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© 2010 Standard Insurance Company First Rate Annuity 7 and Advantage Growth Annuity 5 & 7 Product Training Module.

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Presentation on theme: "© 2010 Standard Insurance Company First Rate Annuity 7 and Advantage Growth Annuity 5 & 7 Product Training Module."— Presentation transcript:

1 © 2010 Standard Insurance Company First Rate Annuity 7 and Advantage Growth Annuity 5 & 7 Product Training Module

2 © 2010 Standard Insurance Company First Rate Annuity (FRA) Product Overview Surrender Schedules and Free Withdrawals Advantage Growth Annuity (AGA) Product Overview Surrender Schedules and Free Withdrawals Suitability Analysis During the Sales Process Compensation and Sales Support FRA and AGA Product Training Module 2

3 © 2010 Standard Insurance Company First Rate Annuity Product Overview

4 © 2010 Standard Insurance Company The First Rate Annuity (FRA) from The Standard is a single-premium, deferred annuity offering a one-year interest rate guaranteed period, during which a bonus of 2.00% additional interest is credited. The FRA has a seven-year surrender charge period. After the initial guarantee period, your client will benefit from competitive renewal rates based on the current economic environment and market conditions. The First Rate Annuity is an ideal savings vehicle for a long-term saver seeking the benefits of a bonus interest rate during the first year and generous access to funds throughout the surrender-charge period. Issue Ages – The FRA may be established for owners age 18-90; The maximum issue age for an annuitant is 90. Single Annuitant and Single Owner – The First Rate Annuity series contract language does not allow for joint annuitants or joint owners. In the case of a 1035 exchange we will facilitate a joint owner. If one owner dies, the death benefit will be payable. Tax Qualified Options -- This annuity may be established as an IRA (Traditional, Roth, or SEP), 403(b) Tax-Sheltered Annuity, or Qualified Pension. Non-qualified funds may also be used to establish the annuity. Premium – The minimum premium amount for the annuity is $15,000 and the maximum is $1,000,000. Greater amounts may be considered, but must receive home office approval prior to application. Additional premium payments may be made during the first 90 days of the contract. FRA Overview 4

5 © 2010 Standard Insurance Company The First Rate Annuity (FRA) offers strong growth potential through competitive market interest rates. The Standard has a long-standing history of excellent fixed annuity performance and competitive renewal rates. Rate Guarantees – The initial interest rate is guaranteed to remain level for one year. After the rate guaranteed period your client will receive renewal interest rates based on the current economic and interest-rate environment. The annuity contract is assigned a guaranteed minimum rate; the renewal rate will never be set below this rate. Interest is calculated and credited daily. Interest Rate Bonus – The First Rate Annuity includes an interest rate bonus of 2.00% for the first contract year. Principal Guarantee – Principal is 100% guaranteed. Regardless of economic fluctuations at home or abroad, we guarantee that your client or the beneficiary will never receive less than the total premium payments, less any previous withdrawals or outstanding loan balances. Interest Rate Lock – The First Rate Annuity may make available an interest rate lock. If available at the time of purchase, this would allow The Standard to hold a rate for a set time period from the home-office receipt of a request for a rollover, transfer, or exchange. If the funds were to be received within this window, the client would receive the greater of the held interest rate or the current interest rate. If the premium is received after the rate-lock period, it would be credited the interest rate in effect at the time the premium is received. For more specific information, please contact The Standard. FRA Overview 5

6 © 2010 Standard Insurance Company FRA Surrender Schedule and Free Withdrawals

7 © 2010 Standard Insurance Company FRA Surrender Charge Schedule 7 Contract Year FRA 79%8%7%6%5%4%2% Unlike short-term savings products, deferred annuities are designed and priced for long-term retirement savings. Part of this design relies on the fact that the advantages of tax deferral work best when the annuity’s growth is allowed to compound over time. So, though all or a portion of the funds may be withdrawn at any time, early withdrawals are discouraged and are subject to surrender charges. Expressed as a percentage of the annuity’s total value, these charges diminish to zero over time. The schedule is in effect for only one period during the life of the contract and will not reset. Please note that the surrender charges are not part of or associated with any state or federal taxes imposed on a distribution or with the IRS pre-age-59 ½ tax penalty that may apply to a withdrawal. Surrender charges are in addition to any applicable state or federal taxes or penalties.

8 © 2010 Standard Insurance Company Scheduled Payments of Interest Earnings – After 30 days, regularly scheduled withdrawals of interest earnings may be made on a monthly, quarterly, semi-annual or annual basis. 10% Annual Withdrawals – After the first contract year, your client may annually withdraw up to 10% of the annuity’s value (as of the end of the preceding contract year) without incurring a surrender charge. IRS Required Minimum Distributions – If the contract is held as a tax-qualified plan, IRS Required Minimum Distributions may be made on the schedule requested. Substantially Equal Periodic Payments (SEPP) – The SEPP option allows early-retirement (pre-age-59 ½) income without imposition of the IRS 10% early-withdrawal penalty or incurring a surrender charge. Nursing Home Benefit - After the first contract year, if your client becomes a nursing home resident for 30 or more consecutive days, The Standard will waive surrender charges on all withdrawals, transfers and surrenders during the period of confinement. Written documentation is required. The nursing home waiver is not available in Massachusetts. Terminal Condition Benefit – If your client is diagnosed with a terminal condition, The Standard will waive surrender charges on all withdrawals, transfers and surrenders. Written documentation is required. State-specific conditions apply to the terminal condition waiver. Out of Surrender – After the end of the surrender period, your client may withdraw some or all of the First Rate Annuity funds without surrender charges. Death Benefits -- Beginning immediately, upon the death of the owner or annuitant, the full annuity value is payable as death benefits to the named beneficiary. FRA Surrender Free Withdrawals 8

9 © 2010 Standard Insurance Company Annuitization – At any time the annuity may be converted to an income annuity with The Standard. Your client must choose a Lifetime Income option or a Period Certain option of five years or longer. Available Income Options Include Certain Period – A guaranteed income for a time period chosen (5, 10, 15, or 20 years). At any time, benefits may be commuted to a lump-sum payment. If the annuitant dies prior to the end of the period specified, payments continue to the beneficiary until the end of the period (or may be commuted to a lump-sum payment). Life Income – A guaranteed income for as long as the annuitant lives. Payments will cease upon the death of the annuitant. Life Income with Installment Refund – A guaranteed income as long as the annuitant lives. The total payments will never be less than the total of the funds paid to purchase this option. If the annuitant dies before receiving at least that amount, payments continue to the beneficiary until the full amount is repaid (or may be commuted to a lump-sum payment). Life Income with Certain Period – A guaranteed income for as long as the annuitant lives. If the annuitant dies prior to the end of the period specified (5,10,15,or 20 years), payments continue to the beneficiary until the end of the period ( or may be commuted to a lump-sum payment). FRA Surrender Free Withdrawals 9

10 © 2010 Standard Insurance Company Available Income Options Include Joint and Survivor Life Income – A guaranteed income for as long as both annuitants live. When either annuitant dies, payments will continue at 50%, 66 2/3%, 75% or 100% of the payments received when both were living. Payments will cease upon death of both annuitants. Joint and Survivor Life Income with Installment Refund – A guaranteed income for as long as both annuitants live. The total payments will never be less than the total of the funds paid to purchase this option. If both annuitants die before receiving at least that amount, payments continue to the beneficiary until the full amount is repaid (or may be commuted to a lump-sum payment). Joint and Survivor Life Income with Certain Period – A guaranteed income for as long as both annuitants live. When either annuitant dies, payments will continue at 100% of the payments received when both were living. If both annuitants die prior to the end of the period specified (5, 10, 15 or 20 years), payments continue to the beneficiary until the end of the period (or may be commuted to a lump-sum payment). Joint and Contingent Survivor Life Income – A guaranteed income for as long as both annuitants live. If the primary annuitant dies first, payments will continue at 50% of the payments received when both were living. If the contingent annuitant dies first, payments will continue at 100% of the payments received when both were living. Payments will cease upon death of both annuitants. FRA Surrender Free Withdrawals 10

11 © 2010 Standard Insurance Company Advantage Growth Annuity Product Overview

12 © 2010 Standard Insurance Company The Advantage Growth Annuity (AGA) from The Standard is a single-premium, deferred annuity offering a one-year interest rate guaranteed period, during which a bonus of 2.00% additional interest is credited. The AGA is offered in a five and seven-year surrender charge period. After the initial guarantee period, your client will benefit from competitive renewal rates based on the current economic environment and market conditions. The Advantage Growth Annuity is an ideal savings vehicle for a long-term saver seeking the benefits of a bonus interest rate during the first year and generous access to funds throughout the surrender charge period. Issue Ages – The AGA may be established for owners age 18-90; The maximum issue age for an annuitant is 90. Single Annuitant and Single Owner – The Advantage Growth Annuity series contract language does not allow for joint annuitants or joint owners. In the case of a 1035 exchange we will facilitate a joint owner. If one owner dies, the death benefit will be payable. Tax Qualified Options -- This annuity may be established as an IRA (Traditional, Roth, or SEP), 403(b) Tax-Sheltered Annuity, or Qualified Pension. Non-qualified funds may also be used to establish the annuity. Premium – The minimum premium amount for the annuity is $15,000 and the maximum is $1,000,000. Greater amounts may be considered, but must receive home office approval prior to application. Additional premium payments may be made during the first 90 days of the contract. AGA Overview 12

13 © 2010 Standard Insurance Company The Advantage Growth Annuity (AGA) offers strong growth potential through competitive market interest rates. The Standard has a long-standing history of excellent fixed annuity performance and competitive renewal rates. Rate Guarantees – The initial interest rate is guaranteed to remain level for one year. After the rate guaranteed period your client will receive renewal interest rates based on the current economic and interest-rate environment. The annuity contract is assigned a guaranteed minimum rate; the renewal rate will never be set below this rate. Interest is calculated and credited daily. Interest Rate Bonus – The Advantage Growth Annuity includes an interest rate bonus of 2.00% for the first contract year. Interest Rate Lock – The Advantage Growth Annuity may make available an interest rate lock. If available at the time of purchase, this would allow The Standard to hold a rate for a set time period from the home-office receipt of a request for a rollover, transfer, or exchange. If the funds were to be received within this window, the client would receive the greater of the held interest rate or the current interest rate. If the premium is received after the rate-lock period, it would be credited the interest rate in effect at the time the premium is received. For more specific information, please contact The Standard. AGA Overview 13

14 © 2010 Standard Insurance Company AGA Surrender Schedule and MVA Feature

15 © 2010 Standard Insurance Company AGA Surrender Charge Schedule 15 Contract Year AGA 57%6%5%4%2% AGA 77%6%5%4%3%2%1% Unlike short-term savings products, deferred annuities are designed and priced for long-term retirement savings. Part of this design relies on the fact that the advantages of tax deferral work best when the annuity’s growth is allowed to compound over time. So, though all or a portion of the funds may be withdrawn at any time, early withdrawals are discouraged and are subject to surrender charges. Expressed as a percentage of the annuity’s total value, these charges diminish to zero over time. The schedule is in effect for only one period during the life of the contract and will not reset. Please note that the surrender charges are not part of or associated with any state or federal taxes imposed on a distribution or with the IRS pre-age-59 ½ tax penalty that may apply to a withdrawal. Surrender charges are in addition to any applicable state or federal taxes or penalties.

16 © 2010 Standard Insurance Company Why an MVA? – The MVA helps optimize the growth potential of the Advantage Growth Annuity over the long term. The presence of an MVA helps protect the insurance company against investment losses due to early withdrawals from the annuity, and in turn, the MVA allows the insurance company to credit a higher interest rate to the annuity contract. For those clients who do not plan on taking distributions beyond the penalty-free withdrawals allowed during the surrender period, the MVA can work to their advantage by helping them receive a more competitive interest rate. How it Works – During the surrender charge period an MVA will be applied to withdrawals or surrenders that are subject to surrender charges. This adjustment is based on changes in yields of market interest rates and may increase or decrease the annuity’s surrender value. The contract details how this adjustment is calculated, but generally if interest rates have risen since the annuity purchase, the adjustment will decrease the surrender value; if interest rates have fallen, the adjustment will increase the surrender value. In a withdrawal scenario where the surrender charge is being waived, the market value adjustment will also be waived. Market Value Adjustment (MVA) 16

17 © 2010 Standard Insurance Company During the initial interest rate guarantee period, an MVA is applied to withdrawals or surrenders that are subject to surrender charges. On the AGA 5 and 7, both the surrender charge period and MVA period are the same number of years. The MVA is based on changes in the prescribed index, and may increase or decrease the annuity’s surrender value. Generally, if interest rates have risen since the purchase, the adjustment will decrease the surrender value. Conversely, if interest rates have fallen since the purchase, the MVA will increase the surrender value. Advantage Growth Annuity 5 Advantage Growth Annuity 7 AGA Market Value Adjustment Examples 17 End of year Unchanged at 3.00% Increased to 5.00% Decreased to 1.00% End of year Unchanged at 3.00% Increased to 5.00% Decreased to 1.00% %14.02%-0.65%17.00%15.46%-1.46% %11.41%0.14%26.00%14.75%-3.85% %8.73%1.04%35.00%12.17%-2.92% %5.98%1.94%44.00%9.53%-1.98% %2.16%1.84%53.00%6.81%-1.04% % 62.00%4.02%0.84% % 71.00%1.16%0.00% For illustrative purposes only; results may vary

18 © 2010 Standard Insurance Company Scheduled Payments of Interest Earnings – After 30 days, regularly scheduled withdrawals of interest earnings may be made on a monthly, quarterly, semi-annual or annual basis. 10% Annual Withdrawals – After the first contract year, your client may annually withdraw up to 10% of the annuity’s value (as of the end of the preceding contract year) without incurring a surrender charge. IRS Required Minimum Distributions – If the contract is held as a tax-qualified plan, IRS Required Minimum Distributions may be made on the schedule requested. Nursing Home Benefit - After the first contract year, if your client becomes a nursing home resident for 30 or more consecutive days, The Standard will waive surrender charges on all withdrawals, transfers and surrenders during the period of confinement. Written documentation is required. The nursing home waiver is not available in Massachusetts. Terminal Condition Benefit – If your client is diagnosed with a terminal condition, The Standard will waive surrender charges on all withdrawals, transfers and surrenders. Written documentation is required. State-specific conditions apply to the terminal condition waiver. Out of Surrender – After the end of the surrender period, your client may withdraw some or all of the First Rate Annuity funds without surrender charges. Death Benefits -- Beginning immediately, upon the death of the owner or annuitant, the full annuity value is payable as death benefits to the named beneficiary. AGA Surrender Free Withdrawals 18

19 © 2010 Standard Insurance Company Annuitization – At any time the annuity may be converted to an income annuity with The Standard. Your client must choose a Lifetime Income option or a Period Certain option of five years or longer. Annuitization is not available in California. Available Income Options Include Certain Period – A guaranteed income for a time period chosen (5, 10, 15, or 20 years). At any time, benefits may be commuted to a lump-sum payment. If the annuitant dies prior to the end of the period specified, payments continue to the beneficiary until the end of the period (or may be commuted to a lump-sum payment). Life Income – A guaranteed income for as long as the annuitant lives. Payments will cease upon the death of the annuitant. Life Income with Installment Refund – A guaranteed income as long as the annuitant lives. The total payments will never be less than the total of the funds paid to purchase this option. If the annuitant dies before receiving at least that amount, payments continue to the beneficiary until the full amount is repaid (or may be commuted to a lump-sum payment). Life Income with Certain Period – A guaranteed income for as long as the annuitant lives. If the annuitant dies prior to the end of the period specified (5,10,15,or 20 years), payments continue to the beneficiary until the end of the period ( or may be commuted to a lump-sum payment). AGA Surrender Free Withdrawals 19

20 © 2010 Standard Insurance Company Available Income Options Include Joint and Survivor Life Income – A guaranteed income for as long as both annuitants live. When either annuitant dies, payments will continue at 50%, 66 2/3%, 75% or 100% of the payments received when both were living. Payments will cease upon death of both annuitants. Joint and Survivor Life Income with Installment Refund – A guaranteed income for as long as both annuitants live. The total payments will never be less than the total of the funds paid to purchase this option. If both annuitants die before receiving at least that amount, payments continue to the beneficiary until the full amount is repaid (or may be commuted to a lump-sum payment). Joint and Survivor Life Income with Certain Period – A guaranteed income for as long as both annuitants live. When either annuitant dies, payments will continue at 100% of the payments received when both were living. If both annuitants die prior to the end of the period specified (5, 10, 15 or 20 years), payments continue to the beneficiary until the end of the period (or may be commuted to a lump-sum payment). Joint and Contingent Survivor Life Income – A guaranteed income for as long as both annuitants live. If the primary annuitant dies first, payments will continue at 50% of the payments received when both were living. If the contingent annuitant dies first, payments will continue at 100% of the payments received when both were living. Payments will cease upon death of both annuitants. AGA Surrender Free Withdrawals 20

21 © 2010 Standard Insurance Company Suitability Analysis During the Sales Process

22 © 2010 Standard Insurance Company Is the Product Right for Your Client? In recommending an annuity to a client, suitability regulations require a producer to have “reasonable grounds” to believe the recommended annuity is suitable for that particular client on the basis of facts disclosed by the client during the sales process. A producer should obtain and analyze the client’s: Age Annual Income Financial Situation and Needs (including financial resources used to fund the annuity) Financial Experience Financial Objectives Intended Use of the Annuity Financial Time Horizon Existing Assets (including investments and life insurance holdings) Liquidity Needs Liquid Net worth Risk Tolerance Tax Status Suitability Analysis During the Sales Process 22

23 © 2010 Standard Insurance Company As a result of a producer’s review of the previous, and analysis to determine suitability, the producer must have a “reasonable basis to believe:” The client has been “reasonably informed of the various features of the annuity” – this includes the surrender charge amounts; potential tax penalties associated with the sale, exchange, surrender or annuitization of the annuity; mortality, expenses and investment advisory fees; potential charges for and features of riders; limitations on interest returns; insurance and investment components and market risk; The client would benefit from certain features of the annuity, such as tax-deferred growth, annuitization, death benefits or living benefits; The particular annuity as a whole, any index accounts to which funds are allocated at the time of purchase or exchange of the annuity, and any riders and similar product enhancements, are suitable for the client based on his/her suitability information; and (If applicable) an exchange or replacement is suitable, taking into consideration whether the client: – Will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits (such as death, living or other contractual benefits), or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements; – Would benefit from product enhancements and improvements; and – Has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 36 months. The Producer Must Have Reasonable Basis to Believe: 23

24 © 2010 Standard Insurance Company Compensation and Sales Support

25 © 2010 Standard Insurance Company Commission Amounts Consult your Annuity Commission Schedule for details Commission Chargeback Surrenders – 100% of the commission will be recaptured on contracts surrendered in the first six contract months – 50% of commission will be recaptured on contracts surrendered in the seventh to twelfth contract months Death – There is no chargeback on death of an owner or annuitant except in those cases where the deceased was age 86 or older at contract issue, in which case the commission chargeback rules for surrenders apply – 100% of commission will be recaptured on death in the first six contract months – 50% of commission recaptured on death in the seventh to twelfth contract months Compensation 25

26 © 2010 Standard Insurance Company Please contact your NMO or our sales team The Standard sales team phone: The Standard sales team alias: Marketing Materials: New Business Forms and Materials: New Business Submission Annuity New Business, P5C The Standard PO Box 711 Portland, OR Street Address for Overnight Deliveries Annuity New Business, P5C The Standard 1100 SW Sixth Avenue Portland, OR Sales Support 26

27 © 2010 Standard Insurance Company First Rate Annuity 7


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