mutual of omaha’s annuity portfolio and certification€¢the inadequacy of social security...

Mutual of Omaha’s Annuity Portfolio and Certification

2016

Annuity Overview

The main objectives of people planning for retirement are to:

• Maintain their current lifestyle at retirement and

• Provide for adequate health care

Annuity Overview

The importance of retirement planning has escalated in recent years due to concerns regarding:

• The inadequacy of Social Security benefits

• The demise of traditional employer-provided pensions

Annuity Overview

Now more than ever people are aware of the need to plan for a financially secure retirement.

They recognize that they will have to rely primarily on company pensions, personal savings and investments for retirement.

Annuity Overview

Annuities are one of the best ways to accumulate money for retirement and are specifically designed for two important retirement planning aspects:

• Maximum accumulation of funds before retirement and

• A reliable source of income after retirement

Annuity Overview

Annuities offer your clients important benefits:

• Lifetime income• Security of principal• Tax-deferred accumulation• Consistent investment return• Sound investment management• Flexible features of distribution and accumulation• Low risk

Annuity Overview

Annuities can be a valuable tool in helping your clients succeed in achieving their retirement planning goals.

Mutual of OmahaAnnuity Products

Deferred Annuities Immediate Annuities• Bonus Flexible Annuity • Ultra Income• Ultra Secure Plus • Income Access• Deferred Income

Protector• Income Annuity with

Premium Return

DEFERRED ANNUITIES

Bonus Flexible Annuity

The Bonus Flexible Annuity is designed specifically for the accumulation of funds for both tax-qualified and nonqualified plans.

It is a flexible premium deferred annuity with a fixed interest rate and flexible contribution options.

Bonus Flexible AnnuityIssue Ages: 0-89

Premium:• $1,200 minimum annual contribution for recurring premiums• $5,000 minimum for single premium

Contributions: • Flexible • May be increased or decreased at any time subject to a

minimum of $100 a month

Bonus Flexible Annuity • Cash value accumulates at a current interest rate

• Contributions receive an additional 1 percent in addition to the current rate during the first 12 months for all new deposits made

• After 12 months, the deposits receive the stated current interest rate, but no additional 1 percent

• Additional 0.15 percent* added to interest rate on accumulation values equal to or over $50,000

* These values are subject to change

Bonus Flexible Annuity • A 10 percent annual withdrawal of the cash value is

allowed with no surrender charge

• Minimum withdrawal is $100

• The accumulation value cannot be less than $5,000 after the withdrawal

• The accumulation value may be withdrawn, subject to applicable withdrawal fees in the first 8 years

Bonus Flexible Annuity • A systematic income feature provides a regular income to

annuitants

• Withdrawal options are interest only or fixed amount

• The income withdrawals can be as low as $100 and can be monthly, quarterly, semiannually or annually

• Withdrawal charges apply to systematic income withdrawals that exceed 10 percent of the accumulation value during the first 8 policy years

• The request for a systematic withdrawals can be made at any time by completing the appropriate form

Bonus Flexible Annuity

The death benefit is equal to the accumulation value less any applicable premium taxes.

Ultra-Secure Plus

Ultra-Secure Plus is a single premium deferred annuity with either a five-year or a seven-year rate guarantee.

It is designed for long-term tax-deferred growth anda competitive long-term interest rate.

Ultra-Secure PlusIssue ages: 0-89

Premiums:• $5,000 is the minimum purchase amount• Subsequent purchases of $2,500 (nonqualified) or $2,000

(qualified) are allowed

Policy additions are allowed within the first year. and the minimum amount is $500.

Ultra-Secure Plus

Ultra-Secure Plus interests rates:

• Five or seven-year fixed rate guarantee period

• Additional 0.15 percent interest added to purchase payments and accumulation values of $50,000 or higher

Ultra-Secure Plus

Annual withdrawals of 10 percent with no surrender charge are available immediately.

5 year 1 2 3 4 5

Charge 6 6 6 6 5

7 year 1 2 3 4 5 6 7

Charge 6 6 6 6 5 4 3

Withdrawal Charges

Ultra-Secure PlusSurrender charges will NOT apply if the withdrawal* is for any of the following:• Confinement to a Hospital, Nursing Home or Long-Term

Care Facility• Unemployment• Disability• Terminal illness• Death of a Spouse or Minor Dependent• Damage to Residence• Transplant Surgery

* Not available in all states

Ultra-Secure PlusA market value adjustment may apply to a cash surrender or partial withdrawal.

• If the interest rate at the time of the surrender or withdrawal is higher than the multi-year guaranteed interest rate, the market value adjustment will be downward

• If the interest rate at the time of the surrender or withdrawal is lower than the multi-year guaranteed interest rate, the market value adjustment will be upward

• There will be no interest rate adjustment if the contract is surrendered, renewed or a payout option is selected during the renewal period

Ultra-Secure PlusUltra-Secure Plus has a return of premium benefit.

• Surrender value will never be less than purchase payments*

• 100 percent of remaining premiums can be returned at anytime*

• Renews at time of contract renewal and guarantees the client the accumulation value at the time of the most recent renewal date*

* Minus any withdrawals and any applicable premium tax

Ultra-Secure PlusUltra-Secure Plus has a 30-day window at the end of the surrender period. During this 30-day window, clients have three choices:

• Renew their contract and reinstate it for another full contract

• Annuitize the contract

• Surrender (without charge)

Ultra-Secure Plus

The death benefit equals the accumulation value on the date of the owner’s death, minus any applicable premium taxes.

Deferred Income Protector

The Deferred Income Protector is a “pension-like” annuity that:

• Provides clients with a guaranteed fixed amount of monthly income that they will begin receiving several years in the future, and

• Affords protection against constantly fluctuating interest rates and higher income payments


Individuals can invest some of their assets to secure a portion of their retirement needs.

It also serves clients who are looking for a longevity product that provides security against outliving their existing assets at advanced ages.

Deferred Income ProtectorQualifying Longevity Annuity Contracts(QLACs):

• Are fixed-rate deferred annuities that can be sold with certain types of employer-sponsored retirement plans and IRAs

• Individuals may allocate either 25 percent of total qualifying assets or $125,000, whichever is less, into a QLAC, diverting a portion of their qualified funds for later use

• Reduces the required minimum distributions (RMDs) he or she must start paying at age 70 ½

• Must start taking distributions no later than age 85


Target Market:

•Ages 55-65 •Approaching retirement age •Planning to retire in the next 5 to 10 years


Issue ages:

• Between 40 and 75 for non-qualified and QLAC plans

• Between 40 and 68 for qualified plans

Deferred Income Protector• The minimum initial premium is $5,000

• Additional purchase payments may be added at any time until two years before the Income Start Date

• Subsequent purchases must be at least $2,000

• The sum of all purchase payments may not exceed $1,000,000 without home office approval


Surrenders are not allowed. This contract does not provide access to funds prior to the income start date, other than payment of the death benefit, if any.


Deferral Period:

• 2-40 years

• Income payments must begin by age 70 ½ if qualified or age 85 if non-qualified or QLAC

Deferred Income ProtectorIncome Start Date selected on the application: • Must be at least 2 years from the most recent purchase

payment and no more than 40 years from issue date

• Payments must start by age 70 ½ if qualified, or age 85 if non-qualified or QLAC,

• May only be changed once to move the date 5 years earlier or later than originally selected

• A change in Income Start Date will result in a change in the Income Payment Amount quoted

Deferred Income ProtectorIncome options include:

• Life (or Joint Life) only

• Life (or Joint Life) with Period Certain*

• Life (or Joint Life) with Cash Refund

• Life (or Joint Life) with Installment Refund** Not allowed on QLAC contracts

Deferred Income ProtectorDeath Benefit:

• Life Only: None

• Cash Refund: Return of Premium

• Installment Refund: Return of Premium

Deferred Income ProtectorThe Income Advance Feature:

• Is only available on monthly payments

• Allows policyowners to receive the next scheduled monthly payment along with six subsequent payments for a total of seven months of income payments paid in one lump sum

• May be exercised 3 times during the life of the contract


Annual Income Increase Option:

• Must be elected at the time of application

• Allows policyowners to increase income payments by 1-3 percent annually

• Annual increases begin on the Income Start Date


• Income Reduction for Surviving Spouse allows the income payment to be reduced after the death of one annuitant.

• There is no contract fee

• Rated age and impaired risk underwriting are not available


Deferred Income Protector is a versatile annuity that allows individuals to invest a portion of their assets to secure a portion of their retirement needs.

It also serves clients who are looking for a longevity product that provides security against outliving their existing assets at advanced ages.

Deferred Annuity Portfolio Recap

Product Bonus Flexible Annuity

Ultra-Secure Plus Deferred Income Protector

Description Tax-deferred accumulation; safety; guaranteed income

5 or 7 year rate guarantee; tax-deferred accumulation

Pension-like annuity; longevity insurance; QLAC allows for income starting at an advanced age

Issue Ages 0-89 0-89 40-75 non-qualified & QLAC;40-68 qualified plans

Policy Minimum $5,000 to $1 million max without home office approval; planned purchase payments of at least $100/month

$5,000 minimum initial deposit $2,500 subsequent purchase for nonqualified and $2,000 for qualified

$5,000 minimum purchase; $2,000 subsequent purchase; Max $1 million without home office approval

Interest Rate 1% bonus first year and .15% additional interest when accumulation value = $50K +

5 or 7-year fixed rate guarantee period and .15% additional interest when accumulation value = $50K +

Not applicable

Deferred Annuity Portfolio Recap (cont’d)

Product Bonus Flexible Annuity

Ultra-Secure Plus Deferred Income Protector

Partial Withdrawal 10% annual withdrawal with no surrender charge; other withdrawals subject to charges through policy year 9

10% annual withdrawal with no surrender charge; other withdrawals subject to charges through policy years 5 and 7 respectively

Income Advance feature – 7 months of payments in 1 lump sum (up to 3 times);

Other Features Flexible payment options; automatic annuitization; competitive payouts

Competitive renewal rates; waiver of withdrawal charges in certain circumstances

Income advance feature; annual income increase option; income reduction for surviving spouse

Death Benefit Greater of accumulation value or premiums paid minus partial withdrawals/loans

The accumulation value less any applicable premium taxes

If life only chosen, no death benefit; Cash refund is return of premium; Installment refund is a return of premium

Target Market 35-65 45-65 55-65

SINGLE PREMIUM ANNUITIES

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Immediate Annuities Our product portfolio offers three immediate annuities:

• Income Access

• Ultra-Income

• Income Annuity with Premium Return

Income Access

The Income Access single premium immediate annuity is a flexible plan that provides a guaranteed income to the annuitant(s).

It offers a package of several base plans and optional benefits.

Income Access Issue ages: 0-85

Premiums: The minimum single premium is $10,000 and the maximum is $1,000,000*

Benefit payments: May be made monthly, quarterly, semiannually or annually

* Premiums in excess of this amount require preapproval by the home office

Income Access

• The minimum periodic payment is $100

• Payouts must begin between 1 and 13 months of the purchase date

• Income Access offers a guaranteed lifetime income payout to the annuitant

• No period certain options are offered

Income Access Increased Payout Options*

* Subject to state availability

Payment Enhancement Risk Class (standard)

10% or 20% payment increase for certain medical conditions

Inflation Protection Benefit (optional)

3% inflation protection

Enhanced Payment Nursing Home Rider(optional)

50% payment increase for nursing home confinement for five year

Income Access Death Benefit Options*

* Subject to state availability

Return of premium Any remaining premiums not received will be paid to the beneficiary

Guaranteed Minimum Death Benefit Rider

• Policy will pay the greater of anyremaining premiums or 10% of the initial premium

• If the entire premium amount is not paid, the beneficiaries receive 10% of the initial premium

Accidental Death Benefit Rider Pays double the death benefit upon death in a plane, train, taxi or other common carrier

Survivor Continuation Rider Offers continuation of the annual income benefit to the surviving spouse / relative/business partner/companion

Income Access

Partial return of premium on cancellation: Allows the owner to cancel the contract and receive a lump-sum of any remaining premium. Only a partial return of premium will be paid in the first several years.

Return of premium for terminal illness: Allows the owner to receive the full return of premium death benefit up to 12 months early, without being subject to the vesting schedule.

Ultra-Income

Ultra-Income is a single premium immediate annuity.

After the initial payment has been made, the client may choose income payments beginning the very next month or the payments may be postponed up to 13 months.

Ultra-Income

• Issue ages: 0-85

• Premiums: The minimum single premium is $10,000 and the maximum is $1,000,000*

• Benefit Payments: May be made monthly, quarterly, semiannually, or annually

* Premiums in excess of this amount require home office approval

Ultra-Income

• The minimum benefit payment is $100

• Payouts must begin between 1 and 13 months of the purchase date

• The annuitant can elect a cost-of-living adjustment up to 6 percent of the initial annual benefit

Ultra-IncomeThere are a variety of payout options:

• Life annuity• Life annuity with period certain• Period certain without life• Joint and survivor life• Joint and survivor life with period certain• Installment refund• Temporary (life contingent)

Ultra-IncomeAge Rating for Impaired Risk/Substandard: Age rating increases the monthly payments for clients with health problems and a history that includes a lower life expectancy.

Example:A 65-year old man has severe emphysema. He places $100,000 in the annuity. Underwriting assigns him a rated age of 72. Using the rated age his benefit is $902 instead of the normal life expectancy benefit of $748 a month for life.

Income Annuity withPremium Return

• A non-qualified single premium immediate annuity

• Provides a source of reliable income payments

• Ensures a return of premium* paid as a death benefit to the beneficiary

• Once a death benefit is paid, the contract will be terminated

* Less applicable premium tax

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Target Market:

• Individuals approaching retirement (ages 59-65)

• Desire for their spouse to continue receiving annuity payouts or a premium return in the form of a tax-free death benefit to their spouse or beneficiary

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Income Annuity withPremium Return• Issue ages 59 to 85

• Minimum single premium of $10,000 and maximum of $1 million* with a minimum periodic payment of $20

• Guaranteed Life or Joint Life Only income payout

• Benefit payments must begin between 1 and 13 months after issue


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Return of Premium Death Benefit Before the Annuity Start Date: Upon the death of any joint owner, whichever occurs first, or upon the death of the last surviving annuitant, the death benefit is paid to:

• Any surviving owner* if none then• The beneficiary* if none, then• The last surviving owner’s estate

* Spousal Continuation: If the sole surviving owner or sole beneficiary is the Owner’s spouse and there is at least one surviving annuitant, the surviving spouse may elect to become the new Owner and continue the contract instead of receiving the death benefit. This election must be made by formal request no more than 90 days following the death of the Owner and may only be elected once.


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Return of Premium Death Benefit On or After Annuity Start Date: Upon the death of the last surviving annuitant, the death benefit is paid to:

• Any surviving owner if none then• The beneficiary if none, then• The last surviving owner’s estate

Interest will be paid on the death benefit from the date of the death that triggers the death benefit to the date of payment.


Example A: One Owner, Different AnnuitantAt age 60, Theresa purchased an Income Annuity with Premium Return contract and named her spouse John as the Annuitant. Payments started two months later. Unfortunately, John dies six months after the annuity payments begin. The death benefit is paid to the Owner (Theresa) and the contract is terminated.

Example B: Two Owners, One is the AnnuitantIf Theresa and John are joint owners, John is the Annuitant and Theresa dies after the annuity payments start, the contract continues with the one surviving owner/annuitant.

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• 1035 Exchanges are available with this product. All payouts are fully taxable and the death benefit will be tax-free up to the cost basis

• A formal request can be submitted to change the ownership or to assign the contract. If an irrevocable beneficiary exists, they must also sign the request

• Commutation (contract value) can be requested at any time. It is equal to the present value of both the projected future income payments and the projected death benefit

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Terminating the Contract: The commuted value will be distributed as a lump sum payment upon terminating the contract.

• The commuted value is equal to the present value of both the projected future income payments and the projected death benefit and will always be less than the sum of future income payments and the death benefit

• If the Owner wishes to pursue commutation, they must notify the home office

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Immediate Annuity Portfolio Recap

Product Ultra-Income Income Access Income Annuity With Premium Return

Description Variety of payout options available; Cost of Living Adjustment; Impaired risk underwriting

Guaranteed Min. death benefit; Enhance Nursing Home Rider; Inflation Protection; Survivor Continuation; Return of Premium

Return of premium death benefit; Life and Joint Life payout option

Issue Ages 0-85 0-85 59-85

Policy Minimum •$10,000 initial premium; $1m max*

•$100 minimum monthly payout

•$10,000 initial premium; $1m max*


•$10,000 initial premium; $1m max*


Liquidity N/A Return of premium features

N/A


Immediate Annuity Portfolio Recap (cont’d)

Product Ultra-Income Income Access Income Annuity With Premium Return

Other Features •Age rating available

•0%-6% COLA adjustments

•Flexible payment frequency

Return of Premium on Cancellation-a portion of the premium is returned each policy year upon cancellation

• Premium Return death benefit

• Life and Joint Life Only payout option

Death Benefit N/A •Return of premium at death

•Guaranteed minimum death benefit

•Death benefit doubles for accidental death in a common carrier

•Premium return at death

Withdrawal Charges N/A N/A N/A

Client Profile Ages 65+ Ages 65+ Ages 59+

Resources

• Fixed Annuities Product Portfolio Overview

• Bonus Flexible Annuity Policy Highlights

• Ultra-Secure Plus Highlights

• Income Annuity with Premium Return Highlights

Suitability

NAIC Suitability Model

In recommending the purchase or exchange of an annuity, agents must have reasonable grounds for believing the recommendation is suitable for the customer.

Suitability

To determine the product’s suitability, the agent must obtain information concerning:

• The client’s financial status

• The client’s tax status

• The client’s investment objectives and

• Any other information used or considered to be reasonable in making the recommendation to the client

Annuity Suitability Form

This form is required to be completedand signed by the applicant and mustbe submitted with the application before an annuity can be issued.

Disclosure

Disclosure

Clients must be given a disclosure about the specific annuity being offered for purchase.

The disclosure reviews important points that the client needs to consider.

Disclosure

Some of the topics the disclosure will cover:

• Type of annuity• Benefits• Annuity starting date• Fees, expenses and other charges• Withdrawal charges, if applicable• Taxes• Miscellaneous information

Disclosure

The appropriatedisclosure formsmust be provided to the client. they must becompleted and signed.

Summary

It is important as you make a recommendation for an annuity to a client that you have reasonable grounds that the recommendation is suitable for the client based on the facts disclosed by the client.

Replacements

Replacements

Replacement of existing coverage should occur only when it is in the best interest of the client.

You need to be able to assist the client inevaluating whether replacement is in his or her best interest.

Replacements

When completing the application if the applicant answers “yes” to the question regarding existing coverage and coverage will be replaced or used to fund the new contract, the client must be given a replacement notice.

In addition, the application should list the name of the insurer, insured or annuitant, and the policy orcontract number of the policy being replaced, if available.

Replacements

A copy must be provided to the client and submitted with the application.

Replacements

Submit the correct forms for a replacement or 1035 exchange.

Replacements

Remember, in making a recommendation,the agent must have reasonable grounds to believe the recommendation is suitable based on the facts the client has disclosed about his or her financial situation and needs.

Annuity Checklist

When selling an annuity be sure to:

• Submit the completed application• Complete and submit the Annuity Suitability form• Complete and submit the appropriate Disclosure

Statement• If there is a replacement or 1035 exchange, submit the

correct forms• Provide a copy of the “Buyer’s Guide to Annuities” to

the client (where required)

Certification and AcknowledgementCongratulations! You have completed the NAIC National Annuity Training course. To receive credit:

• Log into SPA, Training & Compliance tab, Protect Your Business header, click the NAIC Annuity Suitability link and scroll down to the form titled, “Certificate and Acknowledgement” form.

• Complete it and email to: [email protected]

Questions can be directed to: 1-800-867-6873

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NAIC Suitability in Annuity Transactions Model Regulation

Company Product Training Certification and Acknowledgement Form

I hereby acknowledge that I have received the appropriate Company product training and understand the benefits and provisions of the Annuity products currently being marketed. I completed these requirements on the date shown below: _______________________________________________________ _________________ Signature Date _______________________________________________________ _________________ Full Name (PRINT) Production Number Please return this completed form to Mutual of Omaha Insurance Company by one of the following options. Fax or E-mail to: Agency: (402) 997-1829 or [email protected] Brokerage: (402) 997-1830 or [email protected] Mail to: Mutual of Omaha Insurance Company 3- Producer Services Mutual of Omaha Plaza Omaha, NE 68175

NOTE: This product training does not fulfill the 4-hour CE Requirement. Annuity products underwritten by: United of Omaha Life Insurance Company Home Office: Omaha NE 68175 Companion Life Insurance Company Home Office: Hauppauge, NY 11788 Affiliates of Mutual of Omaha Insurance Company Mutual of Omaha Plaza, Omaha, NE 68175

For Home Office Producer Services use only. Not for use with the public.

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