Accumulation Builder IUL Sales Ideas

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Accumulation Builder IUL Sales Ideas

• Larry FoutsRegional Life Specialist

Penn Mutual Life Insurance Company 600 Dresher
Road, Horsham, PA 19044
All guarantees are based on the claims paying
ability of the issuer. For Home Office and
Producer Use Only. Not to be Used with Existing
or Prospective Customers.
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Identifying the IUL Market

• Accumulation / Lifetime Income Sale
• Industry first introduced Indexed UL in 1997
• More than 20 companies now offer IUL products
• The growth of indexed annuities have helped sales
  of indexed life products grow in recent years
• Represents a little less than 10 of all UL sales

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Identifying the IUL Market

• IUL Sales almost doubled between 2005 and 2006

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Accumulation Builder IUL

• Penn Mutuals IUL Interest Crediting Approach
• SP 500 with Dividends Excluded
• Annual reset on Monthly Segments
• Illustrative rate reset each month
• Current crediting rate 8.92
• 1 yr Avg 10.36
• 5 yr Avg 8.10
• 10 yr Avg 8.59
• 20 yr Avg 8.92

As of 10/1/07
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SP 500 Index vs. Other Indices Historical

• Total Returns

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SP 500 Index vs.Other Indices Historical

• Returns Without Dividends

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Consider This

• Between 1984 and 2003, the SP 500 Index1 grew by
  12.98. During that time, the average investor,
  however, earned only 3.51 while the average
  market timer lost 3.29.2

1The SP 500 Index is an unmanaged index of
common stock performance, considered to be
representative of the stock market in general.
Indexes do not have sales charges and it is not
possible to invest directly in an index. Past
performance is no guarantee of future
results. 2DALBAR Quantitative Analysis of
Investor Behavior, 1984-2003.
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Accumulation Builder IULKey Features

• Premiums allocated between a fixed and indexed
  account
• Minimum 2 guaranteed interest floor on both
  accounts
• Indexed account has a competitive cap (14) and a
  100 participation rate which is guaranteed
• Two Loan Options available (except NY)
• Annual reset of starting SP value on index
  segments
• Overloan Protection Benefit available
• 9 Year Surrender Charge
• Rolling Targets in most states (except NY and NH)

What about that moving part?
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The CAP

• Caps set based on the companys earned ROR and
  the cost of hedging the performance of the index
• Bonds cover product guarantees
• Leftover cover cost of hedging the index
  performance
• Cost of hedging determined by market volatility
• More volatility lower cap due to higher cost of
  hedge
• Lower earned rate lower cap due to less
  available to hedge
• Reverse is true for lower volatility or higher
  earned rate
• Hedging strategy limits major cap movement up or
  down
• Index Annuity products need to aggressively
  manage cap

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Accumulation Builder IULHow the Indexed Account
Works

• Annual reset of segment
• Indexed account earnings are locked-in
• In years of poor SP 500 performance, a 2 floor
  protects account value

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2
14
10
2
SP Return
Note Assumes no charges or fees on either product
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Probability of DoingWhat we show!
    3 yr 5 yr 10 yr 20 yr
  Annually Period Period Period Period
           
5.0 69.7 92.5 97.9 100.0 100.0
6.0 68.0 84.2 90.0 99.6 99.6
7.0 63.1 78.4 83.8 99.2 99.2
8.0 58.5 68.5 72.2 97.5 84.2
9.0 55.2 56.0 57.3 71.0 47.3
10.0 51.5 29.5 34.0 25.3 8.7
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Accumulation Builder IUL - IRR
Male Age 45, Preferred Plus Maximum Non-Mec
Premium 7 Illustration Rate
Policy Year IRR on CSV Comparable After-Tax IRR with 35 Tax Bracket
1 -33.34 N/A
5 0.72 0.10
10 4.32 5.83
15 5.40 7.29
20 5.86 7.91
25 6.06 8.18
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Accumulation Builder IUL

• Accumulation / Lifetime Income Sale
• Index Account / Index Loan (except NY)
• 2 Minimum, 14 Current Cap, 100 Participation
• One-Year Point to Point Reset
• 12 Investment Segments to Catch Lightening
• Volatility is a Friend Stay Invested
• If Market Tanks Get 2 Reset at Lower Point
  Earn Interest as it Climbs Back
• Balance to Other Aspects of Clients Portfolio
• Strong IRR on CSV with Life Insurance Protection

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Sec 7702(A) Plan
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Probability of DoingWhat we show!
    3 yr 5 yr 10 yr 20 yr
  Annually Period Period Period Period
           
5.0 69.7 92.5 97.9 100.0 100.0
6.0 68.0 84.2 90.0 99.6 99.6
7.0 63.1 78.4 83.8 99.2 99.2
8.0 58.5 68.5 72.2 97.5 84.2
9.0 55.2 56.0 57.3 71.0 47.3
10.0 51.5 29.5 34.0 25.3 8.7
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Sec 7702(A) Plan

• A Tax-Free Retirement Income Benefit
• The tax benefits of this personal retirement
  strategy are made possible by utilizing a cash
  value life insurance policy. This is
  accomplished through a combination of withdrawals
  up to cost basis and policy loans thereafter.
  Policy loans and withdrawals will reduce the
  death benefit. This assumes that the policy
  remains in force and is not a modified endowment
  contract under IRC Section 7702A. If the policy
  is lapsed or surrendered prior to the death of
  the insured, the policy loans in excess of the
  cost basis will result in taxable income.
• Tax-Deferred Accumulation of Policy Values
• Cancellation of a policy in the early years may
  have a significant impact on policy values. A
  detailed illustration based on your specific
  facts and circumstances should be reviewed
  carefully before purchase.
• Individual Ownership and Control
• Access to Funds Before age 59 ½ Without Penalty
• The tax benefits of this personal retirement
  strategy are made possible by utilizing a cash
  value life insurance policy. This is
  accomplished through a combination of withdrawals
  up to cost basis and policy loans thereafter.
  Policy loans and withdrawals will reduce the
  death benefit. This assumes that the policy
  remains in force and is not a modified endowment
  contract under IRC Section 7702A. If the policy
  is lapsed or surrendered prior to the death of
  the insured, the policy loans in excess of the
  cost basis will result in taxable income.
• A Self-Completing Pre-Retirement Death Benefit
• Requires optional waiver of monthly deductions at
  an additional charge. The waiver of monthly
  deduction agreement allows you to maintain your
  insurance protection during a period of
  disability by waiving all monthly expenses and
  cost of insurance charges.

Please Note Life insurance policies are subject
to certain fees and expenses which are not
normally associated with other investment
vehicles.
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Sec 7702(A) Plan

• Income Tax-Free Death Benefits
• Proper Beneficiary Designations that Can Avoid
  Probate
• Possible Protection From Creditors
• Selectivity of Participants
• No Trust or Trustee Necessary
• No IRS Forms Required 

Please Note Life insurance policies are subject
to certain fees and expenses which are not
normally associated with other investment
vehicles.
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Sec 7702(A) Plan

• Male Age 50 - 60,000 / YR, 10 Years, DB -
  2,412,136
• Target Premium - 41,009

Illustrated Interest Rate 7.0 7.5 8.0
Annual Income 65,590 84,108 104,310
Net Payments _at_ age 95 1,367,710 1,923,240 2,529,289
IRR_at_ age 95 5.51 6.73 7.86
Death Benefit _at_ age 95 363,264 524,850 820,773
Taxable Equivalent (Hypothetical Equity) 8.55 10.00 11.30
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Web Story Premium Choice
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Executive Bonus Plan(with Leverage)

• Business Owner, Male Age 50
• 100,000 Tax Deductible Contribution yrs 1-10
• Taxable to Business Owner
• Paid via Policy loans yrs 2-11
• Net zero out of Pocket for Business Owner
• Tax Deferred Growth
• Income Tax Free Death Benefit
• Tax free Cash Flow - 140,000 Age 66-120
• Tax Equivalent 13.17

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Exec Bonus Report
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Leveraged Life

• Male Age 50 Sophisticated Investor
• Understands Margin Account
• Understands Put Option
• Pays Annual Premium, then borrows back to provide
  Leverage
• Maximizes use of funds!

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Leveraged Life
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Leveraged Life
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Accumulation Builder IUL Sales Ideas

• Dan SoderbergRegional Life Specialist

Penn Mutual Life Insurance Company 600 Dresher
Road, Horsham, PA 19044
All guarantees are based on the claims paying
ability of the issuer. For Home Office and
Producer Use Only. Not to be Used with Existing
or Prospective Customers.