Nationwide IUL Web Ex Series Introduction to Indexed
Nationwide IUL Web Ex Series Introduction to Indexed UL: Part 1 Taking the Fear out of Indexed UL April 23, 2013 FLM-0866 AO (03/13) FLM-0866 AO. 1 (04/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC
Disclosure • Life Insurance issued by Nationwide Life Insurance Company and/or Nationwide Life and Annuity Insurance Company. • Guarantees are subject to the claims paying ability of Nationwide. • As your clients' personal situations change (i. e. , marriage, birth of a child or job promotion), so will their life insurance needs. Care should be taken to ensure this product is suitable for their long-term life insurance needs. They should weigh any associated costs before making a purchase. Life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, and has additional charges for riders that customize a policy to fit their individual needs. • Riders may be known by different names in different states, may not be available in every state and have an additional charge associated with them. • Indexed universal life insurance policies are not stock market investments, do not directly participate in any stock or equity investments, do not receive dividend or capital gains participation. Past index performance of an index is no indication of future crediting rates. • Not a deposit. Not FDIC or NCUSIF insured. Not guaranteed by the institution. Not insured by any federal government agency. May lose value. • © 2013 Nationwide Financial Services, Inc. All rights reserved FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 2
Nationwide Your. Life® Indexed UL S & P 500® is a trademark of Standard & Poor's and has been licensed for use by Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company. Nationwide Your. Life® Indexed UL is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Product. NASDAQ®, OMX®, NASDAQ-100®, and NASDAQ-100 Index® are registered trademarks of The NASDAQ OMX Group, Inc. (which with its affiliates is referred to as the "Corporations") and are licensed for use by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company. Nationwide Your. Life® Indexed UL has not been passed on by the Corporations as to their legality or suitability. Nationwide Your. Life® Indexed UL is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the product. The "Dow Jones Industrial Average. SM" is a product of Dow Jones Indexes, the marketing name and a licensed trademark of CME Group Index Services LLC ("CME"), and has been licensed for use. "Dow Jones®", "Dow Jones Industrial Average. SM" and "Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones") and have been licensed for use for certain purposes by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company. Nationwide Your. Life® Indexed UL based on the Dow Jones Industrial Average. SM is not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of trading in such product(s). FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 3
IMPORTANT BENCHMARKING INFORMATION • All competitive information is believed to be current as of January 2013 for NLG; June 2013 for IUL. Information was compiled from the latest company software. American General Win. Flex Rev. 122012; Met Life 84. 009; Protective 7. 6. 46; Prudential 43. 00; Hartford 12. 5. 5; AVIVA 2. 95. 0. 55; Penn Mutual Web Illustrator 1/8/13; Principal 10. 18. 15; Lincoln 16. 0; Transamerica 16. 7; Lincoln Benefit Life 5. 29 x; Genworth 6. 53. 116; Pacific Life 13. 10. 4777. 24551; John Hancock 9. 0. 1 and Minnesota Life’s web based software. All information presented is reliable as at the date of comparison and Nationwide has made every effort to make sure it is reliable; however, it’s possible that there are differences between the products compared which are not reflected and/or of which we are unaware. For this reason, its completeness and accuracy cannot be guaranteed. These are mere hypothetical scenarios and not intended to represent any specific client or situation. FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 4
Agenda • Indexed UL is here to stay • Why you should be selling Indexed UL? • Understanding Indexed UL – and keeping it simple! • How Indexed UL compares to other UL’s • Pieces & Parts of IUL: New Terms • Most Common Crediting Method • Applying Caps, Floor and Participation rate • Ideal Client Profile FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 5
Indexed UL is Here to Stay Why You Can’t Ignore IUL: • IUL - fastest growing individual life product* • Low interest rates put pressure on insurance companies which impacts their Guaranteed Universal Life (GUL) offering • IUL meeting client needs today - No Lapse Guarantee - Low Cost UL (solve for premium) - Accumulation and Income - No negative returns (down side protection) • Don’t wait for your client to ask you about IUL *LIMRA 4 Q 2012 US Individual Sales; Total Premium FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 6
Why You Should be Selling IUL: If You have Clients that Want: If You Want: • Guaranteed Death Benefit with opportunity for Cash Value growth • Offer a Guaranteed Death Benefit where the Cash Values are not guaranteed to run out • Opportunity for higher interest rates credited • Offer potential for higher returns without the risk of negative returns • Downside protection against market loss • Cash Accumulation or Supplement Retirement Income • Higher Target Premiums than typical Guaranteed UL with 2 yr Rolling Target Premiums • Offer Policy Management Program to make sure policy stays on track • Long Term Care Rider • Offer clients solution to help meet their LTC needs Then Nationwide’s Your Life Indexed UL may be the solution Important not all IUL’s in market place offer the features noted here FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 7
Understanding Indexed UL Product Comparison: FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 8
What is IUL? Keep it Simple! Indexed Universal Life is: • • Universal Life Policy Interest credited is based off performance of Underlying Index Behind the Scenes: Guaranteed UL Accumulation UL Current Assumption UL Indexed UL Interest Credited Subject to discretion of Insurance Company. New Money or Portfolio Subject to discretion of Insurance Company. New Money or Portfolio Transparent: Based in part off of the performance of Underlying index General Account Investment Strategy Varies by company, Varies by Usually bonds company, Usually bonds Hedging strategy FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 9
How Indexed UL with a No Lapse Guarantee Rider Compares to Guaranteed UL: Male, Age 65, Non Tobacco, Level Pay, $1, 000 Death Benefit No Lapse Guarantee Duration to age 100 What would you expect if Cash Surrender Values were being compared? FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 10
How Indexed UL with a No Lapse Guarantee Rider Compares to Current Assumption UL: Male, Age 50, $500, 000 Death Benefit Pay to age 80, Non Tobacco Preferred Note: For Current Assumption products, the No Lapse Guarantee (NLG) duration is the maximum life expectancy solve based on current interest rates as of April 2013 Product Premium Interest Rate Guaranteed Target NLG Duration Premium Nationwide Your. Life IUL $4, 632 N/A to guarantee Age 80 $8, 442 Rolling Target Premiums ? Yes John Hancock Protection UL AXA Athena UL $4, 657 5. 20% Age 80 $4, 683 No $7, 976 3. 00% Age 80 $5, 965 No Nationwide Your. Life IUL $6, 816 N/A to guarantee Age 90 $7, 353 Yes FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 11
Pieces & Parts of Indexed UL Industry Comparison: IUL & other UL’s Indexed UL Description Usually Sometimes All other Universal Life Cap Rate Maximum interest rate credited 9% - 13% 14%, 20% 32% N/A* Or Uncapped Participation Rate Percentage of performance rate applied - - used in calculation for credit 100% 15% - 150% N/A Underlying Index One or more market indexes S&P 500® DJIA®, NASDAQ -100®, Hang Seng®, Euro Stoxx 50®, Barclays®, Russell 2000®, N/A Segment Maturity End of term where indexed interest is credited 1 year 2, 3, 5 yrs N/A *Maximum interest rate applied subject to discretion of Insurance Company FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 12
Pieces & Parts of Indexed UL Industry Comparison: IUL & other UL’s Indexed UL Description Usually Sometimes All Other Universal Life Guaranteed Floor Minimum interest rate credited even if underlying index was negative 0% 1% or 2% Guaranteed Interest Rate Guaranteed Cap Minimum percentage company can reduce the Cap rate to 2% or 3% 0% - 4% N/A Guaranteed Participation Minimum percentage company can reduce the Participation rate to 100% 55% to 150% N/A Guaranteed Death Benefit Guarantees subject to various premium requirements No Guarantee Varies by product Could be from age 80 - 120 Varies by product FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 13
Example of Most Common Crediting Method Annual Point to Point: Measuring 2 Points in Time Index growth is equal to the difference between the index beginning value and index ending value. The difference is divided by the index beginning value. #1 At the Beginning of the Period: The underlying index value is recorded. #2 At the End of the Period: The underlying index value is recorded. If the index is now higher, the policy owner will earn interest. If the index stays flat or declines, cash value is still credited with a minimum guaranteed interest (floor) which could be 0%. Question: If IUL product has a 12% Cap rate, then what rate would be credited? FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 14
Example: Applying Cap, Floor & Participation Rate Example: 140% Participation, 12% Cap and 0% Floor What if You Assume: 100% Participation with a 12% Cap and 0% Floor? FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 15
Ideal Client Profile Nationwide’s Your. Life IUL may be a Good Fit for Your Clients: • Low Cost alternative to UL with opportunity for higher crediting • Guaranteed Death Benefit with optional No Lapse Guarantee Rider - (Extended Death benefit Guarantee Rider) - Nationwide’s Policy Management Program for Death Benefit Guarantee • Accumulation and Income – Insurance Based Retirement Plans - Nationwide’s Policy Management program for Income - Nationwide’s Policy Management program for 2/1 switch • Long Term Care Rider – optional LTC rider, indemnity style FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 16
What we didn’t cover today: IUL Part 2: Learning To Embrace IUL May 21, 2013 IUL Part 3: Commonly Misunderstood Components of IUL June 25, 2013 IUL Part 4: Advanced Planning Applications of IUL July 23, 2013 FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 17
QUESTIONS? FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO (03/13) FOR INSURANCE PROFESSIONAL USE ONLY — NOT FOR DISTRIBUTION TO THE PUBLIC FLM-0866 AO. 1 (04/13) 18
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