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Changing Commissions Plus New Choices
and Sales Opportunities
Enhanced Income Products Available Soon
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Economic conditions have made this past year a very difficult one for annuity producers and insurers alike. Over the last several months we and other major insurers have taken steps to adjust to the low interest rate environment and smaller investment spreads. Today we are announcing further adjustments, but more importantly, we are coming to you with solutions that provide a means for you to continue to sell and prosper in this difficult market.
In addition to the natural economic difficulties inherent in a recession, we are seeing unprecedented interest rate volatility perpetuated by ongoing and highly unusual Federal Reserve activity designed to influence the economy. It remains unclear what the impact of this activity will be on the future direction of the economy. This ongoing uncertainty complicates an already difficult situation.
What is clear, however, is that with the Federal Reserve on record as saying they will act (via “quantitative easing”) to keep rates low over the near term, we don’t foresee significant economic changes that will result in increased rates any time soon. In general, this means that the annuity products developed in years past to emphasize accumulation are not well-suited to today’s market realities. Given this market change, we’ve had to make some tough adjustments.
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Important Dates
Deadline for SecurePlus Accumulator 3 - apps in-house by October 29, paid by December 31, 2010
Deadline to get current GLIR for indexed SPDA - apps in-house by October 28 and paid by December 31, 2010
WebEx Schedule
Mark your calendars
October 27th at 3:00 p.m. CST
October 28th at 10:00 a.m. CST
WebEx Instructions
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The need to change is heightened by new suitability requirements which affect our ability to accept annuity-to-annuity transfers and rollovers – it is simply not suitable to put a customer seeking accumulation into an annuity that offers the prospect of rates which are lower than the annuity from which the transfer is being made. Finally, the difficulty of the environment is evidenced by more and more of our competitors withdrawing their single premium deferred annuities from the market.
So, if accumulation isn’t an attractive sale right now, what can we offer that will be attractive to customers looking for choices? Sitting on the sidelines is not an option – we are taking action now to help you offer choices.
To that end, we are taking steps to give you the tools you need to keep selling and to keep prospering. The steps described below focus on three things: 1) Income through an enhanced GLIR used with SPDAs, 2) a retirement savings safe harbor in the form of a 2-year surrender charge annuity and a 5-year multi-year guarantee annuity for customers who don’t want to commit to a long-term product with low interest rates, and 3) the capacity for ongoing savings where each new premium paid will receive new money rates – we continue to offer competitive flexible annuity products for customers seeking ongoing savings.
New for Income
Available October 29
GLIR for Indexed SPDA – we are increasing the roll-up rate and guaranteed withdrawal percentages on our GLIR used with indexed single premium deferred annuities, making this Guaranteed Lifetime Income Rider a very attractive option for those seeking income.
- For applications received on or after October 29, 2010 the roll-up rate is increased to 7%, guaranteed for 10 years. Also, the guaranteed withdrawal percentage at age 60 will be 4.5%. Beginning October 29, Index SPDAs will not be issued without a GLIR except in those limited situations where a GLIR is not approved in the state of issue (WA, OR and NJ).
- Applications received by October 28 and paid by December 31, 2010 will receive the GLIR rates and SPDA product commissions in effect on October 28 (current rates).
New Safe Harbor Annuities
SureRate 2 – We are reintroducing SureRate 2. With a 2-year surrender charge schedule, and the opportunity to transfer money into another LSW annuity after the first year with no penalties, SureRate 2 is an ideal vehicle for someone looking to put money aside for the future but unwilling to commit to a long-term product with low interest rates. This is a “safe harbor” to hold money in for the short term while waiting to see if interest rates increase. It offers protection from market losses, flexibility to move the money in the short-term, and it keeps you in control of the asset. Keep in mind you will be eligible for the commission then in effect if the policy owner chooses to move the money into another of our annuities at a future time.
A new commission schedule is in effect for SureRate 2. The commission rate will be reflected in an addendum to your current commission schedule. You will receive the updated commission information electronically. SureRate 2 sales are not eligible for Performance Plus and will receive 1/10 credit for the Conference of Champions and Chairman’s Club conventions.
RetireMax Secure 5 – this is a multi-year guarantee product with a 5-year surrender charge schedule. This annuity offers a rate slightly higher than SureRate 2 that is guaranteed for 5 years. It is another option for someone seeking a safe harbor.
A new commission schedule is in effect for RetireMax Secure 5. You will receive the updated commission information electronically. RetireMax Secure 5 is not eligible for Performance Plus and will receive 1/10 credit for the Conference of Champions and Chairman’s Club conventions.
Sales material and additional product details on these new products will be provided to you through eNews prior to October 29, 2010.
Ongoing Savings Opportunities
Now, more than ever, people are looking for safety and guarantees for their on-going retirement savings needs. Flexible premium annuities offer a real choice to the saver who wants to avoid market risk and accumulate future retirement savings. With our GLIR for flexible annuities, flexible premium savers also have the unique opportunity with us to provide for guaranteed lifetime income. Payroll deduction/reduction, bank transfers and other types of continuous flow premium sales continue to be an important and growing market. We continue to offer a wide variety of flexible premium annuities to fill this need.
Flexible Premium Products and Commissions Remain Unchanged – because we strongly believe that ongoing saving remains an important goal and the 403(b)/457(b) segment is a market full of opportunity, commissions and convention and Performance Plus production credits for individual salary contributions into our flexible premium product line remain unchanged at this time. You continue to receive full compensation on such ongoing flow premium, and 75% commission on single sum dump-ins and any other non-403(b)/457(b) flex contributions. And the GLIR used with flexible premium annuities continues to offer a 7% roll-up rate and 4.5% guaranteed withdrawal percentage, providing an excellent option for income-based sales.
SPDA Commission and Product Adjustments
Be assured we are working diligently to develop products designed specifically for the economic environment in which we are now operating, and those new products, when introduced, will have appropriate commission levels. However, the quickest way to get you products to sell NOW so you can stay in the market was to enhance the GLIR and to balance the costs by adjusting commissions and company profit.
To provide the new GLIR income on indexed SPDAs, we are making adjustments in commissions and product availability on our index single premium deferred annuity product line for applications received on or after October 29, 2010. In states where GLIR is available, indexed SPDA applications will only be accepted with GLIR. Commissions on indexed SPDA sales will be reduced by applying only one half of the premium towards the existing commission schedules – i.e. only one-half of premiums are commissionable. Production credits for conventions and Performance Plus will be awarded based on the one-half premium amount as well. These changes are applicable to the following products:
- SecurePlus Accumulator 5
- SecurePlus Premier 3
- SecurePlus Premier 8
- SecurePlus Premier 10
Please note, commission statements and all sales reporting will reflect the above change.
Product Withdrawal
SecurePlus Accumulator 3 will be withdrawn. Applications will only be accepted through October 29, 2010 and must be paid by December 31, 2010.
Long-term Commitment to the Annuity Market
As we have said in the past and continue to state, we are committed to the fixed and indexed annuity business. As conditions warrant, we will continue to make adjustments up or down as necessary and we look forward to a return to a more friendly interest rate environment. As always, we thank you for your business. Please contact the Annuity Sales Desk at 800-906-3310 if you have questions.
For Agent Use Only – Not For Use With The Public
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