Life Insurance BasicsModule 3

Life Insurance Illustrations

©2011 Genworth Financial, Inc. All rights reserved. 126201 08/16/11 FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Compliant Illustrations

Parts of a Life Insurance Illustration

Current Assumptions versusGuaranteed Features

Module 3 – Illustrating Current Assumption UL

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Illustration excerpts used in this module do not representany specific policy. They are included for training purposesonly and should not be shared with the public.

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Compliant Illustrations

National Association of Insurance Commissioners (NAIC) model regulation on life insurance illustrations

• To ensure that consumers have all the necessary information to make an informed decision

Most states have adopted some version of this model• If the life insurance illustration will be showing any non-guaranteed values,

the product is filed as an illustrated product

• If non-guaranteed values are shown, the illustration must comply with the illustration regulations as adopted by the state

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

If an illustration is used at point of sale

• Policy applicant must sign and date, acknowledging receipt of illustration

• New, signed illustration required if changes occur during underwriting

If no illustration is used at point of sale

• “No Illustration Certificate” must be completed and signed by policy applicant

• Signed compliant illustration will be required at policy delivery to put the policy in force

Compliant Illustrations

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Universal Life Insurance Premiums

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Narrative Summary

Numeric Summary

Tabular Detail

Text describing the policyfeatures and premium levels

Impact of guaranteed andnon-guaranteed elements

Year-by-year view of policyvalues

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Basic UL policy has very few guarantees

• Stated policy fees

• Maximum cost of insurance (COI) charges; and

• Minimum interest crediting rate

UL policies are often illustrated based on “current assumptions”

• Assumes current interest crediting rate and current COI charges will continue for the entire life of the policy

Current Assumptions Versus Guarantees

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Illustration regulations require that non-guaranteed and guaranteed elements be shown

Must be signed by the applicant

• Either at time of sale and submitted with the application, or

• At policy delivery

Numeric Summary

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Sample Numeric SummaryMale, Age 35

Preferred Best No Nicotine Use

Initial AssumptionsInitial Specified Amount: $100,000

Death Benefit Option: 1

Initial Planned Premium Outlay: $650.73 Annually

Numeric Summary – Guaranteed

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Worst-Case Scenario:• Minimum interest rate credited• Maximum COI charges taken out

*The policy will end during this policy year unless a higher premium is paid.**Benefits and values are not guaranteed. The assumptions on which they are based are subject to change by the insurer, and the actual results may be more or less favorable.

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Sample Numeric SummaryMale, Age 35

Preferred Best No Nicotine Use

Initial AssumptionsInitial Specified Amount: $100,000

Death Benefit Option: 1

Initial Planned Premium Outlay: $650.73 Annually

Numeric Summary – Non-guaranteed

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*The policy will end during this policy year unless a higher premium is paid.**Benefits and values are not guaranteed. The assumptions on which they are based are subject to change by the insurer, and the actual results may be more or less favorable.

Current Assumption Scenario:• Current interest rate – doesn’t

account for fluctuations• Non-guaranteed COI charges

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Sample Numeric SummaryMale, Age 35

Preferred Best No Nicotine Use

Initial AssumptionsInitial Specified Amount: $100,000

Death Benefit Option: 1

Initial Planned Premium Outlay: $650.73 Annually

Numeric Summary – Non-guaranteed

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*The policy will end during this policy year unless a higher premium is paid.**Benefits and values are not guaranteed. The assumptions on which they are based are subject to change by the insurer, and the actual results may be more or less favorable.

Midpoint Scenario:• Halfway between guaranteed and

current interest and charges• Still non-guaranteed

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

The point when the guaranteed policy value is insufficient to cover the monthly deductions and the policy enters the grace period.

Tabular Detail – Year-By-Year

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**Benefits and values are not guaranteed. The assumptions on which they are based are subject to change by the insurer, and the actual results may be more or less favorable.

FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

Shows guaranteed versus non-guaranteed values on a year-by-year basis

Will Show

• Planned loans or withdrawals

• Interest accruing on policy loans

Changes

• Premium

• Death benefit options

• Death benefit reductions

Tabular Detail

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

If non-guaranteed values will be shown, the illustration must comply with the state’s illustration regulations

Three sections

Narrative Summary – explains policy features and premium options

Numeric Summary – must be signed by applicant

Tabular Detail – shows year-by-year changes in the policy as projected at policy inception

The final signed illustration must match the policy issued.

Illustration Module Summary

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FOR AGENT/PRODUCER/BROKER/DEALER USE ONLY. NOT TO BE REPRODUCED OR SHOWN TO THE PUBLIC.

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Disclaimer

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