Live & Give Strategy

Case Study

Challenge: Client has dual objectives for their money. They want to:

  • Live off it, with guaranteed income for their retirement
  • Give it, with the ability to pass value to beneficiaries without their income detracting from their legacy

Case Profile:

  • Client age 50-70
  • Has one pool of money to meet both their income and legacy objectives
  • Finds tax-deferred equity investing appealing
  • Wants guaranteed income with growth potential
  • Desires protection of their investment for beneficiaries
  • Does not plan to access money for one-time needs

With ForeRetirement™ III variable annuity and either Daily 7 or Daily +5 optional withdrawal benefits to “Live:”

Daily market-based step-up opportunities to age 95.

With Daily 7, your client’s income can increase through the greater of:

  • 7% annual Deferral Bonus applied to the Withdrawal Base, OR
  • Daily market step-ups if they exceed the Deferral Bonus.

With Daily +5, your client’s income can increase through:

  • 5% annual Deferral Bonus applied to the Withdrawal Base, AND
  • Daily market step-ups.
     

With either option:

  • Deferral bonuses are available until the earlier of the fifteenth contract anniversary or the first withdrawal.
  • Optional benefits are available at an additional cost and investment requirements apply.

 

Add the optional Legacy Lock III death benefit to “Give:”

Provided withdrawals remain within the allowable amount — and subject to the conditions below – Legacy Lock III provides death benefit proceeds equal to the greater of:

  • The total premiums invested in the contract, with a one-time step-up opportunity that increases the death benefit to the contract value, if greater, at the time of first withdrawal
  • The current contract value
     

Another “Live & Give” option: Elect Legacy Lock III as a standalone benefit:

For occasional withdrawal needs, Legacy Lock III stand-alone offers:

  • Up to 5% of Premium Base, the total premium paid into the contract, or RMDs may be withdrawn annually without reducing the death benefit, provided the client remains within the benefit guidelines
  • A death benefit that is reduced proportionately by withdrawal amounts in excess of the allowable amount, as well as by all withdrawals prior to age 59 1/2. Proportionate reductions may be greater than dollar for dollar.
     

Legacy Lock III Important Note: A variety of factors — including withdrawals, underperformance and fees — can reduce the contract value. When purchased alongside an optional withdrawal benefit (also referred to as “optional living benefit”), should the contract value be less than the greater of either one Lifetime Annual Payment or the minimum contract value, the death benefit reverts to traditional return of premium, and is reduced proportionately by all past and future withdrawals. The Legacy Lock III step-up would also no longer apply. The contract owner may need to choose between an unreduced death benefit and continued withdrawals should the contract value approach the required minimum. When not paired with an optional withdrawal benefit, the contract owner may need to discontinue withdrawals in order to maintain an unreduced benefit as any withdrawal that reduces the contract value below the minimum contract value will terminate the contract and death benefit. The death benefit terminates upon annuitization. Contracts must be annuitized by age 95. In addition, the Enhanced Return of Premium portion of death benefit terminates at age 90. The benefit provides a traditional Return of Premium benefit to age 95, reduced proportionately for all withdrawals, including Lifetime Annual Payments and Allowable Withdrawals. Please see the prospectus for details.

Optional benefits are available at an additional cost and investment requirements apply.

* Minimum issue age varies by optional benefit.

Marketing Resources

Client Brochure

 

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Suite Product Guide

 

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Sample Illustration:
Income & Legacy
with Daily 7 (Live & Give)

 

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Sample Illustration:
Income & Legacy
with Daily +5 (Live & Give)

 

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Phone: (877) 454-4777

 

All products and optional benefits are subject to state and firm approval and variations.

Variable annuities offer tax-deferral, professionally managed investment options and flexible payouts. Values will fluctuate with investment performance, and the annuity may gain or lose value. Charges and fees will also reduce its value. A standard death benefit is included in the base product. Optional benefits are not available for purchase outside of a variable annuity and may be elected at an additional cost. Suitability and willingness to purchase the variable annuity must be considered prior to the potential benefits of any optional features.

All death benefits terminate upon age 95 and will expire sooner if you initiate an annuity payout option (annuitize). With Legacy Lock III, the death benefit value protected from withdrawals (Enhanced Return of Premium portion) terminates at age 90, and a traditional Return of Premium benefit is provided to age 95, reduced proportionately for all withdrawals. Please see the prospectus for details.

The ForeRetirement Variable Annuity is available in multiple share classes, which each have different fees and charges as described in the prospectus. Financial professionals’ commissions may also differ depending upon the share class selected. You should discuss which share class is right for your clients based on the available options. Important share class considerations include, but are not limited to, investment holding period and investment flexibility.

Daily +4/Daily 6 cost 1.25% annually. Daily +5/Daily 7 costs 1.10%. The charges cannot exceed 2.50%. These optional benefit charges may increase upon any contract anniversary. If an increase is declined, the withdrawal percentage will be decreased by 1% (ex.: 5% to 4%); however, market-based step-ups and Deferral Bonuses, if applicable will continue to be credited.

Legacy Lock III costs 0.85% when paired with Daily +5 or Daily 7. The charge cannot exceed 1.50%. Withdrawals in excess of the LAP amount reduce both the Legacy Lock III benefit and future LAPs on a proportionate basis. The Enhanced Return of Premium component of the Legacy Lock III benefit will no longer apply if the contract value is less than the greater of one LAP under Daily +5/Daily 7 or the minimum contract value.

Legacy Lock III when elected as a stand-alone benefit costs 1.15% (ages 0-60) and 1.25% ages (61-65), not to exceed 1.50%.

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.

Investment requirements apply. Investment options are designed to reduce investment volatility within the portfolios. As a result, clients should anticipate that their contract value normally may not decline in value as much as the overall market in downturns. However, they should also anticipate that their contract value will not normally increase in value to the same extent as the equity or bond markets during market upswings, simultaneously mitigating insurance company risk under the guarantee. If clients are uncomfortable with the inclusion of these fund options in their investment, the optional benefits within ForeRetirement may not be suitable.

Withdrawals will reduce the death benefit and any optional guaranteed amounts in an amount more than the actual withdrawal.

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 your tax or legal counsel for advice.

Marketing materials may not be available for use in all states, including but not limited to, Georgia, and Mississippi. Not construed as an offer for solicitation until your state has approved the product and the referenced marketing materials.

Sale of a variable annuity requires the use of the appropriate prospectus, available through your wholesaler. The prospectus contains detailed information including investment objectives, risks, and charges and expenses. Please have your clients read the prospectus carefully before they invest or send money.

Variable annuities are issued by Forethought Life Insurance Company and are underwritten and distributed by Forethought Distributors, LLC.

FOR BROKER/DEALER USE ONLY. NOT FOR USE WITH THE PUBLIC.

100521-4 (05-15)