Living Benefits Anico ABR presentation 080813a

IMG8868 For Agent Use Only; Not for Use with the Public

Life When You Need It!

One Moody Plaza Galveston, TX 77550

Accelerated Benefit Riders


TOPICS

What are the ANICO Accelerated Benefit Riders?

How Will These Living Benefits Work? Case Studies Benefits to Client Underwriting Express Conclusion

Topics

For

Today



Life, When You Need It! LIVING BENEFITS – more options for your clients A new product advantage to offer your clients Another way along with Underwriting Express to

differentiate our products in the field from the competition

Another reason to buy a permanent life insurance policy from ANICO

And best of all, NO ADDITIONAL PREMIUM for this rider to the customer


Accelerated Benefit Riders Great Benefits

Provides for the payment of an accelerated benefit!

Lump-Sum Payment / Not required to take in installments

Up to 16 qualifying Critical Illnesses* - More than the competition!

Requires inability to perform only two of six daily living activities to qualify for Chronic Illness

ANICO provides Living Benefits at NO additional Premium!

*Critical Illness Rider not available in all states


Accelerated Benefit Riders Accelerated Benefit Riders are not Long Term Care Insurance

Majority of Americans do not buy or cannot afford Long Term Care Insurance

Cost of Long Term Care Insurance is very expensive and may not be needed

Accelerated Benefit Riders may enable consumer with qualifying condition to receive a discounted accelerated benefit in lieu of the full death benefit for liquidity to cover expenses of Terminal, Chronic and Critical Illness

No Additional Premium: Benefits When You Need Them!!



A study by Harvard conducted in 2007 and published in The American Journal of Medicine* in 2009 found in a survey of 2,314 Americans in Bankruptcy in 2007, that 62.1% were related to medical debts.

The ANICO Accelerated Benefit Riders provide a discounted accelerated death benefit in the event of a Qualified Terminal, Chronic or Critical Illness when it is needed most.

*Volume 122, Issue 8, Pages 741-746, August 2009; Austin David Himmelstein and Deborah Thorne, Elizabeth Warren and Stephie Woodhandler



Products CoveredANICO Indexed Universal Life*

Affinity 7 Whole Life Insurance

ANICO Executive Universal Life

*The ANICO Indexed Universal Life Insurance policy is not a registered security or stock market investment and does not directly participate in any stock or equity investment or index. When an individual purchases the policy, the individual is not buying an ownership interest in any stock or index

Form IUL08, Form IULU08, Form PWL-CSO, Form PWLU-CSO, Form EXEC-UL, Form EXEC-ULU



Chronic Illness (Form ABR11-CH)

Insured is unable to perform 2 of 6 activities of daily living (ADLs) or requires supervision due to severe cognitive impairment

The Activities of Daily Living are:

Bathing, continence, dressing, eating, toileting and transferring


Accelerated Benefit Riders Critical Illness (Form ABR11-CT)

Triggered by a specific qualifying health event where critical illness transpires

Most of the competition only covers 6 triggers

Covered Critical Illnesses may include:

Heart Attack Stroke Invasive Cancer End stage renal failure Major organ transplant ALS Blindness

Covered critical illnesses continued:

Paralysis Arterial aneurysms Central nervous system disease Central nervous system tumors AIDS Major burns Major Multi-system trauma Severe disease of any organ Loss of limbs


Accelerated Benefit Rider

Terminal Illness (Form ABR11-TM)

Life expectancy of less than 24* months Some states may limit the definition of terminal illness to

conditions that are expected to result in death within 12 months

Available on all classes

Terminal Illnesses can cost an incredible amount of money and cause stress and worry for those involved

Sometimes having money during life to meet health care costs to make loved ones more comfortable or give them hope is more important than having a death benefit later



Use of any Accelerated Benefit Rider will terminate the life insurance policy unless the benefit accelerated is under a spousal term or other insured rider, in which case the rider will terminate– Partial Settlements Coming the first quarter of 2014.

For Chronic and Critical Illnesses, Accelerated Benefit Rider is not allowed on policies rated higher than table 4 or if there is a flat extra of more than $5.00 per thousand.


Accelerated Benefit Riders Face Amount Availability:

Based on total Death Benefit at issue including all eligible primary insured riders & other ANICO Policies including Accelerated Benefit Riders

Minimum $25,000 for Terminal Illness version $50,000 for Chronic and Critical Illness version

Maximum $2,000,000 for ages 0-65 $1,000,000 for over age 65 Death benefit can grow over maximum amount

post issue and entire amount eligible for benefit



Accelerated Benefit Availability

Added automatically to newly issued policies

Some states may approve all riders; some states such as New York may approve only Terminal Illness Rider

check individual states for approval



Enhance attractiveness of our product in the Buy/Sell Market

Using full funding, the base policy cash value builds to assist Buyout at retirement

Accelerated Benefit Riders can be used as a buy-out down payment in the event of a qualifying Critical, Chronic or Terminal illness


Accelerated Benefit Riders Additional Qualifying Riders

Primary Insured – Added to base policy death benefit when electing accelerated benefit amount for primary insured

Level Term Rider (Form ULLTR)

Additional Protection Benefit Rider (Form ULAPBR08)

Paid Up Additions Rider (Form MLPUA)

ANICO Select Term Rider (Form ART07 –TERM)

Other Insured Parties – eligible for accelerated benefits if the other Insured has qualifying condition Other Insured Rider (Form ULOIR) Spouse Term Rider (Form ULSTR93, Form SARTR94, Form STR88)


Accelerated Benefit Riders Payment of Benefits

Eligible Death Benefit reduced by

- Actuarial Discount

- Administrative Fee (not to exceed $500)

- Less Outstanding Policy Debt

= Accelerated Benefit Amount

Loans reduce BUT DO NOT Eliminate Benefits; Other Carriers???


Accelerated Benefit Riders Actuarial discount computed to make accelerated benefit

amount equivalent to present value of eligible death benefit less the present value of future premiums required to keep the policy in force

Factors Impacting Benefit Amount:

Accelerated Benefit Interest Rate

Severity of Qualifying Medical Condition

Future Premiums

Future Anticipated Dividends

Cash Value Associated with Eligible Death Benefit


Accelerated Benefit Rider Payment Options

Accelerated Benefit paid in a lump sum Lump sum may be applied to any non-life

contingent settlement option available in the contract

If insured for whom accelerated benefits are paid is insured under policy, policy will terminate

Partial Settlements Coming the 1st quarter of 2014.

If insured for whom accelerated benefits are paid is not insured under base policy, then policy remains in effect with rider terminated

spouse term rider or other insured term rider


Accelerated Benefit Rider Waiting Period

Terminal Illness - None

Chronic Illness – Condition must exist for 90 days prior to a claim (does not

apply to cognitive impairment)

No accelerated benefit will be paid within the first two policy years of the issue date of the base policy

Critical Illness – Claims will not be processed until at least 30 days after the

qualifying event

No accelerated benefit will be paid for any qualifying event that occurs on or before the issue date of the base policy


Tax Consequences

Terminal Illness should be Non Taxable

Chronic Illness Rider distribution may receive favorable tax treatment as it is subject to daily limit of $320 or $116,800 annually for 2013 or amount of qualified long- term care expenses. All insurance benefits are considered in evaluating these limits.

Payments received under Critical Illness Rider may be excluded under accidental health policy and IRC Section 105(b) and 105(c) (check with advisors)

Clients should consult their tax and legal advisors to determine applicability to their individual situation



Effect on Eligibility for Government Benefits Qualification for Government programs such

as Medicaid are quite stringent and often allow for only limited income and assets in order to receive benefits

Client should consult their legal and tax advisors to determine the impact of receipt of benefits on their individual situation before deciding to accept such benefits


Accelerated Benefit Rider

Illustration Support Accelerated Benefit Rider Illustrations will follow

the policy under Riders

Report will provide an illustration for Terminal, Chronic and Critical Illness at various attained ages

Report will reflect hypothetical amount available based upon slight impairment, moderate impairment and severe impairment for Chronic and Critical and amount for terminal illness


Hypothetical Accelerated Benefits

Attained Age

Chronic and Critical Illness

Terminal Illness

Slight Impairment

Moderate Impairment

Severe Impairment

47 $0 $38,222 $76,444 $88,186

65 $20,238 $48,341 $76,444 $88,186

75 $39,216 $57,830 $76,445 $88,186

85 $59,272 $67,867 $76,461 $88,186

ANICO Indexed Universal Life, Face Amount: $100,000, 45 Year old Female

Standard non-user, Annual Premium $3,347.00


ABRs for Signature Term Insurance

ANICO’s Signature Term Insurance Policy also contains the three Accelerated Benefit Riders

Benefits may not be as large as IUL Benefit unless Illness is severe

Slight and moderate benefits will be reduced by lack of cash value and reduction in benefit due to ART premiums at higher ages being a part of discounting calculation


Terminal Illness – Hypothetical Case Study

After visiting her Doctor, Joan found out she had pancreatic cancer. She went to a leading Cancer Center and had her diagnosis confirmed

Joan could not work once treatment started and began going through her savings very rapidly.

Joan visited with her financial advisor to see what she could get if she surrendered the policy and found she could access a larger amount through the Accelerated Benefit Terminal Illness Rider

Joan exercised the rider in settlement of her policy


Terminal Illness – Hypothetical Case Study

With this money, Joan was able to afford to continue her treatment and lived longer than expected

The money brought Joan hope that she could beat this devastating disease and become one of the few survivors

Although she did not survive the disease, she lived a longer and better life due to the assistance this living benefit provided her


Chronic Illness – Hypothetical Case Study

Karen became concerned as her husband Bill began experiencing forgetfulness and occasionally became confused. This condition worsened over time

They visited a doctor and learned that Bill had early-onset Alzheimer’s disease. As time passed, the disease became worse and Bill needed to stop working. Karen missed work taking care of Bill

This resulted in a loss of income and higher medical bills as Bill was being treated


Chronic Illness – Hypothetical Case Study

Bill and Karen quickly went through all of their savings and much of their retirement savings to pay for treatment

They met with their financial advisor to see what they had left

Bill had an ANICO life insurance policy with a face of $500,000 on his life

They talked to their advisor about surrendering the policy and were informed the policy had a living benefit that included Chronic Illness

They qualified and received a reduced lump sum acceleration benefit in settlement of the policy which helped pay for Bill’s treatment & caregivers which allowed Karen to return to work


Critical Illness – Hypothetical Case Study

Jim and Mary were asleep one night when Jim woke up experiencing a massive heart attack

Jim was in ICU several days before eventually being sent home to recover

Jim would be unable to return to work for two months and Mary took a temporary leave of absence to care for Jim and help him get healthy and lose weight


Critical Illness – Hypothetical Case Study Jim and Mary were concerned that

with Jim’s illness and recovery, they would go through their regular savings and much of their retirement savings

Their financial advisor pointed out that Jim’s ANICO Life Policy had a Critical Illness Rider and they could receive a discounted lump sum in settlement for their policy

At a time when their future retirement seemed to be falling apart, Jim and Mary found the financial comfort they needed from ANICO’s living benefits



The check is not a reimbursement for approved expenses already incurred

Lump Sum discounted accelerated benefit can be used without restrictions

Pay a family member to take care of you

Have the lawn mowed or the house cleaned

Funds to get you through the tough times



ANICO’s Accelerated Benefit Riders can provide a client living benefits that they can use when they need them

Selling life insurance for more than protecting against premature death is critical to making the sale

Our living benefits rider joins other features such as (1) supplemental retirement income, (2) paying off a home prior to retirement, (3) educating grandchildren, etc. to provide our clients a number of benefits they may enjoy while they are alive

ANICO has multiple Life Insurance product attributes that differentiate us from the competition


The ANICO Underwriting Express

Another product attribute that ANICO provides is The ANICO Underwriting Express

Underwriting Express allows for fast easy underwriting along with the Living Benefit Riders

With the ANICO Underwriting Express, Most Cases Allow for:

No Labs

No Parameds

No Blood work


The ANICO Underwriting Express

Underwriting Express applies to ages 0-65 with amounts up to $250,000

Standard and Substandard rate classes only. Preferred rates and full underwriting available with other ANICO products

or on amounts over $250,000

No Reduction in Commissions Underwriting becomes faster and less invasive for most

individuals Applications that meet our guidelines usually approved

within 72 hours


Conclusion

ANICO’s Living Benefits Riders help protect against life’s risks No one expects life threatening events but we can plan for them One way to protect from catastrophic health events is the

ANICO Accelerated Benefit Riders Some other companies may charge a premium for a Living

Benefit that may never be utilized ANICO offers Protection for NO ADDITIONAL PREMIUM If an insured qualifies, they can receive a discounted lump sum

death benefit when they need it to get through their illness ANICO’s ABR’s HAVE NO ULTIMATE BENEFIT CAP ! If the DB

grows after issue, then the ABR Benefit will be calculated on the DB at time of claim (Other Carriers have a Benefit Cap . . .)


Conclusion Give your clients more reasons to buy life

insurance that can benefit them

Then provide your clients an improved, less invasive underwriting experience with The ANICO Underwriting Express

American National Insurance Company: More client living benefits Easier, faster and painless underwriting Less of your time required to finalize the sale


Any Questions?

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