Life insurance you don't have to die to use AG Secure Lifetime GUL® II with AG Asset ProtectorSM Accelerated Access Solution® Lifestyle Income Solution® Live Longer. Retire Stronger. Policies issued by American General Life Insurance Company, a member company of AIG FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Agenda I’d like to describe how American General Life is revolutionizing the way life insurance is bought and sold By showing how you can turn illiquid death benefits into a liquid pool of money your clients can use to protect their portfolio assets from the costs of severe illness and the risk of outliving their assets So they can achieve a higher sense of financial security during their retirement. 2 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION One of Three Things Will Likely Happen Die Too Soon Become Seriously Ill Outlive Retirement Assets 3 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION What the Statistics Say Chances of survival to age X for one spouse of a couple Prepared by Ernst & Young Insurance and Actuarial Advisory Services practice. The analysis uses the Annuity 2000 mortality table with Scale G2 mortality improvements. 4 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Financial Life Spectrum Building Assets Protecting Assets Extending Assets Die Too Soon Get Sick Along The Way Live Too Long 45 65 Life Insurance 85 Chronic Illness 100 Longevity Protection 5 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION AG Secure Lifetime GUL II 100% ROP at Age 85 50% ROP at Policy Year 20 Guaranteed Cash Value Guaranteed Premiums and Death Benefits 6 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 50% ROP at Year 20 Returned premiums are more than 4x the guaranteed cash surrender value! Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 8 Financial Life Spectrum Building Assets Protecting Assets Extending Assets Die Too Soon Get Sick Along The Way Live Too Long 45 65 Life Insurance 85 Chronic Illness 100 Longevity Protection 9 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Benefits of Accelerated Access Solution: Chronic Illness 101(g) No LTC license necessary 2-out-of-6 ADLs; or Severe Cognitive Impairment Deemed to be Permanent Indemnity Benefit No Receipts Spend benefits on anything Flexible Benefit Base Benefit = 50% up to 100% of Death Benefit $50,000 minimum up to $1,500,000 maximum 10 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Benefits of Accelerated Access Solution: Chronic Illness Flexible Monthly Benefit 1. IRS Per Diem capped at 2% per month 2. IRS Per Diem capped at 4% per month 3. IRS Per Diem with No Cap! Max. Monthly Benefit = Total Benefit ÷ 12 IRS caps the maximum daily rate each year. The 2014 maximum is $330/day or $9,900/month. Subsequent years may be higher. 11 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Financial Life Spectrum Building Assets Protecting Assets Extending Assets Die Too Soon Get Sick Along The Way Live Too Long 45 65 Life Insurance 85 Chronic Illness 100 Longevity Protection 13 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION The Case for Lifestyle Income Solution: Longevity Insurance The positive aspects of living longer come with some financial concerns 48% of Americans age 45–70 have no financial plans in place to protect themselves against outliving their assets and the rising cost of health care should they live longer than expected.1 1 State of the Insured Retirement Industry: 2012 Recap and a 2013 Outlook, Insured Retirement Institute . FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 14 Think about what may contribute to the possibility of outliving your retirement income. Do any of these issues concern your clients? Debt Social Security Uncertainty Historically Low Interest Rates Health Care Expenses Stock Market Corrections Didn’t Save Enough Rising Income Tax Rates Political Uncertainty 15 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Lifestyle Income Solution: Longevity Insurance 1. Accelerate up to 10% of DB per year 2. Primary requirement: Live to age 85 3. Tax-free up to basis; ordinary income after Choosing to exercise rights under the Lifestyle Income Solution can impact cash available under the Accelerated Access Solution. Please speak with your American General Life Insurance Company representative for more information. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 17 100% ROP at Age 85 Premiums Returned! Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 18 American General Life is… Revolutionizing the way YOU sell life insurance! “Telling The Story” 19 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Risk Protection Spectrum Age 65 – 70 $ $ 20-40 Years Prior to Retirement Retirement Years 3 big risks get smaller over time. 3 other big risks get larger over time. 20 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 21 Change the way you sell life insurance: Turn your Term Life Insurance Sales Into Permanent UL Sales! 22 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Sell The Value: Clients are Protected Whether They: Die Too Soon Become Seriously Ill Outlive Retirement Assets 23 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION AG Asset Protector: Is It Really Worth The Extra Premium? FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION “Ordinary” GUL vs. AG Asset Protector Male, 55, Standard-Plus $1,000,000 DB Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION GUL vs. AG Asset Protector GUL to A100 AG Asset Protector To A85 Premium $13,751 $18,073 Savings vs AG Asset Protector $4,322 ------------ $290,000* $1,000,000 14.04% ------------ $35,485* $100,000 Available @ A85 Pre-Tax Equiv. Return = $1M 10-Year After-Tax Distributions * 6% growth, 20% tax rate, 4.8% net return; results rounded down for simplicity. Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 28 Cumulative Premium Comparison Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 30 Cumulative Premium Comparison Residual Asset Protector DB: Approx. $450,000 Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 32 Invested Premium Savings – Premiums to A100 Even at age 100 you’d be short Need extra cash atover age $300,000 85? $290,000* or $1,000,000? 75? Chronic Illness at age 80? Less than $150,000 About $210,000* * 6% growth, 20% tax rate, 4.8% net return; results rounded down for simplicity. Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 34 Invested Premium Savings – Premiums to A100 If you accelerate your entire AG Asset Protector DB starting at age 85, and invest it at 6% in a 20% tax rate, at age 100 it would be worth almost $1,600,000! Assumes AG Asset Protector distributions in excess of basis are taxed as ordinary income. Projected value = $1,594,075 * 6% growth, 20% tax rate, 4.8% net return; results rounded down for simplicity. Hypothetical information for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 35 Summary: 1. The level of liquidity created by the additional AG Asset Protector premium can’t be created any other way. 2. If you’ve made the decision to buy permanent UL, about the only reason you wouldn’t buy AG Asset Protector is because you simply can’t afford it. – If you can afford it, what else can you do with the money to generate this kind of liquidity and value? 36 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Summary: 3. When clients – especially premium payers – realize that they can spend their entire Death Benefit while they’re still alive. . . They’ll never want to own life insurance any other way! AG Asset Protector provides an unmatched level of financial security, especially during retirement, whether you: Die Too Soon Become Seriously Ill Outlive Retirement Assets 37 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION AG Asset Protector: It Really IS Worth It! FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION American General Life is revolutionizing why people buy life insurance, and how it’s sold. Become a part of the next generation of life insurance! FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Bring On Tomorrow! FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Questions? For additional information, please contact your American General Life Companies representative or visit our producer web site at http://eStation.americangeneral.com National Sales Desk can be reached at 1-800-677-3311 Or visit RetireStronger.com 41 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Important Information Policies issued by: American General Life Insurance Company (AGL), Policy Form Number 13460, ICC13-13460, Rider Form Number 13972, 13600, ICC13-13600. Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG). AGL does not solicit business in the state of New York. Policies and riders not available in all states. These product specifications are not intended to be allinclusive of product information. State variations may apply. Please refer to the policy for complete details. There may be a charge for each rider selected. See the rider for details regarding the benefit descriptions, limitations and exclusions. Guarantees are backed by the claims-paying ability of the issuing insurance company. AGLC107915 ©2014. All rights reserved. 42 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Life insurance you don't have to die to use AG Secure Lifetime GUL® II with AG Asset ProtectorSM Accelerated Access Solution® Lifestyle Income Solution® Live Longer. Retire Stronger. Policies issued by American General Life Insurance Company, a member company of AIG FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION