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James Hahn EVP, Life Sales
How To Sell BGA IUL James Hahn EVP, Life Sales Karl Ammerman, CLU VP, Highland Capital Steve Austin Principal, APEX Financial
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Proven Distribution Model
Annexus [Latin] • the act of bringing together Vision To become the leading independent developer of retirement insurance products in the industry Product Development Proven Strategy Vision – Leader in providing retirement solutions Annexus – Innovative product development IMO – Distribution – Experts in retirement solutions (agent presentation – message the agents expertise in providing retirement solutions to their clients.
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Product Development – Genesis
Patents Issued 15 Patents Pending 19 Founded 1989 15 actuaries – over 285 years of experience Worldwide experience Independent proprietary development company with focus on R&D and innovation Share the alignment/Value of Genesis Focus on building Products (Bigger Engines), consumer centric (Intuitive)
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Proven Distribution Model
Annexus [Latin] • the act of bringing together Strategic Partners Vision To become the leading independent developer of retirement insurance products in the industry Product Development Proven Strategy Vision – Leader in providing retirement solutions Annexus – Innovative product development IMO – Distribution – Experts in retirement solutions (agent presentation – message the agents expertise in providing retirement solutions to their clients.
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At the end of the day we are selling insurance solutions.
The reputation of the carrier will directly impact how well a product performs for your client over the life of their contract. Carriers have not had the control over distribution necessary to fix the problem....we feel that Minnesota Life has had the discipline and courage to be part of the solution.
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Proven Distribution Model
Annexus [Latin] • the act of bringing together Strategic Partners Vision To become the leading independent developer of retirement insurance products in the industry Product Development Proven Strategy Vision – Leader in providing retirement solutions Annexus – Innovative product development IMO – Distribution – Experts in retirement solutions (agent presentation – message the agents expertise in providing retirement solutions to their clients. Product Distribution
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Five Talking Points Proprietary IUL Product
Uncapped Crediting Strategy basis points more potential annual interest than traditional strategies* Potential income advantage of 62-72% for target clients 40-60** Ability to give Partial Interest Credit on different types of withdrawals, including COIs, regardless of end term date*** [REVIEW SLIDE] * Source: Minnesota Life Illustration. Based on 2-year balanced indexed account (100% S&P 500 index allocation, 105% interest participation rate at the end of segment term) compared to 12.5% capped account. S&P 500 Index performance 12/31/96 – 12/31/16. ** Source: Minnesota Life Illustration software, April Past performance does not guarantee future results. *** If money is deducted from a balanced indexed account for a policy loan with a fixed policy loan interest rate, a partial index credit will be credited on the amount of money withdrawn from the balanced indexed account. The partial index credit will be calculated based on the partial index credit term. Additionally, a lockout period of 12 months during which no transfers from the fixed account to an indexed and/or balanced indexed accounts will apply.
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S&P 500® Growth ( ) -40% -20% 0% 20% 40% This graph represents the annualized two-year returns of the S&P 500 for the history of the index. I want you to see that big spikes in annualized returns—these periods where annual returns are above 20%. This graph represents the annualized returns of two-year holds of the S&P 500® Price Index for every date from 1/3/1950 – 12/31/2016. Every date is any market open date where the stocks comprising the index are traded. The horizontal axis represents the start date for each two-year holding period during this date range, while the vertical axis represents the two-year index growth on an annualized return for a two-year hold period. Source; Genesis Financial.
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Positive Returns of the S&P 500® Price Index
10.91% average annual growth is excluded when index performance exceeds the cap Depending on the structure of the uncapped indexed account, index allocation and participation rate would impact the interest credit earned. Depending on the structure of the uncapped indexed account, interest crediting may be more or less than the amount the underlying index exceeds an interest cap. Factors that affect the structure of an uncapped indexed account include index allocation, declared rate allocation, declared rate, segment spread and participation rate. Story of Capped vs Uncapped Over the last 30 years, annual performance of the S&P 500 Price Index exceeded a 12.5% cap 46.67% of the time. In those years where index performance exceed the cap, policies that offered uncapped index options could have helped clients earn all or a portion of that change in the underlying index. The graph below shows how much potential interest a 12.5% index cap would have missed over the last 30 years. Chart Assumptions: Year-end annual returns of the S&P 500® Price Index beginning December 31, 1986 to December 31, IUL is not an investment and does not directly invest in any stock or stock market index. It is not possible to invest in an index. Past performance does not guarantee future results. Source for index performance: McGraw Hill Financial
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Uncapped Crediting – Two-year BAS
Index Allocation Premium dollars go to work in the BAS from day 1* 100% of S&P 500 Index 1% annual spread deducted At end of term, client receives 105% participation rate Explain the Math 100% allocated to Index Less (minus) an annual spread of 1% per year X a multiplier - only applied on index credits at the end of the segment term Now lets see the power of the 2-year BAS vs a capped account product. * Premiums are applied to the interim account and transferred to the fixed, indexed, or balanced indexed accounts according to the allocations on the interim account transfer day. A premium fee may be deducted before allocation to the accounts. Funds allocated to balanced indexed accounts and the indexed account become part of a new segment. Segments can be created in any month when premium is paid or a segment reaches its term. Full index credits are calculated and credited at the segment term and combined with any allocated premium that month to create a new segment.
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Power of an Uncapped Strategy (1950-2016)
-40% -20% 0% 20% 40% This slide really highlights the power of an uncapped strategy like the one used in BGA. The BGA strategy would have provided significantly more upside than the capped strategy while offering the same downside crediting protection. This slide shows the annualized returns of 2-year holds for the S&P 500 and a 2-year BAS strategy compared to the annual returns of a capped strategy. This graph represents the annualized returns of two-year holds of the S&P 500® Price Index and interest credited for a hypothetical 12.5% annual point-to-point strategy (100% index participation up to 12.5%, 0% index participation above 12.5%) and annualized returns of two-year holds of the two-year BAS Strategy (100% S&P 500® Price Index Allocation, 1% Annual Segment Spread, 105% Participation Rate), with crediting factors consistent for each new segment for every possible contract purchase date from 1/3/1950 – 12/31/2016. A possible contract purchase date is any market open date where the stocks comprising the index are traded. The horizontal axis represents the start date for each segment during this date range, while the vertical axis represents the annualized return for the relevant hold period, after the deduction of the strategy spread, where applicable. Should the index have 0% growth or decline, policy owners bear the risk that no index credit will be given to the account. Source: Genesis Financial.
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Earn Credit when Credit is Due
November 17 Date of: Policy Anniversary February 1 Trigger Point November 17 Cost of Insurance Charges Fixed Loans* Withdrawals Regardless of end of term or not Earn any credits on withdrawals Potential more accumulation * A fixed interest rate loan will begin a 12-month lockout period during which no transfers from the fixed account to an indexed account will apply.
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Earn Credit when Credit is Due
Partial index credits based on index changes up to the date of access on withdrawals and fixed loans Traditional BGA $40,000 Loan amount* 0% No earned credit $0 Credit applied $40,000 Loan amount* 10% S&P 500® 9.00% BAS return** $3,600 Partial Index Credits applied Same as previous slide using a different type of withdrawal (loan) Access account value any day of the year – Intuitive Hypothetical index performance for demonstration purposes only. Does not reflect client experience or past performance. * A fixed interest rate loan will begin a 12-month lockout period during which transfers from the fixed account to a balanced indexed account or indexed account will not be available ** Two-year BAS (100% index allocation, 1% annual segment spread). This example is calculated over a 12-month period.
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62- 72% Income for Your Client Potential Income advantage of
more for your clients 62- 72%
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Why BGA IUL and How It’s Being Sold?
Karl Ammerman, CLU, Highland Capital Brokerage Steve Austin Principal APEX Financial
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In Closing… Proprietary IUL Product Uncapped Crediting Strategy
basis points more potential annual interest than traditional strategies* Potential income advantage of 62-72% for target clients 40-60** Ability to give Partial Interest Credit on different types of withdrawals, including COIs, regardless of end term date*** [REVIEW SLIDE] * Source: Minnesota Life Illustration. Based on 2-year balanced indexed account (100% S&P 500 index allocation, 105% interest participation rate at the end of segment term) compared to 12.5% capped account. S&P 500 Index performance 12/31/96 – 12/31/16. ** Source: Minnesota Life Illustration software, April Past performance does not guarantee future results. *** If money is deducted from a balanced indexed account for a policy loan with a fixed policy loan interest rate, a partial index credit will be credited on the amount of money withdrawn from the balanced indexed account. The partial index credit will be calculated based on the partial index credit term. Additionally, a lockout period of 12 months during which no transfers from the fixed account to an indexed and/or balanced indexed accounts will apply.
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Thank You
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