MYGA Product Training

September 8th, 2021

MYGA

A MYGA, or Multi-Year Guaranteed Annuity is a single premium, fixed deferred annuity with a 2, 3, 4 or 5-year rate guaranty.

Our product also has several enhanced living benefit riders, which allows for additional liquidity under certain conditions.

GBU’s MYGA Contract

Owner Driven Contract

Qualified & Non-Qualified

Joint ownership allowed on non-qualified accounts with a spouse as the joint owner only. Each owner must also be an annuitant, unless there is a non-person entity owner. Also each spouse must be the beneficiary of the other.

Max Issue Age: 95

Maturity Date: 110

GBU’s MYGA Contract Cont.

Min Deposit: $25,000 Max Deposit: $2,000,000 (W/O Approval)

Free Look Period: 10 days, unless it is a replacement, then 30 days

Additional premium can be added during the first 90 days of the contract or during the 45-day liquidity window

Statements are mailed on an annual basis, but available on the member portal quarterly

Owner Driven vs Annuitant Driven Contract

Annuity contracts are either owner or annuitant-driven, depending which of those lives triggers the annuity’s key provisions

An owner-driven annuity terminates upon the death of the owner. The death benefit then passes down to the designated beneficiary. In the case of joint owners, the joint owner can continue the contract

If the annuitant in an owner-driven contract dies first, the owner can become the annuitant or name a new annuitant, and the contract continues unchanged

In an annuitant driven contract, upon the death of the annuitant the annuity terminates, and the death benefit passes down to the designated beneficiary

Free Withdrawal Provision

In all contract years, including the first year of the contract, 10% of the account value. If no withdrawal is taken in a year, member may take out a max of 20% the next year

Interest may be taken, but it is not in addition to the 10% and is calculated as part of the total 10%

For qualified money, RMD’s are permitted, even in excess of the 10%. During the 45day renewal window, the entire contract value is available for free withdrawal

Market Value Adjustment (MVA)

An adjustment (positive or negative) that is applied when an annuity is liquidated early. It is designed to share some of the investment risk associated with the annuity between the contract holder and the company. If the client takes an early withdrawal or surrenders the annuity (other than a partial surrender of no more than the “penalty free” amount); and the annuity has an MVA, the client might have a higher or lower cash value at the time the money is withdrawn.

In general, if the interest rates available on fixed income investments have increased since the beginning of the interest rate guarantee value, and if the interest rates available on fixed investments have decreased since the beginning of the interest rate guarantee period, the MVA will increase the customer’s cash surrender value. GBU will be using a Bloomberg Index to calculate the MVA.

Market Value Adjustment Example

Assumptions:

 $100,000 premium

 5-year surrender charge and market value adjustment period

 No free partial surrender provision, no prior partial surrenders taken

 3% credited interest rate

Thus, the Accumulated Value = $100,000 x (1.03)3 = $109,272.70 and the Minimum Nonforfeiture Value = $100,000 x 87.5% x (1.01)3 = $90,151.34

Full surrender is requested on the third contract anniversary, when the surrender charge is 7% and the number of days remaining in the market value adjustment period is 1,095 (3 years remaining)

 Surrender charge = 7% x $109,272.70 = $7,649.09

 The maximum MVA is the difference between the Surrender Value and the Minimum Nonforfeiture Value. Thus, it is limited, equally in both directions, to ($109,272.70)

 Accumulated Value – $7,649.09 surrender charge) – $90,151.34 Minimum Nonforfeiture Value = $11,472.27

Market Value Adjustment Example ( Cont )

Surrender Charges

During the Initial Guarantee Period, withdrawals that are greater than the Penalty-Free Withdrawal amount are subject to a MVA (positive or negative) and a Withdrawal Charge according to the schedule below:

Death Benefit

The death benefit is equal to:

• the accumulation value on the date of death or • the minimum nonforfeiture value as of the date of death (the regulatory guaranteed minimum); whichever is greater

Death Benefit Payout

Death of the Owner:

• Owner dies before the maturity date or

• Owner is a non-natural owner (corporation or trust) and any Annuitant dies before the maturity date or

• No other payment of death benefits has begun

The Death Benefit will be paid to

• The joint owner, if any; otherwise

• The beneficiary if living; otherwise

• Your estate, if you are a natural owner; otherwise

• The annuitant’s estate, if you are a non-natural owner

Death Benefit ( Cont )

Death of the Annuitant:

• the annuitant dies before the maturity date or

• no other payment of death benefits has begun

The Death Benefit will be paid to:

• The surviving natural owner(s), if any; otherwise

• The beneficiary if living; otherwise

• The annuitant’s estate, if you are a non-natural owner

The Amount of the death benefit paid equals:

• The accumulation value or

• The minimum nonforfeiture value

Annuity Payout Options

• The contract owner may choose to annuitize the contract value into an annuity payment at the end of the initial guaranteed term or during or after any successive guaranteed term. The amount applied to the annuitization option is the account value, with no surrender charge or MVA applied. The options available are:

a) Customizable Period Certain 5 Years to 25 Years

b) Life Income

c) Life Income Period Certain

d) Life with Refund (Installment or Lump Sum)

e) Joint & Survivor Income

f) Joint & Survivor with Certain Period

g) Joint & Reduced Survivor

h) Joint & Survivor Reduced Life Income

i) Joint & Survivor Reduced with Certain Life Period

j) Lump Sum

Waiver of Surrender Charges -Living Benefits

Activities of Daily living and Severe Cognitive Impairment Benefit

Waiver:

• Activities of Daily LivingBathing, Continence, Dressing, Eating, Toileting and Transferring (moving in and of bed, chair etc.)

Critical Illness Benefit

Waiver

• Critical Illness-Cancer, end state renal failure, heart attack and stroke

Waiver of Surrender Charges -Living Benefits

Nursing Home Confinement

• Nursing Home-A facility or part of a facility (such as a hospital or other clinical institution that:

1. Has as its main function providing skilled, intermediate, or custodial care;

2. Is operated and licensed as a skilled nursing home or intermediate care facility according to

3. The laws of the state in which it is doing business;

4. Provides 24-hour per day nursing care to at least three persons by, or supervised by, a Nurse on duty or on call at all times;

5. Is supervised by a Physician; and

6. Keeps an ongoing medical record of each patient in accordance with generally accepted professional standards and practices.

Nursing Home does not include a place primarily used for: (a) rest; or (b) day care. Nursing Home also does not include: (a) retirement homes or community living centers; (b) homes for the aged; (c) assisted living facilities; and (d) facilities primarily affording custodial, educational or rehabilitative care.

Waiver of Surrender Charges -Living Benefits

Home Health Care Benefit Waiver:

• Home Health Care – Skilled Nursing or other professional medical services in your residence, under the supervision of a physician, including, but not limited to:

A. Part-time intermittent skilled nursing services

B. Home health aide services

C. Physical Therapy

D. Occupational Therapy

E. Speech Therapy or audiology services

F. Medical social services

Proposed Interest Rates

Minimum Guarantees

• The nonforfeiture rate will be no lower than 0.50% or the rate prescribed in the law of the state where the policy is delivered or issued for delivery, if higher, and no higher than 3%. • For 2021 issues, the Guaranteed Minimum Annual nonforfeiture Interest Rate is 1% in all states

• The only time a minimum guaranteed rate comes into play is during the 45-day renewal window---it would only apply if the new money rate offered was less than 0.50%

Rate Change Process

• Rates are evaluated every week on Wednesday at 9am

• Areas considered when determining rate changes:

• Treasury Rates

• Wellington & AAM portfolio rates of return

• Competitor rates

• Cash Flows/Durations

• Communication of Rate change/no change sent every week

• Rate change occurs a week from date of announcement

• Announcement to field in email and text

• Rate sheet posted to website-two rate sheets current and future

• On date of new rate old rate sheet removed from website

Rate Lock

In the event of a rate decrease, the new contract will receive the previous higher rate if:

1. the application is signed within 3 business days of the rate change date

2. the application is in good order and if either,

a) If the cash was received with the application, the premium is received by GBU within 7 business days

b) If transfer/1035 exchange, the premium is received by GBU within 60 calendar days

Renewal of Policy

During the 45 days after the end of the Initial Guaranteed Term AND contract anniversary, the client can choose to invest for an additional term or surrender the contract in part or in full

If no action is taken, the contract will automatically continue for another guaranteed term equal to the initial term chosen at the then current rate

At renewal, the surrender charge and MVA will also restart as of the policy anniversary--The contract can be surrendered at anytime after 45 days with surrender charges and a MVA (positive or negative)

MYGA

• Single Premium

• New Application

• Rate Guaranteed for Term

• Years offered 2,3,4,5

• Free withdrawal 10% with a rollup

• Owner Driven Contract

• Joint Owners available on NQ accounts

• Min-Max $25K-$2M

• Max Issue age-95

• Free Look: 10 days unless replacement up to 30 days

• Waiver of Surrender Charges (Nursing Home, Critical Illness, Activities of Daily Living, Cognitive Impairment

• Minimum Guaranteed Rate-0.15%