps and participation rates the same for all IUL products?

No. Caps and participation rates will vary by product. Please refer to the Current Interest Rates section of the Sales Professional Access website for the current participation rates and caps for each product.

How is index interest calculated?

Our IUL products use one of the most straightforward index crediting methods in the industry - annual point-to-point. This crediting method calculates the index interest rate by comparing the S&P 500^® value on the date a segment is created to the value one year later when the segment matures. The participation rate and the cap are then applied to determine the index interest rate to be credited to the funds currently in that segment.

Example: Below are three examples of how the interest amount to be used to credit would be calculated.

^* Participation rates and caps shown are for example purposes only. Please refer to the Current Interest Rates for current participation rates and caps for each product.

What is a segment?

A segment is a portion of an index account that may be credited interest based upon the performance of a market index.

When does a segment begin for my premium payment?

New segments are created on the 10th of each month. A policy may contain up to 12 segments per index interest crediting strategy. Each segment ends or matures, one year after it begins. Upon maturity, a new segment starts and any values in the new segment will use the same index interest crediting strategy, unless changed by the client.

What happens to funds received prior to the 10th of the month?

If money is received prior to a new segment start date, it will sit in the short-term holding account where it earns the same interest rate as the fixed account until the next segment start date.

Can term policies be converted to an indexed universal life policy?

Yes, the usual term conversion rules apply.

What's the difference between standard loans and indexed loans?

For standard loans, the interest charged and credited is known in advance. With indexed loans, interest charged is declared in advance; however, interest credited is based on the underlying index performance.

When applying for a loan, the client will be asked which type of loan they're applying for.

How do I decide which crediting strategy(ies) to recommend to my clients?

While these suggestions are by no means definitive, here are a few broad guidelines about which of your clients might be best for each crediting strategy:

• 100 percent participation rate with mid-range cap - Clients who believe the index will perform at an average or slightly above average rate might be more suited to select this strategy
• Higher participation rate with lower cap - Clients who believe the index will perform below the cap or below the index average might be more suited for this strategy
• Lower participation rate with no cap - Clients who believe the market will outperform the cap might be more suited for this strategy
• Fixed account - Clients who may not be comfortable with allocating all of their accumulation value to an index interest crediting strategy

How often can clients change their crediting strategy?

The crediting strategy can be changed as often as monthly for new money. For money already submitted, amounts can be moved once an existing segment matures. The policyowner can also transfer between the fixed and index account. Transfers from the fixed account to the index account are processed on the next allocation date. Transfers from the index account to the fixed account will be processed on the next segment maturity date.

What does "downside protection" mean?

Downside protection means that even if the market falls and the index change is negative, the client will be credited no less than the floor for that segment. For our IUL products, that floor is zero percent.

Is the policy's accumulation value invested in the stock market?

No. Although the index interest rate is based on the performance of a market index, the accumulation value is not actually invested in the stock market. The index performance is only used in the calculation of the interest credited to the policy.

Beyond my license to sell life insurance, do I require any special licensing to sell indexed universal life insurance products?

No, if you are currently licensed to sell life insurance with us, that's all you need

Who is the client for each product?

Life Protection Advantage is designed to provide affordable, long-term life insurance protection. By paying the long-term no lapse protection premium, the client is guaranteed a minimum period of time the coverage will remain in force. For most clients of average health, this premium guarantees their coverage lasts up to, or even beyond, their life expectancy. This policy also has growth potential, which is important because it can help extend the policy's death benefit coverage beyond the no-lapse protection period. This product is ideal for clients with a long-term death benefit need such as income replacement, wealth transfer or estate planning.

Income Advantage is designed for clients with a death benefit need who also want the potential for cash value¹ accumulation that can be accessed at a later date. The client can take distributions from their policy's cash value to help supplement future cash needs, such as paying for a child's college education expenses, supplementing retirement income or for any reason the client chooses. Distributions are taken in the form of income-tax free loans or withdrawals,^2,3 and it's important for a client who purchases an Income Advantage policy to understand how loans and withdrawals work and the types of loans available.

Indexed Universal Life Express is designed to provide affordable, long-term life insurance protection on a simplified issue basis. By paying the minimum premium, the client is guaranteed coverage for a no-lapse protection period that lasts for 20 years or until age 80, whichever is shorter. This policy also has growth potential, which is important because it can help extend the policy's death benefit coverage beyond the no-lapse protection period. This product is ideal for clients who want to protect their family and replace their income should something happen to them. And, because it uses simplified underwriting, it helps clients get their coverage issued quickly without lengthy health inquiries.

¹ The amount that may be available through loans or withdrawals, as defined in the contract.

² For federal income tax purposes, tax-free income assumes (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); and (2) the policy does not become a modified endowment contract. See IRC §72, 7702(f)(7)(B), 7702A.

³ Any policy withdrawals, loans and loan interest will reduce policy values and benefits.