GBU FIXED INDEX ANNUITY (FIA) Training Presentation
Fixed Index Annuity Training 1
FIA Basics
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Product Overview
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Barclays Index Options
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Product Details
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FAQ 2
FIA Basics An Intro to Fixed Index Annuities
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What is a Fixed Index Annuity (FIA)? •
A fixed index annuity is a taxdeferred, long-term savings option that provides upside potential and principal protection in a down market.
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It offers more growth potential than a fixed annuity along with less risk and less potential return than a variable annuity.
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Returns are based on the performance of an underlying index, but your client’s money is never directly exposed to the stock market.
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How does a Fixed Index Annuity work? •
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Your client will allocate their funds to the available index strategies as they choose. A fixed bucket with a declared interest rate is also available. Participation rates vary based on a few different factors and help determine earnings. The higher the participation rate, the higher the potential earnings. Here are some examples:
Index Performance
Participation Rate
Index Credit %
10%
80%
8%
10%
60%
6%
10%
150%
15%
GBU’s FIA products do not have any caps. Other FIA products have caps, minimums, and other types of restrictions that can be confusing and limit earnings. For example, if a product has a cap rate of 5% and the index performance is 8%, your client would earn no more than 5%.
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Product Overview GBU’s Fixed Index Annuity
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GBU Life FIA Product Differentiators •
Proprietary Barclays Agility Shield Index
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Shorter surrender period than nearly every other Fixed Index Annuity
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Asset Guard FIA allows for a 4-year guaranteed “lock” on par rates
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No caps that might limit earning potential
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19 investment options total per product
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GBU Life’s Fixed Index Annuity Overview • Single premium (Asset Guard) and flexible premium (Future Flex) products available • Repeating 4-year surrender charge contract (8%, 8%, 7%, 7%) • Both accept funding as non-qualified and qualified accounts • Issue ages 0-95 with a minimum initial premium of $25,000 o Future Flex: Minimum yearly annual contributions of $1,000
• Same contract types available as GBU Future Flex Preferred and Asset Guard MYGA products • Offer 3 Barclays indices along with a fixed bucket • Annual and biennial crediting options • Booster fee option allows your client to purchase a higher participation rate • GBU’s FIA 19 crediting options have no caps, or other restrictions • Individual strategies have low $1000 minimum per category
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FIA Crediting Strategies (19 options) Declared interest rate account (fixed bucket)
**SELECT UP TO 7 STRATEGIES**
Counts towards maximum of 7 strategy selections
Barclays Agility Shield
Barclays Fortune 500 12%
Barclays US Tech 12% Index
Crediting
Annual Par Rate Booster Fee
Crediting
Annual Par Rate Booster Fee
Crediting
Annual Par Rate Booster Fee
Annual
None
90%
Annual
None
60%
Annual
None
55%
Annual
1%
120%
Annual
1%
80%
Annual
1%
75%
Annual
3%
180%
Annual
3%
120%
Annual
3%
110%
Biennial
None
135%
Biennial
None
95%
Biennial
None
85%
Biennial
1%
180%
Biennial
1%
125%
Biennial
1%
115%
Biennial
3%
270%
Biennial
3%
190%
Biennial
3%
170%
Participation rates shown are examples. Check GBU website for current par rates. 9
Barclays Index Options GBU’s Fixed Index Annuity
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Barclays Agility Shield Index (ASI) • New, proprietary GBU Life index that’s designed to provide exposure to a dynamic combination of equity, commodity, and treasury assets • 7% volatility target that’s applied daily to control risk • This index aligns with GBU’s philosophy and is a blend of already existing Barclays indices: o Barclays US Quality Excess Return Index (Live since 2014)
o Barclays US Low Volatility Excess Return Index (Live since 2015)
o Barclays UW Value Excess Return Index (Live since 2014) o Fixed Income (On or off depending on trends) 2Y US Treasury Index (Live since 2009) 5Y US Treasury Index (Live since 2009) 10Y US Treasury Index (Live since 2009)
• Barclays Backwardation Long Only Index, selects 10 commodities monthly (Live since 2010)
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Barclays Agility Shield Index (ASI) In addition to dynamically allocating to equity, commodity, and treasury assets, the Index also adjusts its exposure up or down in an attempt to maintain the 7% volatility target. This is called “Volatility Control”. Maximum Exposure = 225%
A hypothetical example is provided for illustrative purposes only and may not reflect actual weights or allocations.
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Barclays Fortune 500 12% •
Aims to provide stabilized exposure to US large cap stocks while targeting 12% volatility.
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The Index may increase or decrease its exposure to the stocks corresponding to those in the Fortune 500 list between zero and 125% to try and maintain volatility at a constant 12% annualized level using Barclays proprietary volatility forecasting technology. The Historical Exposure chart illustrates how the Index increases or decreases its exposure during a variety of market cycles as a result of the 12% volatility control using Barclays proprietary intraday forecasting volatility technology.
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Barclays US Tech Index •
Seeks to capture the returns of the largest non-financial stocks listed on the Nasdaq by market capitalization, while targeting 12% volatility.
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The Index consists of a single building block, Invesco QQQ Trust Series 1, (“QQQ”).
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The Index seeks to reduce exposure to the QQQ in turbulent markets faster than other volatility control mechanisms and increase exposure more rapidly when markets return to normal.
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Similar to the Fortune 500 12% Index, the Index may increase or decrease its exposure to the QQQ between zero and 125% to try and maintain a constant 12% annualized level using Barclays’ proprietary intraday volatility forecasting technology.
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Barclays Index Comparison Chart Agility Shield Index
Fortune 500 12% Index
US Tech 12% Index
Return Type
Excess return
Excess return
Excess return
Volatility Target
7%
12%
12%
Exposure
Up to 225%
Up to 125%
Up to 125%
Proprietary to GBU
Yes
No
No
Ticker
BXIIAS7E
BXIIU500
BXIITE12
Link to Barclays Information
Agility Shield Index Barclays Link
Fortune 500 12% Index Link
US Tech Index Barclays Link
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Product Details GBU’s Fixed Index Annuity
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Point-to-Point Crediting Method •
The Asset Guard and Future Flex FIAs use a point-to-point crediting method.
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This method takes a snapshot of the index performance on the first day and last day of the index term, which may be annual (every 1 year) or biennial (every 2 years).
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The difference between the first day and the last day determines the index performance.
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The index performance and the par rates are used to determine the earnings.
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Example: Policy Year 1 Here’s what happened: •
Index at 6/1/18 = 2,734.62
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Index at 6/1/19 = 2,752.06
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Increase = 0.64%
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Par rate = 50%
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0.64% x 50% = 0.32% Interest Credit
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Example: Policy Year 2 Here’s what happened: •
Index at 6/1/19 = 2,752.06
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Index at 6/1/20 = 3,055.73
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Par Rate = 50%
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Increase = 11.04%
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11.04% x 50% = 5.52% Interest Credit
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Example: Policy Year 3 Here’s what happened: •
Index at 6/1/20 = 3,055.73
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Index at 6/1/21 = 4,202.04
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Par Rate = 50%
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Increase = 37.51%
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37.51% x 50% = 18.76% Interest Credit
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Example: Policy Year 4 Here’s what happened: •
Index at 6/1/21 = 4,202.04
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Index at 6/1/22 = 4,101.23
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Decrease = 2.40%
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Interest credit = 0%
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Booster Fees •
Booster fees/contract fees enable your client to purchase a higher participation rate.
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Booster fees are deducted from the index strategy value at the beginning of the index term.
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Booster fees are currently 1% or 3% of the account value.
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For any crediting option with a booster fee, GBU will deduct the booster fee from the customer’s account value at the beginning of each policy year, with fees being deducted directly from portions of the account value in each crediting option that has a booster fee. •
Note that if there is a negative year or the interest earned is less than the fee, the account's value could be less than the original premium or the value from the previous year
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Example This example shows the performance of a $100,000 Asset Guard FIA at the end of the first year. This client paid booster fees totaling $1,200 at the beginning of the first year to increase the par rate on two index strategies. Strategy Agility Shield Annual 3% booster fee US Tech 12% Annual 1% booster fee Fortune 500 12% Annual No booster fee Fixed Interest Rate Total Interest Credited
Strategy Value
Par Rate
Index Performance
Interest Credit %
Interest Credited
$29,100
180%
8%
14.4%
$4,190.40
$29,700
75%
16%
12%
$3,564.00
$30,000
60%
12%
7.2%
$2,160.00
$10,000
-
-
3.0%
$300.00 $10,214.40
This example is for illustrative purposes only.
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Premiums Asset Guard FIA (SPDA)
Future Flex FIA (FPDA)
Minimum Initial Premium
$25,000
$25,000
Minimum Additional Premiums
N/A
$1,000
Maximum Total Annual Premium
N/A
$5,000,000 without prior approval
Maximum Premium for All Contract $10,000,000 without prior approval Years
$10,000,000 without prior approval
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The Future Flex accepts ongoing premiums which will go into the declared interest account if off-anniversary and will be swept into the appropriate allocations on the contract anniversary.
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For Future Flex, we will allocate funds to annual strategies on the contract anniversary each year. For biennial strategies, funds will be allocated on even numbered contract anniversaries (every two years).
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For the Asset Guard FIA, funds may be added during the 45-day liquidity window at the end of the surrender charge period.
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Par Rate and Interest Rate Guarantees Product
Future Flex FIA
Asset Guard FIA
Par Rates
Interest Rates
Annual Strategies Guaranteed for 1-year period
Guaranteed for initial 1-year period
Biennial Strategies Guaranteed for 2-year period
and may change any time after 1 year
Guaranteed for 4 years
Guaranteed for 4 years
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The participation and interest rates are not banded by policy size
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The participation rates may never be lower than 20%, and the interest rate on the declared interest rate account may never be less than 0.50%
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Interest earned from the fixed bucket would credit the account daily in alignment with GBU Life’s current annuity products
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Par Rate Lock Procedure •
Identical to our current rate lock procedure, in the event of a par rate decrease, the new contract will receive the previous, higher rate if: •
The application is signed within three business days of the rate change date, and
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The application is in good order, and
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Either: If cash with app, the premium is received by GBU within seven business days, or If transfer/1035 exchange, the premium is received by GBU within 45 calendar days
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Reallocation •
If requested, funds will be reallocated on the first day of a new index term. Funds may not be reallocated at any other time.
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It is possible to transfer funds from an annual to a biennial strategy, or vice versa. However, funds can only be reallocated into or out of biennial strategies at issue, at the beginning of the 3rd year, or at renewal. (In other words, on even contract anniversaries.)
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We must receive a written request for reallocation at our Home Office no later than 5 business days before the new index term that applies to the eligible index account(s).
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When funds are received, they will be placed in the fixed interest rate account until the first day of the index term. At this time, funds will be transferred to the appropriate index strategies.
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Withdrawals •
Liquidity features are identical to GBU’s other annuities, namely: •
In all contract years, including the first year, the free withdrawal amount is 10% of the account value.
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If no withdrawal is taken in a given contract year, then the free withdrawal amount in the next contract year is 20% of the account value.
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Withdrawals will be first taken from the fixed interest rate account and then proportionally allocated across the investment options (unless the owner specifically requests the funds to be taken from specific index strategies).
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For qualified money, the required minimum distributions are free withdrawals if more than what is shown above.
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Living Benefit Riders (Chronic, Critical, Nursing Home, etc.) are available on FIA. 28
Surrender Charges Surrender Charges
Asset Guard FIA (SPDA)
Future Flex FIA (FPDA)
Year 1
8%
8%
Year 2
8%
8%
Year 3
7%
7%
Year 4
7%
7%
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Surrender charges are waived at the death of the owner
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Repeating surrender charge pattern with 45-day liquidity windows every 4th year
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During the 45-day liquidity windows, the entire account value is available for free withdrawal
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No market value adjustment
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45 Day Window There are no surrender charges during the first 45 days of each subsequent surrender charge period. During those 45 days, the owner may choose to: 1.
Continue their contract and apply their accumulation value to a new 4-year surrender charge period. Additional premium may be deposited during this time.
2.
Make a partial surrender without paying surrender charges and apply the remainder to a new surrender charge period.
3.
Surrender their contract without paying surrender charges.
Note: If the owner doesn’t provide written notice of their choice during the 45-day window, option 1 automatically becomes effective.
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Annuitization Options •
Annuitization may occur after the first surrender charge period: •
Certain Period
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Life Income
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Life Income with Certain Period
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Life Income with Installment Refund
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Life Income with Lump Sum Refund
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Joint and Survivor Life Income with Certain Period
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Joint and Reduced Survivor Life Income
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Joint and Reduced Survivor Life Income with Certain Period
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Joint and Survivor Life Income
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GBU Life FIA Product Summary •
Simple and easy-to-understand product design
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No caps that might limit earning potential
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Single premium and flexible premium versions available
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Liquidity provisions are the same as the MYGA and Future Flex
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Proprietary Barclays Agility Shield Index
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Short 4-year surrender period
Living Benefit Riders built into the product
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Asset Guard FIA allows for a 4-year guaranteed “lock” on par rates
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Easy, fast process with eApplication, eSignature and eDelivery
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Booster fees enable higher participation rates with greater earning potential
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Commissions paid daily
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Barclays Disclosures Neither Barclays Bank PLC (‘BB PLC’) nor any of its affiliates (collectively ‘Barclays’) is the issuer of any annuity products referenced herein (‘Annuities’) and Barclays has no responsibilities, obligations or duties to policyholders in Annuities. The Barclays Fortune 500 12% Index, the Barclays US Tech Index and the Barclays Agility Shield Index (collectively, the ‘Indices’), together with any Barclays indices that are components of the Indices, are trademarks owned by Barclays or are licensed to use by Barclays and, together with any component indices and index data, are licensed for use by GBU Financial as the issuer or producer of Annuities (the ‘Issuer’). Barclays’ only relationship with the Issuer in respect of the Indices is the licensing of the Indices, which are administered, compiled and published by BB PLC in its role as the index sponsor (the ‘Index Sponsor’) without regard to the Issuer or the Annuities or policyholders in the Annuities. Additionally, the Issuer may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with Annuities. Policyholders acquire Annuities from the Issuer and policyholders neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Barclays upon making an investment in Annuities. The Annuities are not sponsored, endorsed, sold or promoted by Barclays and Barclays makes no representation regarding the advisability of the Annuities or use of the Indices or any data included therein. Barclays shall not be liable in any way to the Issuer, policyholders or to other third parties in respect of the use or accuracy of the Indices or any data included therein.
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GBU Disclosures Interest rates and participation rates are determined at the date of funds receipt. Rates are subject to change without notice. Optional booster/contract fees increase the participation rate and are deducted from the index strategy value at the beginning of the index term. Increased participation rates can result in greater interest credited. Benefits may be taxable. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. GBU Life is the marketing name for GBU Financial Life (GBU), Pittsburgh, PA. GBU and its agents do not provide tax, legal or investment advise. Please consult with a legal or tax professional prior to the purchase of any contract. Annuities are not short-term products and are issued by GBU. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges. The maximum issue age is 95. The free look period is 10 days or 30 days for replacements unless noted herein. Withdrawals for amounts over those allowed during the guaranteed period are subject to surrender charges defined in the contract. The payout amount you will receive is based on your individual circumstances, the options you select at the time of application and your initial premium payment. Products and features may not be available in all states. This is a summary of the contract provisions. Please refer to the contract for details of surrender charge schedule, benefits and exclusions. NOT A DEPOSIT OF A BANK AND MAY LOSE VALUE—NOT BANK GUARANTEED. Contract Form Numbers: ICC23_FPDA_IA_CON_(01-23), FPDA_IA_CON_FL_(07-23), FPDA_IA_CON_(07-23), FPDA_IA_CON_(07-23)ND, ICC23_SPDA_IA_CON_(01-23), SPDA_IA_CON_FL_(07-23), SPDA_IA_CON_(07-23), SPDA_IA_CON_(07-23)ND).
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Thank you… Questions? GBU Fixed Index Annuity (FIA) Training Presentation
inside.gbu.org/contact 35