Death benefit Policy loans impact the policy’s death benefit. The policy’s death benefit will be reduced by any outstanding loan payoff amount. Fixed loan The loaned portion of the account value will be credited with interest at the rate of 2.5% (1.0% guaranteed) and will be charged with interest at the following rates: • Years 1-10: 3.38% in advance, equivalent to 3.50% in arrears (current and guaranteed); net rate: 1.00% current (2.50% guaranteed). • Years 11+: 2.44% in advance, equivalent to 2.50% in arrears (current and guaranteed); net rate: 0.00% current (1.50% guaranteed). A fixed loan, whether or not repaid, will have a permanent effect on the death benefit and policy values, because loaned amounts will be excluded from the participation accounts in the calculation of index credits. Variable loan Variable loans are available beginning in year 3. With a variable loan, the loaned amount and the loan interest remains in the account(s) to which it is already allocated and will continue to have interest credited in the same manner. The loaned amount will be charged an interest rate that is tied to the Moody’s Corporate Bond Yield Average as published by Moody’s Investors Services, Inc. The loan rate will be set each policy anniversary and will not be changed more often than once a year. The rate will never be more than the greater of Moody’s Corporate Bond Yield Average for the calendar month ending two months before the beginning of the policy year or the rate used to compute the guaranteed account value plus 1%. Additionally, the variable interest rate will never exceed the declared fixed account interest rate for the calendar month ending two months before the policy anniversary plus 1%. Overloan Protection Benefit This rider protects the policyholder from a policy lapse (and potentially the resulting taxation) when there is a large outstanding loan balance by providing paid-up life insurance. There is no cost for this endorsement, unless it is exercised. The endorsement may be exercised if the following conditions are met: • The insured is age 75 or older; • The policy is in its 11th policy year or later; • The outstanding loan balance is more than the specified amount and more than 92.5%, but less than 96% of the account value. If the outstanding policy loan is greater than 96% of the account value, the client can repay loan balance to bring the balance within the range of 92.5% and 96% of account value. Once the endorsement is elected, the following changes will occur: • On the date the benefit is elected, 3.5% of the account value is deducted and the specified amount will be equal to the remaining account value multiplied by the applicable IRC Section 7702 corridor factor. No further changes in the specified amount will be allowed. • The death benefit option will be set to Option A and no further changes in the death benefit option will be allowed. • The death benefit proceeds will equal the death benefit on the insured’s date of death minus any outstanding loan balance. • Any rider attached to the policy will terminate, and any charges or fees associated with the riders will cease. • No additional premiums will be accepted. • No additional partial withdrawals and loans will be allowed, except for automatic loans to cover loan interest not paid when due. • No monthly deductions will be taken. • All amounts not allocated to the loan account w ill be allocated to the fixed account. • The death benefit at any time after the benefit is elected will equal the greater of the specified amount, the account value times the appropriate corridor factor or the outstanding loan balance times the appropriate corridor factor. Termination: Endorsement will terminate at the earliest of policy termination or written notice from the owner to terminate this rider. Reinstatement: The endorsement may be reinstated upon reinstatement of the policy.
For financial professional use only. Not for use with clients.
IUL-AG-0723
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