SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans Overview

FOR AGENT USE ONLY

Presented by: Shelby J. Smith, Ph.D.

Training/Service/Support by: 401k Marketing

SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans

Overview

For Agent Use Only

FOR AGENT USE ONLY

An FIA* Exclusively for 401(k) Plans

Unique Features:• Takes bi-weekly contributions/transfers/employer matches• Daily valuation, on-line enrollment & management• Competitive administrative costs • Guaranteed** Lifetime Income Rider: ages 25-75

Differences:• FIA only for 401(k) Plans• Level commissions – paid on Accumulation Value• Administered same as traditional 401(k) option• Portable if employee separates from employer

*Policy Form No. 8891(0910), along with Rider Form No. 7965, 7966, or state variations thereof. Not approved in all states.

**Guarantees are dependent on the claims paying ability of the issuing Company

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FOR AGENT USE ONLY

Level Commissions! Why?

• Comprehensive disclosure of 401(k) fees required in 2012*• ERISA: fiduciaries must assure “reasonable” fees are paid• Plan-Level & investment fees disclosure required by 8/31/2012• Participant-Level fees & charges disclosure required by 11/14/2012• All fees & charges must be disclosed & regardless of who pays• Product providers, managers & administrators cannot “hide fees”• “Revenue sharing” must now be disclosed by all 401(k) service providers

• Commissions on additions, transfers & “roll-ins”• Level commission on accumulation value is:

• Year 1: 0.80% paid as premium received• Subsequent Years: 0.20% paid quarterly

*DOL: ERISA Section, 401(k) Final Rule Fact Sheet 2/2012: 29CFR Part 2550, Section 408(b)(2)and ERISA Section 404(a)(1)(A) & (B).

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FOR AGENT USE ONLY

Commission Example

401(k) has the following characteristics:• 40 employees participate & 70% over age 55• Total Plan assets are $4,000,000

Assumptions• 55+ employees transfer 50% of their money ($1,400,000)• Bi-weekly contributions to annuity are $20,000• Growth is only 3% annually (employee count & participation assumed static)

Commissions paid on Accumulation Value of FIAs in 401(k)

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*Previous years’ transfers paid quarterly **Current years’ additions paid 0.8% as received & prior years paid quarterly in arrears

Transfers Bi-weekly Total Other

Year 1 $11,200 $3,840 $15,040 Rollovers ?

Year 2 $11,536* $3,955** $15,491 Referrals ?

------ NQ money ?

Year 10 $14,613* $5,010** $19,623 Other 401(k)s ?

FOR AGENT USE ONLY

Other Commission Possibilities…

• Who’s likely to know retirement or separation plans in advance?• Rollovers to IRA – consolidation of IRA accounts• Routine employee meetings could foster credibility and add-on sales potential

• Possible opportunities outside the 401(k)• Other qualified money like IRA• Non-qualified money• Life insurance, LTC, disability, etc.• Buy-sell agreements, business continuation & more• Non-annuity investments (must be securities licensed or RIA/IAR)• Estate planning

• Potential for Referrals• Spouses, relatives, friends & associates• Other employer plans from owners/executives

REGULAR SERVICE MEETINGS WITH PLANPARTICIPANTS RECOMMENED

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FOR AGENT USE ONLY

Why Employees Might Choose FIA

• No decrease of existing 401(k) options• Risk averse or approaching retirement

• Upside potential without market downside losses• Predictable growth of income account via roll up rate• Fixed rate option & choice of indexing methods• Accumulation Value: can only go up or sideways, never down*

• Guaranteed** Lifetime Income Rider (“GLIR”)• Can exercise GLIR option OR take lump-sum – flexibility• Withdrawals for emergencies – income may be reduced• Flexible, safe and understandable

*Assuming there were no withdrawals**Guarantees are dependent on the claims paying ability of the issuing Company

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FOR AGENT USE ONLY

Why Employers Might Add FIA to 401(k)

• Appropriate for some employee• Risk averse• If approaching retirement

• Competitive fees and traditional 401(k) administration• Employer money vesting schedule unchanged• Owners/executives probably participate in 401(k)• No need to decrease other 401(k) choices• Optional Guaranteed* Lifetime Income Rider available**• Reduces distractions when

• Markets meltdown or interest rates plummet• Company’s stock price decreases

*Guarantees are dependent on the claims paying ability of the issuing Company**Ages 25 to 75 only, not approved in all states

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FOR AGENT USE ONLY

Who is the Insurance Company

• Life Insurance Company of the Southwest• (Rating current as of 10/27/2012)• A.M. Best: A (Excellent)• S&P: A (Strong)• Moody’s: A2 (Good)

• About National Life:• A Fortune 1000 company serving 840,000 customers• Founded in 1848• FIAs since 1996 (first to issue flex FIA)• LIMRA* recognized: #1 provider of FIAs for employer plans

Source: www.nationallifegroup.com*LIMRA, U.S. Individual Annuities Executive Summary – Second Quarter 2011

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FOR AGENT USE ONLY

Administration by ExpertPlans

• Technology innovator & 401(k) Plan leader• Private label sites: advisor, employer & employee• Thousands of 401(k) Plans with billions in assets• Flexibility: new, existing, small, large, conversion, etc.• Investments: MF, ETF, managed and now FIAs• Cost effective, competitive, qualified & experienced• Dedicated experts to assist advisors with 401(k)s• 401(k) proposal prepared for advisors & employers

Source: www.expertplan.com

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FOR AGENT USE ONLY

FIA* Exclusively for 401(k) Market

• SecurePlus VIP – Value & Income Plan• Features & benefits

• Traditional FIA features• 10-Year withdrawal penalty from initial premium date• Issue ages: 25-75• Flex premiums** accepted

• No commissions for single accounts over $1 million

*Policy Form No. 8891(0910), along with Rider Form No. 7965, 7966, or state variations thereof. Not approved in all states.**Minimum monthly amount is $100.

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FOR AGENT USE ONLY

The Market & Why Now?

The Market*•Roughly 450,000 plans•Size: very small (1 participant) to millions•50+ ages own majority of plan assets•Participating employees: about 50 million•401(k) assets: $3.1 trillion (12.2011)

Why Now?•Recent market volatility & aging workforce•Greatest fear of retirees is outliving money** •Guaranteed lifetime income viewed favorably**•Potential impact of mandated fee disclosures*Source: 2012 Investment Company Fact Book, 52nd Edition, Chapter 7**Source: Allianz Life Insurance Company of North America, Poll released June 2010 & Harris Interactivepoll conducted 9/2012 for Wells Fargo Institutional Retirement & Research

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FOR AGENT USE ONLY

Opportunity of 401(k) Market

• Fish with a net NOT a single line• The “Ultimate Protection” annuity• An ideal potential practice builder• Trillions of assets & millions of employees• Add-on and linked sales opportunities• Demographics changing & economic future uncertain• Addresses a worry retirees fear greater than death*

• Guaranteed** lifetime income from FIA• Accumulation value can go only up or sideways – never down• Predictable, reliable & flexible

• New opportunity – an FIA designed exclusively for 401(k) market• Fee disclosures opens door for “change”*Source: Allianz Life Insurance Company of North America, Poll released June 2010**Dependent on the claims paying ability of the issuing insurance company

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FOR AGENT USE ONLY

How Do You Participate?

• Call Help Desk at 877.319.2078 • Meet qualifications & get appointed with LSW• Training: marketing/product/implementation/administration• Work with ExpertPlans to create an “advisor’s” website• Develop a prospecting strategy

• Identify businesses or find others with connections• Obtain 401(k) employer data from 401k Marketing• Do a direct mailer through 401k Marketing• Sponsor 401(k) workshops for employers• Print, web, radio, etc. advertisements

*Advertisements & promotional materials must be compliance approved before us

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FOR AGENT USE ONLY

What are the Hurdles?

• Longer sales cycle

• Your marketing company may not offer program

• Must learn 401(k) market & dealing with businesses

• Level commission is only option

• Securities licensed/registered required

• Follow up service & support is required & critical

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FOR AGENT USE ONLY

What are the Opportunities?

• Working with groups

• Including 401(k) plans in your practice

• Recurring commission potential

• Potential opportunity for new business outside 401(k)

• Create your own “Solo-401(k)”

• Learn FIA/401(k) market before your competitors

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FOR AGENT USE ONLY

Summary

• FIAs for 401(k) plans: A unique opportunity

• 401k Marketing help & assistance

• Training by 401k Marketing

• Market is huge and new opportunities available

• Sales/commission potentials are great & continuous

• Securities licensed/registered required

• Limited availability currently

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FOR AGENT USE ONLY

Questions?

Call Desk at 401k Marketing at 877.319.2078 for details and ask for Andy Alvis, Celeste DuPrez or Rebecca Brundage

e-Mail your questions to 401Q@bhcdressander.com

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