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A Live and Give Strategy with ForeRetirement SM Variable Annuity [Presenter] [date]
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Optional benefits discussed within this material are only offered with the purchase of a variable annuity and are not available outside of the variable annuity. As such, you should first consider your suitability and willingness to purchase a variable annuity before considering the potential benefits of any optional features. This material is authorized for distribution only when accompanied or preceded by a prospectus and an applicable product guide and product brochures for the annuities being offered. The prospectus contains investment objectives, risks, fees, charges, expenses, and other information regarding the variable annuity Contract and the underlying investments, which should be considered carefully before investing. You should read the prospectus carefully before investing money. Before we begin…
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Retirement: A numbers game 3 62 10 92 30
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Retirement: A numbers game 4 Average retirement age 1 62 Thousand people retiring daily 2 10 Average age one spouse will attain in life 1 92 Average years of income necessary for a couple 1 30 1 Murray: Retirement Income Boils Down To One Issue, Financial Planning, June 2012 2 Pew Research Center, pewresearch.org, December 20, 2010
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Challenges you will face: Inflation 5 Coffee/lb. 15-year change +35% 30-year change +124% 1982$2.50 1997$4.16 2012$5.60 Eggs/dz. 15-year change +44% 30-year change +109% 1982$0.81 1997$1.17 2012$1.69 Gasoline/gal. 15-year change +221% 30-year change +201% 1982$1.26 1997$1.18 2012$3.79 Bread/lb. 15-year change +72% 30-year change +179% 1982$0.54 1997$0.88 2012$1.51 Source: U.S. Bureau of Labor statistics; 15-years change, 1997-2012; 30-year change, 1982-2012.
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Challenges you will face: Market risk 6 Source: Dow Jones Industrial Average annual returns, excluding dividends, www.forecast-chart.com/historical-dow-industrial.html The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 of the largest and most widely held stocks traded on the NYSE. It is not available for direct investment. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. This hypothetical example is for illustrative purposes only. It is not indicative of any specific investment and does not take taxes or withdrawals into consideration. The amount illustrated would have been lower had taxes or withdrawals been taken into consideration. MARKETS MOVE IN CYCLES When you retire can have a significant effect on your long-term success. 2012 Dow Jones Industrial Average Annual Returns What’s the effect on your retirement income if you retired here......vs. here? 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Over the past 85 years: 67% have been up 32% have been down
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Challenges you will face: Interest rate risk 7 January 1, 2003December 31, 2012 1.72% Source: Board of Governors of the Federal Reserve System, research.stlouisfed.org/fred2/data/GS10.txt 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 4.05% 10-year Treasury rates by month, 2003-2012
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Challenges you will face: Longevity 8
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Life Expectancy of a 65-year-old 9 Source: Department of Health & Human Services, Administration on Aging, 2011 MaleFemale 80.5 1995 15.5 Years 85.3 2050 Projected 20.3 Years 84.2 1995 19.2 Years 87.4 2050 Projected 22.4 Years
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Traditional retirement income strategies: Social Security – Retirement benefits are largest component – Primarily funded through payroll taxes – Predictable, steady income for life Defined-Benefit Pensions – Employer-sponsored plan – Predictable, steady income for life 10
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Outdated retirement income strategies? Social Security – Faces continued scrutiny and debate in Washington, DC – Today, there are just under three workers per retiree 1 In 1950, there were 16.5 workers supporting every retiree By 2030, projected to be just two workers per retiree Defined-Benefit Pensions – In rapid decline: 20% of private workers in 2008 compared to 38% in 2002 2 – Limited ability to increase income 11 1 Contributing workers per benefit recipient, Social Security Administration, 2011 2 Social Security Administration, Office of Retirement and Disability Policy, 2009
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Are there updated retirement income strategies? 12 Yes No
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Strategies that align with your needs Growing & Protecting Assets Accumulation-oriented annuity strategies with optional death benefit protection Growing & Preserving Retirement Income Income-oriented annuity strategies 13
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What is a variable annuity? Retirement investment with: – Tax-deferred growth potential – Wide range of investment options and professional money managers – Flexible payout options to help meet a variety of income needs – Optional income, investment and death benefit guarantees for enhanced financial protection Contracts: – Are subject to the market fluctuations of the underlying investment elections and possible loss of principal – May be worth more or less than the amount invested at any point in time – Contain fees and charges, including sales charges, premium-based charges and mortality and risk expense charges that also will affect values 14 All guarantees within the annuity are based on the claims-paying ability of Forethought Life Insurance Company.
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ForeRetirement variable annuity Forethought Life Insurance Company – Serves the Senior Middle Market by providing retirement protection in order to feel more certainty, security, and confidence throughout retirement. Growth potential through world-class investment platforms – 11 highly-regarded money managers – Over 50 investment options Optional features for income or legacy protection – Guaranteed strategies for your retirement’s financial challenges 15 All guarantees assume compliance with the benefit rules and are based on the claims-paying ability of Forethought Life Insurance Company.
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Who manages your money 16
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The power of tax-deferred growth 17 This hypothetical chart is intended to illustrate the advantage of tax deferral and not the actual performance of a specific product or its investment options. Tax- deferred results do not reflect any insurance charges or maintenance fees and assume no withdrawals or taxes over the periods shown. If included, performance would be lower. When withdrawn, gains from tax-deferred investments are subject to ordinary income tax. Lower tax rates on capital gains and dividends would increase the investment return of the taxable investment, thereby reducing the difference in performance between the options shown. You should consider your investment time horizon and income tax brackets, both current and anticipated, when making an investment decision. These factors, along with any changes in tax rates or tax treatment of investment earnings, may further impact the results of this comparison. Hypothetical growth of $100,000 at a gross 7% annually, tax-deferred vs. taxable (@ 28% federal income tax rate) for 30 years
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Turning investment to income The optional Daily Lock Income Benefit within a ForeRetirement variable annuity can help: 18 Grow income before you need to take it 1 1 Provide a predictable, lifetime income stream 2 2 Give you the potential to increase income while you are receiving it 3 3
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ForeRetirement’s Daily Lock Income Benefit: While you are waiting to take income Grows your Withdrawal Base, used to derive your guaranteed withdrawal amount, while you defer income by either: Daily step-ups when contract value exceeds current Withdrawal Base 1 6% annual deferral bonus that prevails if step-ups are less 2 19 1 The Withdrawal Base is an inaccessible value used solely to calculated guaranteed withdrawal amounts. It has no cash surrender value. 2 Deferral Bonuses apply for up to 10 years, provided no withdrawals are made. This hypothetical example is for illustrative purposes only. Assumes no premium payments after year one and no partial surrenders. All guarantees assume compliance with the benefit rules and are based on the claims-paying ability of Forethought Life Insurance Company. Daily Step-Ups Deferral Bonus Withdrawal Base Contract Value Each and every day that the contract value achieves a new high, the Withdrawal Base locks-in at that value If step-ups are less than the Deferral Bonus after a year, the Deferral Bonus will prevail In years when the step-ups exceed the Deferral Bonus, no bonus is credited. This is now the value the next year’s Deferral Bonus will build upon, if applicable. Withdrawal Base continues to grow by Deferral Bonus, even in down market, until income begins Contract/benefit value year123
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ForeRetirement’s Daily Lock Income Benefit: Guaranteed withdrawals provide income for life Provides guaranteed withdrawals for a predictable income stream, based on your age at first withdrawal: – 59½ -64 4% – 65-84 5% – 85+ 6% The joint income option provides: – 59½ -64 3.5% – 65-84 4.5% – 85+ 5.5% 20 All guarantees assume compliance with the benefit rules and are based on the claims-paying ability of Forethought Life Insurance Company.
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ForeRetirement’s Daily Lock Income Benefit: Continued potential to increase income Market-driven potential to increase income – Market step-ups may continue up to age 90 – Applied daily to the Withdrawal Base, when applicable – Any resulting Lifetime Annual Payment increases will typically occur annually upon the contract anniversary 1 – Step-ups can trigger withdrawal percentage increases Deferral Bonuses cease upon the sooner of 10 th contract anniversary or first withdrawal 21 1 Other triggering events as described in the prospectus may result in an early recalculation of the Lifetime Annual Payment.
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The ultimate cost of inflation and longevity An eroded legacy Typically, the more and longer you have to spend your money, the less your beneficiaries receive In short, the longer you live, the less you can give Consider adding Legacy Lock, as well as Daily Lock Income Benefit to your ForeRetirement variable annuity 22
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Purchase ForeRetirement variable annuity 23 LiveGive Elect to add Daily Lock Income Benefit for: –Ability to grow income –Guaranteed withdrawals to provide a lifetime income stream Elect to add Legacy Lock death benefit for potential return of your full investment, or more, to beneficiaries at death All guarantees assume compliance with the benefit rules and are based on the claims- paying ability of Forethought Life Insurance Company.
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Live with Daily Lock Provide a 6% floor on growth of your Withdrawal Base through Deferral Bonuses for up to 10 years while you are waiting to take income Capture daily contract value highs for growth potential that exceeds the Deferral Bonus while protecting income from the effect of losses Provide guaranteed withdrawals for predictable lifetime income stream that will not decrease but could increase, provided you follow the benefit rules 24 Investment restrictions apply. All guarantees assume compliance with the benefit rules and are based on the claims-paying ability of Forethought Life Insurance Company.
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Give with Legacy Lock With the optional Legacy Lock death benefit: Even while taking withdrawals, retain the potential to provide your beneficiaries with your full investment or more – Upon first withdrawal, one-time step-up opportunity for benefit to “step- up” to equal the contract value if it has experienced investment growth Your death benefit is not reduced by income taken – Must retain one Daily Lock Lifetime Annual Payment – A variety of factors — including withdrawals, underperformance and fees — can reduce the contract value. Should the contract value be less than one LAP, the death benefit reverts to traditional return of premium and is reduced by withdrawals. The Legacy Lock step-up would also no longer apply. You may need to choose between an unreduced death benefit and continued withdrawals should the contract value approach one Lifetime Annual Payment (LAP). Guarantees are based on the claims-paying ability of the issuing company. State availability may vary. Benefit rules and restrictions apply. Benefit terminates upon annuitization. 25
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A Balancing Act: The Value of Professional Investment Advice 26 Income Oriented Assets Accumulation Oriented Assets Annuities Pensions Social Security Bonds IRA’s 401(k) Stocks Money Market
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This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult a tax or legal counsel for advice. Taxable distributions (including certain deemed distributions) are subject to ordinary income taxes, and if made prior to age 59½, may also be subject to a 10% federal income tax penalty. Distributions received from a non-qualified Contract before the Annuity Commencement Date are taxable to the extent of the income on the Contract. Payments from IRAs are taxable in accordance with the normal rules surrounding taxation of payments from an IRA. Early surrender charges may also apply. Withdrawals will reduce the death benefit and any optional guaranteed amounts in an amount more than the actual withdrawal. “Forethought” is Forethought Financial Group, Inc. and its subsidiaries, including the issuing company of Forethought Life Insurance Company. The issuing insurance companies are not investment advisers nor registered as such with the SEC or any state securities regulatory authority. They are not acting in any fiduciary capacity with respect to your investment. This information does not constitute personalized investment advice or financial planning advice. ForeRetirement suite of variable annuities are flexible premium variable annuities issued by Forethought Life Insurance Company, and are underwritten and distributed by Forethought Distributors, LLC. All statements qualified by final prospectus and Contract and are subject to change without notice. In the event of a conflict between this information and that contained in the prospectus and/or Contract, the prospectus and Contract shall prevail. All information and representations herein, are as of 2/13 unless otherwise noted. VA5038 2-12 100100 27 This material is authorized for distribution only when accompanied or preceded by a prospectus and an applicable product guide and product brochures for the annuities being offered. The prospectus contains investment objectives, risks, fees, charges, expenses, and other information regarding the variable annuity Contract and the underlying investments, which should be considered carefully before investing. You should read the prospectus carefully before investing money.
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