SecurePlus Providerpfaonline.com/agent/images/Secure Plus/SecurePlusMktgGuide.pdf · SecurePlus®...

MARKET ING GU IDE

SecurePlus® ProviderI N D E X E D U N I V E R S A L L I F E

TC33788(0407) FOR AGENT USE ONLY – NOT FOR USE WITH THE PUBLIC

SecurePlus® Provider SecurePlus® Provider from Life Insurance Company of the Southwest (LSW), is a flexible premium universal life policy with an indexed interest feature. SecurePlus® Provider offers...

• Highly competitive lifetime rolling target premiums

• Ten year declining surrender charge

• Three Interest Crediting Strategies: Point-to-Point, Point-to-Average or Fixed Interest

• 1035 Exchanges with loans

• Revolutionary no additional cost accelerated benefit riders (ABR)

• 125 bps Account Value Enhancement credited on accumulated cash value starting at the end of year ten

• Guaranteed 100% Participation Rate on Point-to-Point Strategy

• Guaranteed no Cap on Point-to-Average Strategy

• Loan balances that remain in the chosen Interest Crediting Strategy

• Full customization with available riders

• Guideline Premium or Cash Value Accumulation Test

Riders are optional and may be available at an additional cost. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy and may result in a taxable event.

FORAGENTUSEONLY–NOTFORUSEWITHTHEPUBLIC

Your clients need the security that comes with knowing they’re protected – regardless of where life’s journey takes them.

SecurePlus® Provider was created with one thing in mind – to provide your clients with

1

FORAGENTUSEONLY–NOTFORUSEWITHTHEPUBLIC.


2

SecurePlus® Provider is all about providing your clients with options. Based on their financial objectives, risk tolerance, and living benefit needs, they have the flexibility to design a policy that can protect them and their family.

2

Table of Contents

Understanding an Indexed Policy . . . . . . . . . . . . . . . . . . . . 3

Client Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Product at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Death Benefit Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Loans, Withdrawals and 1035 Exchanges . . . . . . . . . . . . . . 7

Indexed UL Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . 8

Interest Crediting Strategies . . . . . . . . . . . . . . . . . . . . . . . . . 8

How SecurePlus® Provider Works . . . . . . . . . . . . . . . . . . . 10

Policy Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Optional Riders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Options for LifeThree interest crediting options:• Fixed Interest• Point-to-Point• Point-to-Average

Customization of features and benefits with available riders

Two death benefit options; level or increasing

3

What is an Indexed Universal Life (IUL) policy?

IUL is a form of permanent life insurance which provides the policyholder the choice of having the interest earned on their cash value based on the performance of the Standard & Poor’s (S&P) 500® Index. This option provides your clients upside potential through growth of cash value. While the SecurePlus® Provider policy provides growth opportunities, it also offers protection against loss of values through a guaranteed minimum interest crediting rate. This is a reason why so many clients are attracted to this type of policy design. SecurePlus® Provider provides upside potential and downside protection. All in one policy!

Because this is a universal life policy, it has the flexibility to change both premium payments and death benefits to meet a variety of client needs. With the tremendous flexibility this policy provides, you can customize the policy to emphasize the features and benefits most important to your clients.

Which clients will benefit from SecurePlus® Provider?

Individual Insurance PlanningClients who are looking for life insurance and the accumulation of cash value that could help cover educational expenses or provide supplemental retirement income are perfect candidates for this product. The tax-deferred accumulation of cash value and tax-favored distributions make SecurePlus® Provider an effective vehicle to build cash value in the simplest to most complex situations. Clients will also appreciate the potential to accumulate cash value as they look to reduce their premium payments during their retirement years.

Business MarketLife insurance is often the preferred choice in funding buy-sell agreements, executive bonus plans, and non-qualified deferred compensation arrangements. By providing premium flexibility, upside cash value performance through the indexed strat-egy accounts, and optional benefits to help protect key employees and their families, SecurePlus® Provider may be ideal for business planning situations.

Estate PlanningLarge estates can be exposed to significant settlement costs whether through gift and estate taxes, probate expenses or costs to administer the estate. SecurePlus® Provider offers liquidity to help cover these costs and protect assets that may otherwise have to be sold in less than ideal conditions.


Issue Ages: 0-85 (age last birthday)

Minimum Face Amount: $25,000*

Rate Classes: Preferred Non-Tobacco (issue ages 15-75)

Verified Standard Non-Tobacco (issue ages 0-85)

Express Standard Non-Tobacco (issue ages 0-85)**

Preferred Tobacco (issue ages 15-75)

Standard Tobacco (issue ages 15-85)

Verified Standard Non-Tobacco will be used for non-rated issue ages 0-14

Substandard: Table ratings and flat extras are available with Verified Standard Non- Tobacco and Standard Tobacco classes

Minimum Premium: $25.00 / month

Surrender Schedule: Ten-year declining charge

Policy Charges: Expense charge: Varies based on age, sex, face amount and rate class for 10 years

Policy fee: $5.00 per month

Premium load: 5% of premium

Policy Loans: Available after the first policy year, both variable and fixed***

Withdrawals: Available after the first policy year

Account Value Enhancement: Starting at the end of year ten, a 1.25% account value enhancement may be credited to the accumulated value annually (non-guaranteed)

1035 Exchanges with Loans: Available for up to 50% of the gross transferred amount

Riders (where approved): Accelerated Benefits Riders (Terminal, Chronic and Critical Illness)

Accidental Death Benefit Rider

Children’s Term Rider

Disability Income Rider (2-year and 5-year)

Extension of Benefits Rider

Guaranteed Insurability Rider

Long-Term Care Rider

Other Insured Rider

Overloan Protection Rider

Unemployment Rider

Waiver of Target Premium

*Face amounts below $25,000, but not less than $10,000, may be purchased as long as the minimum monthly premium is satisfied. **Not available in PA. ***Policy loans and withdrawals reduce the policy's cash value and death benefit and may result in a taxable event.

4

Product at a Glance



5

Rate Classes and UnderwritingPreferred Non-Tobacco: An application for this rate class requires a blood profile and a paramedical or medical examination. The applicant must not have used nicotine containing products within the last 12 months.

Verified Standard Non-Tobacco: Offers com-petitive rates to applicants who are fully underwritten, who are standard risks and who have not used nicotine contain-ing products within the last 12 months.

Express Standard Non-Tobacco: Available to those who qualify as standard under “quick underwriting,” and to non-nicotine containing product users with ratings of four tables or less.

Preferred Tobacco: Available to nicotine containing product users who meet all preferred guidelines. Blood pro-files and paramedical or medical examinations are required for all Preferred Tobacco applicants.

Standard Tobacco: Applicants who use nicotine containing products and who do not otherwise meet the preferred guidelines and who are not rated will fall into this rate class.

Rated cases: Table ratings, if necessary, will apply until the later of age 65 or 20 policy years. Table ratings will not be added to Preferred policies. A non-tobacco (nicotine containing product) user who would be rated through Table D (four tables) will be issued an Express Standard Non-Tobacco policy. Table ratings of more than four tables may be added to any non-Preferred policy.

Rate class changes: A tobacco (nicotine contain-ing product) user who has stopped using tobacco (nicotine containing product) for at least 12 months may apply for a change of rate class. An insured who was younger than age 15 at issue, may request a rate class change to Preferred after becoming age 15. Any insured may request an improved rate class at least 12 months after issue. All rate class changes are subject to underwriting.

*Form series 8054(0908), 8065(0798) **Form series 8052(0798), 8095(0399), 8165(0703)

LIFE IN

SU

RA

NC

E YO

U DON’T HAVE TO DIE TO USE.

A Revolutionary Solution

Disability Income

RetirementIncome

Accelerated Living

Benefits

Life Insurance

Money for a secure retirement.

Money for your family.

Money to help pay your bills.*

Chronic, Critical, or Terminal

Illness Riders.**

Policy Protection PeriodThe Policy Protection Period helps protect the policy against lapse during the first five policy years. During this period, the policy will not enter a grace period, even if the cash surrender value is not sufficient to cover the monthly deductions, as long as:• the sum of premiums paid, less all withdrawals made

and less any policy debt, is greater than or equal to the total minimum monthly premiums in effect since the date of issue, and

• the accumulated value less any policy debt is sufficient to cover the monthly deductions.

The Policy Protection Period applies to the first five policy years only, and does not restart after an increase in face amount.

Monthly Cost of InsuranceEach month, the Cost of Insurance (COI) is deducted from the accumulated value. Guaranteed maximum COI rates shown in the policy are based on the 2001 CSO mortality tables and are higher than what we currently charge. Current COI rates are select and ultimate, and vary by age, sex and rate class. The current COI rates are guaranteed for the first five years.

Surrender ChargesA dollar amount per thousand of face amount, based on issue age, sex and rate class, multiplied by a percentage based on the number of years the policy has been in force. The percentage declines linearly from 100% in Year 1 to 0% at the beginning of Year 11, creating a surrender charge period of ten years. A face amount increase will have its own distinct ten-year surrender charge. The maximum sur-render charges in any year will not exceed the cumulative target premiums.

Account Value EnhancementStarting at the end of policy year ten, an anticipated 1.25% Account Value Enhancement will be credited to the policy each year. An average of the monthly accumulated val-ues will be multiplied by 1.25% and credited to the Basic Strategy at the end of the policy year.

Product at a Glance

PremiumsThis universal life policy has both Minimum Monthly and Commissionable Target Premiums.

The Minimum Monthly Premium (on check-o-matic mode) is the minimum initial amount that must be paid to place a policy in force and is due on the date of issue. The minimum monthly premium will be based on the face amount, age, rate class and gender. Payment of the minimum premium for the first five years guarantees that the policy will stay in force during that time.

The Commissionable Target Premium (CTP) is the maximum premium on which the higher, target compensation rate will apply.

The “target” premium for the Waiver of Target Premium Rider and the Unemployment Rider is defined as the policy-holder’s planned periodic premium, up to the policy CTP.

Unscheduled premiums may be paid into the policy at any time.

SecurePlus® Provider is the first LSW policy to allow the client to choose which premium test will be used to keep the policy within the federal definition of life insurance. Under Section 7702 of the Internal Revenue Code, a policy will generally be treated as life insurance for federal tax purposes if at all times it meets either (1) the “guideline premium test” or (2) the “cash value accumulation test.” In general, the cash value accumulation test will allow your client to make higher premium payments during early years.

Clients must choose either the guideline premium test or the cash value accumulation test when the policy is issued. Once the policy is issued, the client may not change to a different test.

6

Flexibility to cover your changing needs

• Improved access to your policy’s accumulated cash via loans

• Access to death benefit value while you are living through ABRs

• Ability to adjust premium payments and insurance coverage

as your needs change



Death Benefit OptionsThe policyholder may elect an Option A (level) or Option B (increasing) death benefit option:

Option A – The death benefit is equal to the greater of1. the face amount; or

2. the accumulated value multiplied by the applicable corridor factor.

Option B – The death benefit is equal to the greater of1. the face amount plus the accumulated value; or

2. the accumulated value multiplied by the applicable corridor factor.

Change in Death Benefit OptionThe policy’s death benefit option can be changed from Option A to B, or B to A, once each policy year after the first policy anniversary. If a change causes the policy to no longer qualify as life insurance for Federal Income Tax purposes, the change will not be allowed.

Changing from Option A (level) to Option B (increasing): The face amount of the policy will be reduced by the accumulated value just prior to the effective date of the change.

Change from Option B to A: The face amount will increase by an amount equal to the accumulated value just prior to the effective date of the change.

In both cases listed above, the death benefit is the same before and after the change.

Change in Face AmountIncrease in Face Amount: After the first policy anniversary, the policyholder may apply for an increase in coverage subject to the following terms:

• Satisfactory proof of insurability

• The requested increase meets or exceeds the minimum face amount ($25,000)

• The change will be effective on the monthly date on or following the approval of the application

Each increase will have its own set of surrender charges and monthly per thousand of face amount administration charges.

Decrease in Face Amount: After the first policy anniversary, the policyholder may request a decrease in coverage subject to the following terms:

• The decrease becomes effective on the monthly policy date on or after the receipt of the request at the home office

• Decreases cannot be less than the minimum face amount ($25,000)

• Decreases will not be permitted if the decrease causes the policy to no longer qualify as life insurance for Federal Income Tax purposes

• The total face amount of the policy plus any additional riders may be no less than 75% of the largest total face amount in force at any time in the 12 months prior to the request

Each change in coverage will cause the Commissionable Target Premium (CTP) and Minimum Monthly Premium (MMP) to be adjusted for each new segment of coverage.

LoansLoans are available at any time after the first policy year. The policy must be in force and have positive cash surrender value at the time of the loan. The policy will serve as the sole collateral for the loan.

The amount available for a loan on any day will be the accumulated value less the surrender charge on the valuation date, less three times the monthly deductions that were due on the last monthly policy date.

For variable loans, the interest rate charged on the loan will be a variable rate that is based on the Moody’s Corporate Bond Yield Average – Monthly Corporates, subject to a minimum rate of 3%. The loan rate at the time of the loan will be in effect until the next policy anniversary. If on the policy anniversary the loan rate change would be less than one-half of a percentage point, the loan rate will not change.

Loaned values will continue to earn interest/indexed earn-ings as if no loan had been taken from the policy.

All or any loan amount may be repaid at any time prior to the death of the insured or the surrender of the policy. The exception is if the policy is in the grace period, the loan repayment would be considered a premium payment to keep the policy in force unless the policyholder specifies it as a debt repayment.

WithdrawalsAt any time after the first policy year the policyholder may make a withdrawal of the policy’s cash surrender value sub-ject to the following terms:

• The amount of withdrawal may not exceed the cash surrender value minus three monthly deductions due on that date

• The accumulated value will be reduced by the amount of the withdrawal

• The face amount will be reduced by an amount equal to the withdrawal, for Option A (level) policies

• The Company will charge a $25 fee for each withdrawal made

1035 ExchangesThe effective date of 1035 Exchanges will be the date the funds are received into the home office. 1035 Exchanges with loans will be permitted, as long as the loan transferred does not exceed 50% of the total policy value transferred.

7


Indexed UL Glossary of Terms Annual Reset: this feature sets a Policy Segment’s Starting Index

Value equal to the Ending Index Value from the prior year. This reset occurs at the end of each Policy Segment Year.

Basic Strategy Sweep Date: the date in which excess funds in the Basic Strategy will be allocated to the chosen Interest Crediting Strategy. The sweep date is the 21st of the month.

Basic Strategy: the account where all premiums are initially paid. Charges are taken from the Basic Strategy first.

Cap: the maximum annual effective interest rate that can be credited to a Policy Segment. The Cap cannot be less than 3%.

Daily Average of the Index: the arithmetic average of all the published daily ending values of the Index for a 12-month period.

Ending Index Value: the Index value, at the close of business, the day a Policy Segment ends.

Fixed Interest Strategy: the Interest Crediting Strategy which uses a rate of interest declared by the Company that will be credited to the account daily.

Guaranteed Interest Rate: the guarantee is 2%.

Index: the index for SecurePlus® Provider is the S&P 500® Index, excluding dividends.

Indexed Interest: the interest credited to a Policy Segment using either the Point-to-Point or Point-to- Average Strategy.

Interest Crediting Strategy: one of the three available methods used to calculate how interest is credited to the Policy Segment. The three choices are Fixed Interest, Point-to-Point and Point-to-Average.

Participation Rate: the percentage applied to the percent change in the Index.

Point-to-Average Strategy: the strategy which compares the Starting Value of the Index to the Daily Average of the Index to determine the percentage increase in the Index.

Point-to-Point Strategy: the strategy which compares the Starting Value of the Index to the Ending Value of the Index to determine the percentage increase in the Index.

Policy Segment: created each time premiums are swept from the Basic Strategy into an Interest Crediting Strategy. Each Policy Segment has a five-year term.

Policy Segment Year: the 12-month period, beginning when a Policy Segment is created, which is used to determine the Indexed Interest earned on the value of the Policy Segment.

Starting Index Value: the Index value, at the close of business, the day a Policy Segment begins.

Interest Crediting StrategiesLSW’s SecurePlus® Provider policy has three different Interest Crediting Strategies available to provide maximum flexibility for your client.

These strategies are: 1. Fixed Interest 2. Point-to-Point 3. Point-to-AverageThe policyholder can change the allocation of strategies at any time on future sweeps. However, once premiums are swept into a selected Interest Crediting Strategy, they remain in that strategy for five years. The Fixed Interest, Point-to-Point and Point-to-Average Strategies have five-year investment horizons. The Point-to-Point and Point-to-Average Strategies both have the Annual Reset feature.

8


Basic StrategyAll premiums paid by the client are paid into the Basic Strategy and a rate of interest declared by the Company is credited to the account. This rate for the Basic Strategy is guaranteed to be not less than 2%.

The Basic Strategy minimum value is determined at the start of each policy year. It is an estimate of the amount required to fund the monthly deductions for the policy year. This amount will change each policy year on the policy anniversary.

Once per month, on the 21st, any Basic Strategy value in excess of the Basic Strategy minimum value will be transferred to the other three strategies in an allocation specified by the policyholder.

Fixed Interest StrategyThe Fixed Interest Strategy has a segment length of five years. A rate of interest declared by the Company will be credited to the account daily. The guaranteed minimum interest rate credited will be 2%. The current interest rate may change over the length of the segment, and different segments may have different interest rates.

Values cannot be transferred out of any Fixed Interest segment prior to maturity (five years) unless the interest rate has decreased during the segment period. If this has occurred, the policyholder may request to transfer the affected values to the Basic Strategy.

Point-to-Point StrategyThis strategy, like the Fixed Interest Strategy, has a five-year duration. The index for this strategy will be the S&P 500® Index. Earnings are credited annually to each Policy Segment on its segment anniversary. The Point-to-Point Strategy will have a Participation Rate and an index earnings Cap, which are determined in advance for each 12-month period and are subject to change on each segment anniversary. This strategy utilizes the Annual Reset.

The measurement used for calculating values will be the Point-to-Point method. This method measures the change in index value at the start of the segment to the value of the Index 12 months later. The change in the index value is divided by the starting value to determine the percentage increase in the Index.

The resulting value is then multiplied by the Participation Rate (the resulting value will never be less than zero). The Participation Rate is the rate that the policyholder shares in the performance of the Index. Once the Participation Rate is applied to the increase, the result is compared to the index earnings Cap. In no instance will the earnings for the segment exceed the Cap. For example, assume a Policy Segment has a Participation Rate of 100% and an index earnings Cap of 12%. If the Index is up 10% from the starting point of the segment to the point 12 months later, that Policy Segment would be credited 10% (10% increase times a 100% Participation Rate which falls below the 12% Cap).

At the end of a Policy Segment, the starting value of the Index is reset to the last ending value of the Index. This ensures that decreases in the S&P 500® Index do not have to be made up before additional interest can be earned.

The Participation Rate with the Point-to-Point Strategy is guaranteed to be 100%.

Point-to-Average StrategyThis strategy, like the Fixed Interest and Point-to-Point strategies, has a five-year duration. The index for this strategy will be the S&P 500® Index. Earnings are credited annually to each Policy Segment on its segment anniversary. The Point-to-Average Strategy will have a Participation Rate which will be determined in advance for each 12-month period and is subject to change on each segment anniversary. This strategy also utilizes the Annual Reset.

The measurement used for calculating values will be the Point-to-Average method. This method measures the change in index value at the start of the segment to the Daily Average of the Index over the 12-month Policy Segment Year. The difference between the Daily Average of the Index and the Starting Index Value is divided by the Starting Index Value to determine the percentage increase.

The resulting value is then multiplied by the Participation Rate (the resulting value will never be less than zero). The Participation Rate is the rate that the policyholder shares in the performance of the Index. The Participation Rate is then applied to the increase. For example, assume a Policy Segment has a Participation Rate of 80%. If the percentage increase, comparing the Starting Index Value to the Daily Average of the Index, is 10%, that Policy Segment would be credited 8% (10% increase times 80% Participation Rate with no Cap).

At the end of a Policy Segment, the starting value of the Index is reset to the Ending Index Value. This ensures that decreases in the S&P 500® Index do not have to be made up before additional interest can be earned.

The Point-to-Average Strategy is guaranteed to have no Cap. �

UP

SID

EPOTENTIAL

10

Basic Strategy Declared interest credited daily, 2% minimum guarantee

Funds above minimum swept into chosen strategies monthly

Basic Strategy minimum value: approximately 12 months of charges

Policy charges withdrawn monthly

Fixed Interest Crediting Strategy Uses a rate declared by the Company Guarantee: 2% interest

Point-to-Point Crediting Strategy With Annual Reset Uses the S&P 500 ® Index Guarantees: 100% Participation Rate,

0% Floor and 2% interest annually over five-year term

Point-to-Average Crediting Strategy With Annual Reset Uses the S&P 500 ® Index Guarantees: No Cap, 0% Floor and 2%

interest annually over five-year term

At end of five-year term, values are recycled through the Basic Strategy for reallocation.

How SecurePlus® Provider Works

Guarantees

to provide certainty in an uncertain world

• Guaranteed 100% Participation Rate with Point-to-Point Strategy

• Guaranteed no Cap on Point-to-Average Strategy

• Guaranteed 2% minimum interest rate on Basic and Fixed Interest Strategies

• Guaranteed index earnings of at least 2% annually over a five-year segment for indexed strategies

• Guaranteed five-year Policy Protection Period

Basically, the only difference between the Point-to-Point and Point-to-Average Strategies is the “point” which the Starting Index Value is compared to calculate the interest crediting rate. With a Point-to-Average method of index crediting, the daily movement of the S&P 500® is tracked and an average of these movements is used to calculate the value instead of the ending value used in the Point-to-Point method.

Values cannot be transferred out of the Point-to-Point or Point-to-Average Strategy prior to maturity (five years). At the end of each Policy Segment’s five-year term, the value will be transferred to the Basic Strategy for reallocation.



11

GuaranteesEach Policy Segment has a five-year term. During that period it is expected that the value of the S&P 500® will change, either positively or negatively. In the event that market values decline, both indexed strategies provide a minimum guarantee. LSW’s SecurePlus® Provider has a built in 0% interest crediting Floor. This means that no matter how the S&P 500® values change each year, SecurePlus® Provider provides downside protection in that the interest crediting rate will never fall below 0%. This will help protect account values.

On the last segment anniversary of each Policy Segment, interest credits will be increased as necessary so that the annual rate of Indexed Interest over the five-year length of the segment is at least equal to the guaranteed minimum rate of 2% (10.4% over the five-year term).

GuaranteesD O W N S I D EP R O T E C T I O N

0% interest

DO

WN

SID

E

PROTECTION

START 1 YR. 2 YR. 3 YR. 4 YR. 5 YR.

S&P 500® values 1000 1040 1061 �80 �60 �40One year increase 4% 2% 0% 0% 0%Accumulated value $5,000 $5,200 $5,304 $5,304 $5,304 $5,304

Ending segment value $5,304 Guaranteed segment value* $5,520 Additional interest credit $216Segment value to be reallocated $5,520

*Guaranteed interest credits over five years = 10.4%; assumes no charges deducted or withdrawals made from this segment. Withdrawals and monthly charges will reduce the policy value on which guarantees are based and applied.

Understanding SecurePlus® Provider’s Guarantees$5,000 placed in Point-to-Point Strategy; 100% Participation Rate & 12% Cap


Optional RidersThe following riders are available on LSW Provider:

Accelerated Benefits RidersThe Accelerated Benefits Riders 1, 2 and 3 all allow accelerated payment of up to 100% of the policy death benefit. Accelerated Benefits Rider 1 (ABR 1) is available in case of a terminal illness; Accelerated Benefits Rider 2 (ABR 2) is available in case of chronic illness; Accelerated Benefits Rider 3 (ABR 3) is available in case of critical illness.

The actual payment amount under any of the riders is discounted. The benefit payment is the actuarially discounted value of the death benefit being accelerated less a pro rata portion of any policy debt.

• There is no limit on how the funds can be used.

• There is no additional premium for any of the Accelerated Benefits Riders.

• Riders stay in force as long as the base policy remains in force.

ABR 1Gives the policyholder the option of receiving the death benefit early if the insured is terminally ill. Terminal illness is expected to result in death within two years (one year in PA, CT or VT). All or part of the death benefit may be requested early (lump sum).

ABR 2Available when the insured is diagnosed as chronically ill:

• Unable to perform two of the six activities of daily living – bathing, continence, dressing, eating, toileting, and transferring without assistance, or

• With deterioration or loss in intellectual capacity (cognitive impairment).

Provides the option of receiving the death benefit in periodic payments after a �0-day waiting period.

The maximum monthly amount that can be accelerated is 2% of the death benefit.

ABR 2 must be in force for two years before benefits are available.

12

Value

for your clients and their families • Multiple coverages for

multiple insureds

• Revolutionary no additional cost accelerated benefit riders

• 1.25% Account Value Enhancement credited to your accumulated cash value starting at the end of policy year ten


ABR 3*Available when the insured experiences one of the following qualifying events:

• Heart attack

• Major organ transplant

• Stroke

• Diagnosis of ALS (Amyotrophic Lateral Sclerosis or Lou Gehrig’s Disease)

• Diagnosis of cancer

• Diagnosis of end stage renal failure

• Blindness (corrected vision of no better than 20/200 in both eyes)

All qualifying events may not be available in all states. All or part of the death benefit may be requested early (lump sum). The actual payment will vary due to the severity of the disease. If the insured also meets the definition of a terminal illness it will likely be more beneficial to the policyholder to accept benefits under ABR 1 rather than ABR 3. ABR 3 is not available for substandard or reinsured SecurePlus® Provider policies.Any qualifying event occurring during the first 30 days the rider is in force is not covered unless it is the result of an accident.**

**These restrictions may not apply in all states. Please see the ABR disclosure forms for more information.

The Company reserves the right to set a maximum on the total death benefit that may be accelerated under all accelerated benefits riders. The limit will be no less than $500,000.

Death benefits, cash values and loan values (for policies with such values) will be reduced if an Accelerated Benefit is paid.

Accidental Death Benefit Rider (ADB)The ADB pays an additional death benefit if the insured’s death results from an accident. It is not available on rated policies.

• Issue ages 0-60 (age last birthday)

• ADB is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy

• Rider stays in force until the policy anniversary following the insured’s 70th birthday, as long as the insured’s life insurance coverage and the base policy remain in force

• Minimum rider amount is $10,000

• Maximum rider amount is the lesser of $250,000 or the insured’s life insurance face amount

• Premiums are a level amount per thousand, based on issue age

Children’s Term Rider (CTR)The Children’s Term Rider provides term life insurance on all of the insured’s children until they reach age 23. Each child is covered for the same selected benefit amount. Children born or adopted after issue (after they reach the age of 15 days), and dependent stepchildren living in the insured’s home, will be covered as well. The children’s coverage is convertible without underwriting at any time while the rider is in force for an individual whole life or universal life policy with the same face amount. The children’s coverage is convertible for double the rider face amount when the child reaches age 23 or marries, or at the death of the primary insured.

• Issue ages 15 days to 16 years

• Rider stays in force until the policy anniversary following the last covered child’s 23rd birthday, as long as the base policy remains in force

• Minimum rider amount is $5,000

• Maximum rider amount is $25,000

• Premiums are a level amount per $1,000 regardless of the number of children covered

13

*The Accelerated Benefits offered under this rider are intended to qualify for favorable tax treatment under the Internal Revenue Code of 1986. Whether such benefits qualify depends on factors such as your life expectancy at the time benefits are accelerated or whether you use the benefits to pay for necessary long-term care expenses, such as nursing home care.

If the acceleration-of-life-insurance benefits qualify for favorable tax treatment, the benefits will be excludable from your income and not subject to federal taxation.

Tax laws relating to acceleration-of-life-insurance benefits are complex. You are advised to consult with a qualified tax advisor about circumstances under which you could receive acceleration-of-life-insurance benefits excludable from income under federal law.

Receipt of acceleration-of-life-insurance benefits may affect you, your spouse or your family’s eligibility for public assistance programs such as medical supplementary Social Security Income (SSI) and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect you, your spouse and your family’s eligibility for public assistance.

Note: A terminal illness is defined as one that is expected to result in death within two years (one year in PA, CT and VT). A chronic illness is defined as one that leaves you unable to perform two of the six normal activities of daily living without assistance or that leaves you with deterioration or loss in intellectual capacity. The six activities of daily living include bathing, continence, dressing, eating, toileting, and transferring. Covered critical illnesses are heart attack (myocardial infarction), stroke, diagnosis of cancer, diagnosis of end-stage renal failure, major organ transplant, diagnosis of ALS (amyotrophic lateral sclerosis), or blindness (corrected vision of no better than 20/200 in both eyes).


Disability Income Rider (DIR)Two different DIRs are available, distinguished by a 2-year or a 5-year benefit period. Both options provide for a fixed monthly benefit if the insured is totally disabled and unable to work. Both provide coverage for disabilities due to either sickness or accident. DIR coverage is not available on rated classes. Certain occupations are not eligible for coverage. Policy premiums are not automati-cally waived under the DIR; the Waiver of Target Premium Rider must be in force to waive policy premiums.


• DIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy

• Coverage stays in force until the policy anniversary following the insured’s 65th birthday, as long as the insured’s life insurance coverage and the base policy remain in force

• Minimum benefit amount is $300/month

• Maximum benefit amount is $2,000/month, subject to underwriting and any state limitations. The DIR benefit amount cannot exceed 66% of gross monthly income (40% in California) or $20 per $1,000 of life insurance (for example, a $2,000 DIR must be attached to a base policy of at least $100,000)

• Premiums vary with issue age and remain level for the term of the rider

• Rider benefit amounts cannot be increased or decreased after issue. However, an additional DIR may be added after issue, sub-ject to underwriting and the maximum benefit limits

The DIR with the two-year maximum benefit period has a three-month waiting period. Benefits are paid retroactively after the waiting period, from the date of disability. “Disability” is defined as the insured being unable to perform the duties of his or her own occupation.*

The DIR with the five-year maximum benefit period has a six-month elimination period with no retroactive payment. “Disability” is defined as the insured being unable to perform the duties of his or her own occupation for a period of two years, and as unable to perform the duties of any occupation for which he or she is suited for the remaining three years.

After-issue changes between the 2-year and 5-year riders are not permitted.

If the insured is receiving benefits under the DIR when he or she reaches age 65, the benefit payments will continue until the end of the disability or the end of the benefit period.

Note: An Attending Physician’s Statement of Disability from a licensed medical physician will be required for all claims.

Occupations ineligible for DIR:Actor/ActressAir Traffic ControllerAmusement Park EmployeeArmed Forces or Coast GuardArtist/MusicianAsbestos WorkerAthletic Coach or InstructorAuto Body RepairBlasterBowling Alley EmployeeBridge or Dam WorkerBus BoyBus DriverCab DriverCarpet/Floor InstallerCasino EmployeeChauffeur/Limo DriverCircus EmployeeDelivery PersonDishwasherDiver

Domestic Servant (Maid, Butler, etc.)Drivers (local delivery or long-distance)Exotic DancerFBI AgentFederal or Municipal Employee**Fire FighterFisherman/SeamanFlight AttendantForest RangerGame WardenGolf ProHousewifeImmigration OfficerLife GuardLogging EmployeeMigrant WorkerMine WorkerMovie Industry EmployeeNature/Adventure GuideNurse (private duty)Peddler

Piano Mover/Safe MoverPilotPolice OfficerPrison WardenProfessional AthleteRacing Employee (dog or horse)Rodeo Rider or ClownRooferSchool Teacher (public or private)Security Guard (armed)Self-Employed (call with specific info)Skating Rink EmployeeSteeplejack (Billboard Worker)Structural Iron WorkerSubway or Tunnel Construction WorkerTheater Industry EmployeeTruck DriverVending Machine Worker

14

* In South Carolina, “Disability” is defined as the insured’s inability to perform the duties of his or her own occupation during the first year of disability and has the inability to perform the duties of any occupation for which he or she is suited thereafter.

**May purchase DIR up to monthly home mortgage amount.


Extension of Benefits Rider1 (EBR)This is an optional rider that provides the policyholder benefits to help cover expenses incurred for qualified long-term care services once a chronically ill2 insured’s death benefit under the policy has been depleted due to payments made under the Long-Term Care Rider or the Accelerated Benefits Rider 2. Once benefits begin accruing under this rider, they will continue during the lifetime of the insured as long as the insured remains eligible for benefits. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 1% of the policy face amount for nursing home or home health care – up to 0.5% for adult day care). Coverage under this rider may be purchased with or without Inflation Protection. This rider provides a nonforfeiture benefit for any coverage that lapses after being in force for three years. The cost per unit of coverage under this rider is level and is guaranteed not to change.


• Available on the primary insured as well as the primary other insured (covered under an Other Insured Rider)

• Coverage under an Extension of Benefits Rider is only available to a primary insured or primary other insured who also has coverage under either a Long-Term Care Rider or Accelerated Benefits Rider 2

• Total life insurance coverage applied for under the policy may not exceed $1,000,000

• Not ratable and not available on rated policies

Please refer to the Agent Guide for LSW Long-Term Care Rider and LSW Extension of Benefits Rider, MK2582(0205), Catalog No. 63181, for more in-depth information about the rider benefits, suitability, and disclosure requirements.

Guaranteed Insurability Rider (GIR)The GIR allows the insured to increase insurance coverage without evidence of insurability, during specified option periods. Regular option periods run from the 60th day before to the 31st day after the policy anniversary on which the insured reaches age 25, 28, 31, 34, 37, or 40. Additional option periods are available based on marriage, the birth/adoption of a child, or purchase or refinancing of a home; there is a limit of two additional options. The GIR is not available on rated cases.


• GIR is available to the Primary Other Insured (see the Other Insured Rider description) as well as to the primary insured under the policy

• Rider stays in force until the policy anniversary following the insured’s 40th birthday, as long as the base policy remains in force

• Minimum option amount is $5,000

• Maximum option amount is the lesser of $50,000 or the insured’s life insurance amount

• Premiums are a level amount per thousand of option amount, based on issue age1 Rider names may vary by state. 2 An insured is chronically ill if a licensed health care practitioner has certified the insured as: (1) being unable to perform (without substan-

tial assistance from another person) at least two activities of daily living for a period of at least 90 consecutive days due to a loss of functional capacity; or (2) requiring substantial supervision for a period of at least 90 consecutive days by another person to protect oneself from threat to health and safety due to severe cognitive impairment. The activities of daily living are defined as bathing, continence, dressing, eating, toileting, and transferring.

Long-Term Care Rider (LTC)This is an optional rider that allows the policyholder to receive a chronically ill insured’s death benefit in periodic payments, while the insured is still living, to help cover such insured’s expenses for qualified long-term care services. Benefits under this rider begin accruing after a �0-day elimination period and will continue, as long as the insured remains eligible, until the insured’s death benefit under the policy has been exhausted. The rider pays benefits equal to the actual expenses for covered services, subject to a maximum monthly limit (up to 2% of the policy death benefit for nursing home or home health care – up to 1% for adult day care). Each benefit payment will reduce the insured’s death benefit by the same amount. While benefits are being paid under this rider, policy premiums or monthly deductions will be waived. The cost per unit of coverage under this rider is level and is guaranteed not to change.


• Available on the primary insured as well as the primary other insured (covered under an Other Insured Rider)

• Coverage under an Extension of Benefits Rider is only available to a primary insured or primary other insured who also has coverage under either a Long-Term Care Rider or Accelerated Benefits Rider 2

• Total life insurance coverage applied for under the policy may not exceed $1,000,000

• Not ratable and not available on rated policies

Please refer to the Agent Guide for LSW Long-Term Care Rider and LSW Extension of Benefits Rider, MK2582(0205), Catalog No. 63181, for more in-depth information about the rider benefits, suitability, and disclosure requirements.

15


Other Insured Rider (OIR)The OIR provides low-cost annual renewable term insurance on an individual. The other insured may have any of the following relationships to the primary insured:

• Spouse

• Child

• Business partner

Ineligible relationships for OIR coverage include parents, grandparents, siblings and grandchildren. Up to five OIRs may be added to the same base policy. One of these OIRs (spouse or business partner only) may be designated as a “Primary OIR;” additional riders are available options to the Primary OIR (see chart below for rider availability).

The OIR is convertible to a permanent policy without evidence of insurability at any time while the rider is in force, or upon the death of the primary insured.


• Rider stays in force until the other insured’s age 100, as long as the base policy remains in force

• Minimum OIR amount is $25,000 (or the primary insured’s face amount, if less than $25,000)

• Maximum OIR amount is the base policy face amount

• Premiums are based on sex, rate class and age; the same rate classes are available as for the base policy

Benefits Available by Rider on Other Insureds

Primary Other Non-Primary Other Insured Rider Insured Rider

Accelerated Benefits Rider 1 Yes Yes



Accidental Death Benefit Yes No

Children’s Term Rider No No

Disability Income Rider Yes No

Guaranteed Insurability Rider Yes No

Unemployment Rider No No

Waiver of Target Premium Rider No No

Long-Term Care Rider Yes No

Extension of Benefits Yes No

16

Unemployment Rider (UR)The Unemployment Rider provides for a one-time lump sum payment into the policy after the insured has been involuntarily unemployed from full-time employment. This rider is automatically included on all universal life policies issued in states where it is approved. When the primary insured is involuntarily unemployed for three consecutive months, and submits proof such as state or federal unemployment certification, a termination notice or union certification, the Company will pay three months “target” premium into the policy’s accumulated value (the target premium is the monthly planned premium, up to 1/12 of the policy CTP). The policy must be in force when the unemployment begins, and must remain in force during the waiting period.



• The benefit will be paid only once

• There is no premium for this rider

Waiver of Target Premium Rider (WTP)The WTP Rider waives the policy premium – actually pays a waiver of premium benefit into the policy accumulated value – when the insured is totally disabled. If the policy lapses while this benefit is being paid, the benefit will be paid directly to the policyholder until the disability ends. There is a six-month elimination period from the date of disability before benefits begin. The benefit amount is the “target” premium (the monthly planned premium, up to 1/12 of the policy CTP).



• The benefit amount is the entire policy target premium, including any attached riders

• Premiums are a level amount per dollar of target premium, based on age

If the policyholder has the WTP Rider on a policy, any application for an increase in face amount should include additional WTP coverage also, unless the insured is past the WTP age limit.


©Copyright 2007, Life Insurance Company of the Southwest. All Rights Reserved. FORAGENTUSEONLY–NOTFORUSEWITHTHEPUBLIC

MK2896(0407) 63570

LIFE INSURANCE COMPANY OF THE SOUTHWEST was incorporated in 1�55. We are licensed in 4� states and the District of Columbia, with our home office in Dallas, Texas. LSW specializes in life insurance and annuity products. Our rating from A.M. Best Company, the oldest rating agency in the industry, is a good reflection of LSW’s strength.

A.M. Best ratings represent an independent opinion of a company’s financial strength and ability to meet its obligations to policyholders. A.M. Best gives LSW an “A” (Excellent)

rating; this is the third highest of 15 rating categories.*

LSW is an affiliate of National Life Insurance Company based in Montpelier, Vermont. National Life was founded in 1850 and for over a century and a half has provided insurance protection to individuals, families and businesses.

* As of 06/06. Ratings are subject to change without notice. LSW SecurePlus® Provider, form series 8212/8212ID(0305), Indexed Universal Life Insurance and applicable riders are underwritten by Life Insurance Company of the Southwest, Dallas, Texas. An additional premium is charged for some riders. Riders are optional and may not be available in all states. Benefits and terms may vary by state.

“Standard and Poor’s®,” “S&P®,” “Standard and Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Life Insurance Company of the Southwest. The product is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in this Product.

The S&P Composite Index of 500 stocks (S&P 500®) is a group of unmanaged securities widely regarded by investors to be representative of large-company stocks in general. An investment cannot be made directly into an index.

National Life Group® is a trade name of National Life Insurance Company and its affiliates. Each company of the National Life Group is solely responsible for its own financial condition and contractual obligations.

Home Office: Dallas, TX Administrative Office: Montpelier, VT 1-800-536-5�34 www.nationallife.com

SecurePlus Providerpfaonline.com/agent/images/Secure Plus/SecurePlusMktgGuide.pdf · SecurePlus®...

Documents

Transcript of SecurePlus Providerpfaonline.com/agent/images/Secure Plus/SecurePlusMktgGuide.pdf · SecurePlus®...