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Income Pay Pro SM fixed index annuity | Issued by North American Company for Life and Health Insurance®
Annuity
Guaranteed income that lasts a lifetime.
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Income Pay Pro SM Guaranteed lifetime income for whatever the future holds. Many people are concerned about whether or not they have focused enough on preparing for retirement. With the disappearance of pension plans, a potential uncertain future for Social Security, and a fluctuating economy, consumers are facing a challenge to know where to turn with their retirement savings. When you are nearing retirement you want to make sure you can protect your retirement nest egg. Protect and grow what you have worked hard to earn You want to make sure your retirement savings are not only protected from market downturns, but that there’s opportunity for growth as you approach retirement. Protection from inflation You want to be prepared for the rising costs of goods and services. Prepare for unexpected costs You may want the access to additional funds in case unexpected nursing home costs arise and you need care. Flexibility to enjoy your retirement You want control of your money - to travel, to start a new hobby, buy a vacation home...to help pay for whatever it is that you want to do in your golden years.
Income Pay Pro fixed index annuity could help you and your family plan for the future. Read on to find out how...
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A retirement “paycheck” that lasts a lifetime
Income Pay Pro is a modified single premium fixed index annuity with an embedded guaranteed lifetime withdrawal benefit (GLWB) rider 1 offering competitive, guaranteed lifetime income 2 . Lifetime payment amounts (LPAs) are made to you as long as you live or, if applicable, joint annuitant lives. It’s a retirement “paycheck” you can count on. Retirement income Income Pay Pro provides multiple options for taking retirement income. So you’re in the driver’s seat in determining how and when you start receiving payments. Growth Fixed and index account options offer upside potential without downside market risk. Your premium is protected from market downturns. Liquidity options If you need access to funds, Income Pay Pro has different liquidity provisions that can help you when you need it most.
With Income Pay Pro fixed index annuity, you can take advantage of the benefits a fixed annuity offers, such as: Tax deferral improves growth potential Your annuity’s value grows on a tax-deferred basis, meaning more of it is working for you. Tax-deferred growth means you don’t owe taxes until you access funds, allowing more time for growth potential. Work with your tax advisor to find out how this might work for you. Under current law, annuities grow tax deferred. An annuity is not required for tax deferral in qualified plans. Annuities may be subject to taxation during the income or withdrawal phase. Please note that neither North American nor any financial professionals acting on its behalf, should be viewed as providing legal, tax or investment advice. Consult with and rely on your own qualified advisor. May avoid probate By naming a beneficiary, you typically minimize the delays, expense and publicity often associated with probate.
Please consult with and rely on your own legal or tax advisor. Annuitization payout options
By annuitizing your contract (electing an annuity payout option) or by turning on lifetime payment amounts (LPAs), you have access to a guaranteed income stream that will last as long as you live or, if applicable, joint annuitant lives. Issue ages (may vary by state) Available issue ages 40-79 (qualified and non-qualified). Minimum premium Modified single premium, $20,000 at issue, qualified and non-qualified.
1. The embedded guaranteed lifetime withdrawal benefit (GLWB) rider includes a rider charge of 1.15% of the GLWB value, deducted as a partial surrender from the accumulation value on the contract anniversary, while the rider is in effect. 2. Lifetime income refers to guaranteed payment of lifetime payment amounts (LPA’s) as defined in the GLWB Rider included in this contract. It does not refer to interest credited to the contract. Please consult with your own tax advisor regarding tax treatment of LPAs, which will vary according to individual circumstances.
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Your Income Pay Pro annuity To understand how your annuity works, it’s important first to understand a few basics about the accumulation value, GLWB rider and GLWB value in your Income Pay Pro annuity. Accumulation value The accumulation value equals 100% of premium; plus, interest credited, less withdrawals, if any. Your accumulation value is the value used to determine penalty-free withdrawal amounts and your surrender value. The surrender value is the amount you would receive if you surrendered your contract during the surrender charge period. Additionally, any remaining accumulation value plus potential interest credits for the partial contract year as of the date of death may be paid to your beneficiaries upon your passing. For detailed information on charges incurred if the contract is surrendered, see the surrender charge section. Guaranteed lifetime withdrawal benefit (GLWB) rider and lifetime payments The embedded guaranteed lifetime withdrawal benefit (GLWB) rider is designed as a way to generate income payments for life (called lifetime payment amounts (LPA)) without incurring any applicable surrender charges or market value adjustments (MVA), even if the accumulation value is reduced to zero. The LPA is based on the age of the covered person. The covered person(s) is the annuitant(s). If there are joint covered persons, the LPA is based on the youngest covered person. Guaranteed lifetime withdrawal benefit (GLWB) value The GLWB value initially equals 100% of your premium and is used to calculate your lifetime payment amounts (LPA). This value is not the same as the accumulation value and is not available as a death benefit. This value is never available as a lump sum withdrawal. Guaranteed lifetime withdrawal benefit (GLWB) rider is embedded in the annuity and has an annual charge of 1.15% of the GLWB value.
Here’s a summary of how your account value and GLWB value work:
Accumulation value
GLWB value
• Premiums received the earlier of the first contract year and lifetime payment election • 7% (guaranteed) annual GLWB roll-up amount prior to lifetime payment election • Withdrawals, including penalty- free withdrawals, RMDs, and LPAs will decrease the GLWB value on a proportional basis
• Premiums received the earlier of the first contract year and lifetime payment election • Interest credits
Increased by...
• Any withdrawals • Any LPAs
Decreased by...
• Calculating penalty-free withdrawals • Annuity payout options • Death benefit calculation • Surrender value calculation
Used for...
• LPAs
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Enhancing your retirement
Income Pay Pro offers a mix of both fixed and indexed account options, including:
Fixed account Income Pay Pro provides a fixed account that offers a fixed interest rate that is guaranteed for the first contract year. The fixed interest rate is declared by the company each year thereafter, but will never be less than the minimum guaranteed fixed account interest rate provided by your contract. Set your strategy You have total control over how your initial premium is allocated between our fixed account or indexed account options. Choose from several crediting methods (more details on the following pages):
Accumulation value The accumulation value is 100% of premium, allocated to the fixed and indexed account options, less any withdrawals plus any interest credits. The accumulation value will be reduced by the amount of any withdrawals (including any rider charges), but cannot decrease due to negative index performance. Full Surrender - Surrender value If you decide to surrender or terminate your Annuity Contract, the surrender value is the amount that is available to you as a lump sum. The surrender value is equal to the accumulation value, subject to market value adjustment, less applicable surrender charges, and applicable state premium taxes. The surrender value will never be less than the minimum requirements set forth by state law, at the time of issue, in the state where the Annuity Contract is delivered or issued for delivery. The minimum surrender value will never be less than 87.5% of all premiums less any surrenders (after MVA or reduction for surrender charges) accumulated at a rate not less than the rate required or otherwise directed by your Annuity Contract.
• Monthly Point-to-Point with Index Cap Rate • Annual Point-to-Point with Index Cap Rate • Annual Point-to-Point with Participation Rate • Two-year Point-to-Point with Participation Rate • Fixed Account 1
1. The declared fixed rate is an annual effective rate. Interest is credited to the fixed account daily.
How transfers work “Did you know?”
You may elect to transfer funds between the fixed account and index account options after the first contract year for the annual index account strategies (or every two years if you choose the Two-year Point-to-Point strategy). You may also elect to transfer between strategies annually (or every two years for amounts allocated to the two-year strategy). Based on current tax laws, these transfers between options will not be taxable or subject to surrender penalties. Transfers must be specified dollars or whole percentages (no decimals).
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Set your strategy In addition to the fixed account, here are your crediting methods. Diversify the premium among the following index account options Crediting methods* Index availability* Monthly Point-to-Point (subject to an index cap rate) • S&P 500® Annual Point-to-Point (subject to an index cap rate) • S&P 500®
• S&P Multi Asset Risk Control 5% Excess Return • Morgan Stanley Dynamic Global Index • S&P Multi Asset Risk Control 5% Excess Return • Morgan Stanley Dynamic Global Index
• S&P 500® • Fidelity Multifactor Yield Index 5% ER • Goldman Sachs Equity TimeX Index
Annual Point-to-Point (subject to participation rate)
• S&P 500® • Fidelity Multifactor Yield Index 5% ER • Goldman Sachs Equity TimeX Index
Two-year Point-to-Point (subject to participation rate)
In your contract the applicable period of time for your crediting method is referred to as a “term”.
* Index(es) and strategies may not be available in all states.
Pick from a wide variety of index * options S&P 500 ® Index (SPX)
Morgan Stanley Dynamic Global Index (MSUSMSDG) The Morgan Stanley Dynamic Global Index (MSDG) (the “Index”) allocates among global assets with the goal of diversified exposure across and within equities, fixed income, and commodities. Moreover, the index encompasses tailored risk management tools to address the unique risk and return characteristic of each asset class in an effort to respond to changing market conditions. The index is rules-based and targets a 5% annual realized volatility by allocating to cash with the goal of preserving gains during periods of high volatility and using leverage with the goal of capturing returns when volatility decreases. Goldman Sachs Equity TimeX Index (GSEQTMX) The Goldman Sachs Equity TimeX Index (the “Index”) is a rules-based strategy designed to provide long-only exposure to an equity component (the SPDR® S&P® 500 ETF). The Index’s exposure to the equity component is dynamically adjusted each index business day based on certain market signals, including calendar based signals and price patterns, subject to an exposure floor, an exposure cap, and a rebalancing cap. The Index applies a daily volatility target, which can further increase or decrease the Index’s exposure to the equity component. The Index is calculated on an excess return basis, and is subject to servicing and rebalancing costs and a deduction rate of 0.50% per annum (accruing daily). *Past index performance is not intended to predict future performance and the index does not include dividends.
Widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index includes 500 leading companies in leading industries of the U.S. economy. S&P Multi-Asset Risk Control 5% Excess Return Index (S&P MARC 5% ER) (SPMARC5P) The S&P MARC 5% ER Index is a multi-asset excess return index that strives to create more stable index performance through diversification, an excess return methodology, and volatility management. The index manages volatility by adjusting the allocations among multiple asset classes and by allocating to cash in certain market environments. The index is managed to a 5% volatility level. Fidelity Multifactor Yield Index SM 5% ER Index (FIDMFYDN) The Fidelity Multifactor Yield Index 5% ER (the “Index”) is a multi-asset , rules-based index that blends a multifactor equity starting universe with U.S. Treasuries, and uses a dynamic allocation approach that seeks to reduce volatility and deliver a more consistent investment experience over time. The starting portfolio is a combination of 6 factors with pre-determined weights and a tilt towards high dividend yielding companies. A fixed income overlay is applied, and the volatility levels of the combined portfolio are analyzed daily and components are adjusted to meet a 5% volatility target.
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Growth potential
The Income Pay Pro fixed index annuity has growth opportunities that you can take advantage of as you build your retirement savings. How your annuity grows Accumulation value growth The interest earned in the fixed and indexed accounts is applied to your contract’s accumulation value. Guaranteed lifetime withdrawal benefit (GLWB) rider The embedded guaranteed lifetime withdrawal benefit (GLWB) rider is designed as a way to generate income payments for life (called lifetime payment amounts (LPA)) without incurring any applicable surrender charge or market value adjustments (MVA), even if the accumulation value is reduced to zero. The LPA is based on the age of the covered person. The covered person(s) is the annuitant(s). If there are joint covered persons, the LPA is based on the youngest covered person. Guaranteed lifetime withdrawal benefit (GLWB) value The GLWB value is used to calculate the lifetime payment amounts. This value is not used to calculate the death benefit or penalty-free withdrawals and cannot be withdrawn as a lump sum. This value can grow based on the GLWB roll-up rate (also referred to as GLWB value increase percentage), prior to the lifetime payment election date, and any premiums received the earlier of the first contract year and lifetime payment election. Withdrawals will reduce the GLWB value proportionally. The GLWB value initially equals 100% of your premium. The GLWB value is not the same as the accumulation value. GLWB roll-up amount Features a 7.00% roll-up rate (also known as the GLWB value increase percentage) compounded for up to 10 years (or until lifetime payment election date (LPED), if earlier). The roll-up rate is a guaranteed rate applied only to the GLWB value that compounds annually for the GLWB roll-up period (also referred to as the GLWB increase period). It offers growth for your GLWB value, even if you take a penalty-free withdrawal (also referred to as a penalty-free partial surrender) from your accumulation value. The GLWB roll-up amount will not occur in a particular contract year if an excess withdrawal is taken in that contract year. If LPAs are started during the ten year period, the roll-up rate will no longer be applied in following years.
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Determining your lifetime payment amount (LPA)
1
GLWB value The GLWB value initially equals 100% of your premium and is used to calculate your lifetime payment amount (LPA).
Person A purchased a Income Pay Pro fixed index annuity with $200,000 premium. The following table illustrates what this means for their initial GLWB value.
$200,000 $200,000
Premium on issue date
This hypothetical example is for illustrative and educational purposes only.
GLWB value on issue date
2
Roll-up rate Features a 7.00% roll-up rate (also known as the GLWB value increase percentage) compounded for up to 10 years (or until lifetime payment election date (LPED), if earlier). The roll-up rate is a guaranteed rate applied only to the GLWB value that compounds annually for the GLWB roll-up period (also referred to as the GLWB increase period). It offers growth for your GLWB value, even if you take a penalty-free withdrawal (also referred to as a penalty-free partial surrender) from your accumulation value. If LPAs are started during the ten year period, the roll-up rate will no longer be applied in following years. Roll-up rate IS applied when: • No withdrawals in excess of the available penalty- free partial surrender are taken Roll-up rate is NOT applied when: • LPAs have been elected • Withdrawals in excess of the available penalty-free partial surrender are taken
Contract anniversary
GLWB value
Roll-up rate
At issue
$200,000
1
$214,000
2
$228,980
7.00% compound for 10 years Assumes a $200,000 premium at issue and no withdrawals during this 10-year period.
3
$245,009
4
$262,159
5
$280,510
6
$300,146
7
$321,156
8
$343,637
9
$367,692
10 $393,430 This hypothetical example is for illustrative and educational purposes only.
3
Lifetime payment percentage Your LPAs will be determined by multiplying your current GLWB value by the lifetime payment percentage (LPP) based on your attained age. You will need to notify North American to begin receiving LPAs. However, after this election is made, roll-ups will no longer be available.
Here’s a hypothetical example of person A’s available LPAs depending on when they begin taking LPAs:
Contract anniversary
GLWB value
Level LPP
Available annual LPA
5 (Age 55)
$280,510 $393,430
6.35% 6.85%
$17,812
10 (Age 60)
$26,950
This hypothetical example is for illustrative and educational purposes only.
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Lifetime payment percentages (LPPs)
Level LPA
Increasing LPA
Single covered person
Joint covered person
Single covered person
Joint covered person
Attained age of covered person
Attained age of covered person
50-55
6.35% 6.45% 6.55% 6.65% 6.75% 6.85% 6.95% 7.05% 7.15% 7.25% 7.35% 7.45% 7.55% 7.65% 7.75% 7.85% 7.95% 8.05% 8.15% 8.25% 8.35% 8.45% 8.55% 8.65% 8.75% 8.85%
5.85% 5.95% 6.05% 6.15% 6.25% 6.35% 6.45% 6.55% 6.65% 6.75% 6.85% 6.95% 7.05% 7.15% 7.25% 7.35% 7.45% 7.55% 7.65% 7.75% 7.85% 7.95% 8.05% 8.15% 8.25% 8.35%
50-55
4.35% 4.45% 4.55% 4.65% 4.75% 4.85% 4.95% 5.05% 5.15% 5.25% 5.35% 5.45% 5.55% 5.65% 5.75% 5.85% 5.95% 6.05% 6.15% 6.25% 6.35% 6.45% 6.55% 6.65% 6.75% 6.85%
3.85% 3.95% 4.05% 4.15% 4.25% 4.35% 4.45% 4.55% 4.65% 4.75% 4.85% 4.95% 5.05% 5.15% 5.25% 5.35% 5.45% 5.55% 5.65% 5.75% 5.85% 5.95% 6.05% 6.15% 6.25% 6.35%
56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79
56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79
80+
80+
Starting your LPAs “Did you know?”
You can begin taking LPAs immediately and as early as age 50. Provided that no excess withdrawals have been taken, LPAs will be available even if both the accumulation value and GLWB value are reduced to zero. You also have the flexibility to start and stop payments at any time. Electing LPAs is not the same as annuitizing your underlying annuity contract. The start of your LPAs is referred to as the lifetime payment election date (LPED). Future payments will not decrease so long as you don’t withdraw more than your LPA in any contract year. North American will report LPAs as withdrawals. Additionally, any withdrawal taken before age 59 1/2 may be subject to additional IRS penalty taxes. Consult your tax advisor regarding tax treatment of LPAs, which will vary according to your individual circumstances.
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Income Pay Pro adapts to your retirement
Just as your retirement and life needs change, your retirement income should be able to adapt. Income Pay Pro offers two ways you can customize your own LPA as well as two ways to help you and your loved ones when you need it most.
LPA options LPA reserve
Nursing home multiplier Spousal continuance
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LPA options Level vs. increasing LPA While the level LPA design ensures a consistent LPA you cannot outlive, the increasing LPA option (also known as current increasing option percentage) offers a way to help address the rising costs of goods and services when it comes to your retirement. How it works When you decide to start your lifetime payments, you’ll first need to determine whether the level LPA option or the increasing LPA option is right for you. Here is how they compare: 1) Level LPA LPA is a set amount and will not increase. It can be decreased due to any excess partial withdrawals. 2) Increasing LPA While you would receive a lower initial LPA than with the level LPA option, your LPA would increase by an annual increase percentage each year. The annual increase percentage will be declared as of your LPED, but will never be less than that guaranteed minimum increasing rate. The LPA annual increase percentage will not change once LPAs have started. LPAs can be decreased due to any excess partial withdrawals. Contact our customer service team for the current annual increasing LPA percentage. This rate is subject to change. The rate that applies to your contract will be the rate declared as of your lifetime payment election date. This rate will never be less than the minimum guaranteed increasing option percentage of 0.25%.
Hypothetical example of LPA options
Attained Age
Level
Increasing
55
$17,812
$12,202
60
$17,812
$13,472
70
$17,812
$16,423
80
$17,812
$20,019
This hypothetical example is for illustrative and educational purposes only. Assumes LPA begins after the fifth contract anniversary, at age 55. The increasing LPA assumes a 2% annual increase.
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LPA reserve Flexible payments for a flexible retirement
We understand that your retirement needs may change. Perhaps you want to prepare for an unexpected expense, plan a dream vacation, pay for a grandchild’s college or simply have LPA flexibility later in life. The LPA reserve feature provides you the flexibility to customize your LPAs to fit your personal goals. How it works In any year after you have elected your LPA, you can choose to take less than the full LPA. At the end of the contract year, the portion of LPA that is not taken will be placed in the LPA reserve subject to the maximum LPA reserve. The LPA reserve value is available to be taken as a lump sum at any time or periodically withdrawn until depleted. The LPA reserve is not available after the maturity date. Here are two hypothetical scenarios of how you could use the LPA reserve compared to taking the full LPA:
$8,906 $17,812 Year 5
$8,906 $17,813 $8,906 $4,453 Year 6 $17,812 $26,719 $4,453
$17,812 $11,876 $23,749 $4,453 Year 7 $17,812 $40,078
$17,812 $5,939 $23,749 $17,812 Year 8 $17,812
$17,812 $17,812 Year 9
Scenario 1 - full LPA taken
LPA taken LPA taken
Scenario 2 - higher LPA later
$0
Cumulative LPA reserve $8,906
Total withdrawal
$8,906 $4,453
$23,751 $17,812
LPA taken
Scenario 3 - lump sum withdrawal
$0
$0
Cumulative LPA reserve $13,359
Total withdrawal
$4,453
$4,453
$57,891
$17,812
This hypothetical example is for illustrative and educational purposes only.
Person A withdraws full LPA reserve to help pay for his granddaughter’s college tuition
LPA amount $60,000
$50,000
Person A withdraws a portion of the LPA reserve over a few years to offset travel or medical expenses
$40,000
$30,000
$20,000
$10,000 $0
Year 5
Year 6
Year 7
Year 8
Year 9
This hypothetical example is for illustrative and educational purposes only.
LPA reserve “Did you know?” If the LPA reserve equals or exceeds the accumulation value, the LPA reserve has reached it maximum. If the accumulation value is reduced to zero, any LPA reserve at that time is paid to you in a lump sum and the LPA reserve is no longer available. As long as the accumulation value is greater than zero, if the LPA reserve is greater than the accumulation value, then the death benefit will be the LPA reserve instead of accumulation value.
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Nursing home multiplier Not available in the state of California. Double the lifetime payment amount when you need it most While nobody likes to think about it, the potential cost of nursing home care can take a substantial bite out of retirement savings. This, in turn, can have a negative effect on ongoing retirement income. With the nursing home multiplier (referred to in the rider as the LPA multiplier) feature of your Income Pay Pro fixed index annuity, you have the option to receive an increased lifetime payment, if needed, to help with nursing home expenses or other needs. How it works With the nursing home multiplier feature, the LPA can be doubled if you become confined to a qualified care center, as defined in the rider. This benefit is available as early as age 50, and it can be accessed for up to five annual payments. This benefit does not have to be utilized for a consecutive five year period. You can elect the nursing home multiplier benefit as long as all of the following conditions are met: • you were not confined to a qualified care center on the issue date; and • you wait at least two years after contract issue date before requesting the nursing multiplier benefit; and • you are confined to a qualified care center for at least 90 consecutive days; and • you provide written proof to North American of medically-necessary confinement; and • the accumulation value is greater than zero. On each contract anniversary after electing the nursing home multiplier, your LPA will revert back to the original LPA if you do not provide written proof of continued confinement. If the nursing home multiplier benefit limit, which is five annual payments, has been reached you will not receive the nursing home multiplier benefit in the following year.
Before confinement
Qualifications met and nursing home multiplier elected
Nursing home multiplier feature ends
Contract year 7 $35,625
Contract year 8 $35,625
Contract year 9 $35,625
Contract year 10 $35,625
Contract year 11 $35,625
Contract year 5 $17,812
Contract year 6 $17,812
Contract year 12 $17,812
This hypothetical example is for illustrative and educational purposes only.
Nursing home multiplier plus LPA reserve Did you know?” If you are receiving doubled LPAs from the nursing home multiplier, you can still utilize the LPA reserve by deferring all or a portion of the doubled LPA. During this time of need, the LPA reserve can work in tandem with the nursing home multiplier providing strong flexibility.
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Spousal continuance Your spouse may be able to continue receiving GLWB benefits after your death. If your surviving spouse is the sole beneficiary, he or she may have the option to use a spousal continuance to keep the Income Pay Pro contract and GLWB rider in force. The table below outlines the potential outcomes:
Annuity contract format
Before lifetime payment election date (LPED)
After lifetime payment election date (LPED)
Surviving spouse may continue the GLWB rider as the new covered person, until his/ her death. LPED will be established by the surviving spouse and LPA will be based on surviving spouse’s issue age and the attained age on the LPED. Surviving spouse may continue the GLWB rider as a single covered person. Any nursing home multiplier benefit paid before the election of spousal continuance will count towards the multiplier benefit limit after spousal continuance. The LPA (based on the surviving spouse as a single covered person) will be paid until the death of the surviving spouse as the single covered person.
Single covered person
Spousal continuation of the rider is not available. If contract is continued, the GLWB rider will terminate.
Surviving spouse may continue the GLWB rider. The LPA (based on the younger of the joint covered persons) established at LPED will continue to be paid until the death of the second joint covered person.
Joint covered person
Ownership For purposes of this rider, the owner and the annuitant must be the same. If there are joint owners, they must also be joint annuitants. Joint annuitants must be spouses. If the owner is not a natural person, the annuitant(s) are considered covered person(s) under this rider. Change of ownership is only allowed when changing from a non-natural owner to the annuitant(s) or pursuant to spousal continuance provisions of the Contract and this rider.
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Options for accessing funds How withdrawals impact how your annuity grows
If you take withdrawals in excess of those allowed penalty-free, you won’t experience the full benefits of this annuity. Withdrawals will cause your accumulation value and LPAs (if started) to be reduced by the same percentage withdrawn from your contract, which may represent a larger dollar amount than withdrawn. Excess withdrawals may be subject to surrender charges and market value adjustments (if applicable) and will ultimately impact your future lifetime payments and/or death benefit. Penalty-free withdrawals Like most annuities, you’ll be limited on when and how much you can withdraw from your annuity penalty-free. However, Income Pay Pro allows you to access a portion of funds each year. Starting in the first contract year, you may choose to take a penalty-free withdrawal (also known as a penalty-free partial surrender) of up to 10% of the beginning of the year accumulation value each year. Taking out more money than what’s available penalty-free will incur a surrender charge. A market value adjustment may also apply. Withdrawals may be treated by the government as ordinary income. If taken before age 59 1/2, you may also have to pay a 10% IRS penalty. Withdrawals will reduce your accumulation value accordingly. Your annuitization payout options Alternatively to LPAs or penalty-free withdrawals, you may decide to annuitize your contract. You can choose to receive annuity payments based on your choice of several annuity options. Once you elect an annuitization option, it cannot be changed and all other rights and benefits under the annuity end. The payment amount and number of payments will be based on your annuity’s surrender value and the annuitization option you choose (state variations exist). See table for available payout options.
Payout options In all states except Florida, you may select an annuity payout option at any time. If selected during the surrender charge period, your payout will be based on the surrender value rather than the accumulation value. Choose from:
• Income for a specified period • Income for a specified amount • Life income with a period certain • Life income • Joint and survivor life income
For Florida: You may select an annuity payout option based on the Accumulation Value at any time after the first contract year. The following options are available: • Life income • Life income with a 10-year or 20-year period certain • Joint and survivor life income • Joint and survivor life income with 10-year or 20-year period certain
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The finer points of some other features Tax treatment of income
3. If the maturity date of the contract is before the LPED , elect to begin taking the LPA under the terms of the GLWB value for the life of the annuitant(s). The LPA will continue but all other rights and benefits under the contract, including the death benefit and surrender value, will terminate and additional premium will not be accepted. GLWB rider charge The GLWB charge is 1.15% of the GLWB value each contract anniversary date. Your annual charge (called GLWB charge) is calculated by multiplying a charge percentage by the GLWB value on the contract anniversary. This charge will be deducted from your accumulation value on each contract anniversary until either your contract or GLWB rider terminates. If you terminate this rider, you will not be reimbursed for the charges previously incurred. The annual GLWB charge will be deducted each year including: • Years when a withdrawal is taken • Years after LPAs have started • Years when no interest is credited to the contract • Years during which you are confined to a qualified care center • When the rider continues following spousal continuance Although fixed index annuities guarantee no loss of premium due to market downturns and fluctuations, deductions from your accumulation value for optional rider charges could under certain scenarios exceed interest credited to your accumulation value, which would result in loss of premium.
If you chose to put in money that was already taxed, your annuity would be considered a non-qualified plan. A portion of each income payout from a nonqualified plan would be considered a return of premium. That amount would not be taxable, but any credited gains would be. Please note that neither North American, nor any financial professionals acting on its behalf, should be viewed as providing legal, tax or investment advice.
Consult with and rely on your own qualified advisor. Market value adjustment with external index
Your contract also includes a market value adjustment feature – which may decrease or increase your surrender value depending on the change in the market value adjustment external index rate since your annuity purchase. Due to the mechanics of a market value adjustment, surrender values generally decrease as the market value adjustment external index rate rises or remains constant. When the market value adjustment external index rate decreases enough over time, the surrender value generally increases. However, the market value adjustment is limited to the surrender charge or the interest credited to the accumulation value. Market value adjustments are applied only during the surrender charge period to surrenders in excess of the
penalty-free amount. Death benefit
The death benefit is payable upon the death of an annuitant or owner before the maturity date. The death benefit is the greater of: 1. Accumulation value as of the date of death; and 2. The minimum surrender value as of date of death The death benefit equals the accumulation value plus potential interest credits for the partial contract year as of the date of death. The death benefit may be reduced for premium taxes at death as required by the state of residence. Please consult with and rely on your own legal or tax advisor. Maturity date On the contract’s maturity date, three options may be available: 1. Elect to begin taking annuity payments as are defined in the contract 2. If the maturity date of the contract is after the LPED , continue the LPA under the terms of the GLWB value for the life of the annuitant(s). The LPA will continue but all other rights and benefits under the contract, including the death benefit and surrender value, will terminate and additional premium will not be accepted.
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GLWB rider termination We understand that your needs may change. That’s why you have the option to terminate this rider at any time. However, terminating this rider forfeits access to the GLWB value, LPA, LPA reserve, and LPA multiplier features. Termination of the rider will not automatically terminate the contract. Once terminated, this rider cannot be reinstated and you will not
• Upon divorce, to the extent the provisions of the divorce decree violate the ownership requirements of this rider; OR • On the date the contract to which this rider is attached terminates; OR • When you give us written notice requesting termination of this rider. Surrender charges During the surrender charge period, a surrender charge is assessed on any amount withdrawn, as partial or full surrender, that exceeds the available penalty-free amount. A surrender charge may result in a loss of premium. Electing an annuity payout option before the end of the surrender charge period may cause you to incur a surrender charge. A surrender during the surrender period could result in a loss of premium. Surrender charges may vary by state Surrender charge schedule Surrender charges vary by state.
be reimbursed for charges previously incurred. The Income Pay Pro GLWB rider will terminate:
• Upon change of ownership under the contract, unless pursuant to the spousal continuance provisions of the contract and this rider; OR • Upon payment of a death benefit under the contract to which this rider is attached; OR • Upon death of covered person(s) during settlement phase such that a covered person is no longer living; OR • On the maturity date of the contract; OR • Upon the date annuity payments begin under the contract; OR • On the date the contract accumulation value, the GLWB value, and the LPA all equal zero; OR
AL, AZ, AR, CO, DC, GA, IA, KS, KY, ME, MI, MT, NE, NM, NC, ND, RI, SD, TN, VT, WV, WI, WY, FL, IN, MS
AK, CT, DE, HI, ID, IL, LA MA, MD, MN, MO, NH, NJ, NV, OH, OK, OR, PA, SC, TX, UT, VA, WA
CA
Contract year
1
7.50%
9.0%
10%
2
10%
6.70%
8.5%
3
9%
6.50%
7.5%
4
9%
5.50%
6.5%
5
8%
4.55%
5.5%
6
8%
3.55%
4.5%
7
7%
2.55%
3.5%
8
6%
1.50%
3.0%
9
4%
0.50%
2.0%
10
2%
0.44%*
1.0%
0%
0%
0%
11+
*0.44% at beginning of year 10, decreases by 0.04% each month until 0% for 12th month
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Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including North American Company for Life and Health Insurance®. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, North American Company for Life and Health Insurance. The Income Pay Pro SM 10 is issued on form NA1012A/ICC17-NA1012A.MVA (contract), AE665A/ICC22-AE665A, AE575A/ICC16-AE575A, AE577A/ICC15-AE577A, AE579A/ICC15-AE579B, AE584A/ICC15- AE584A, AE583A/ICC15-AE583A, AE638A/ICC21-AE638A (riders/endorsements) or appropriate state variation by North American Company for Life and Health Insurance®, West Des Moines, IA. This product, its features and riders may not be available in all states. Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from your accumulation value for optional benefit riders or strategy fees or charges associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index. The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product. A.M. Best is a large, third-party independent reporting and rating company that rates an insurance company on the basis of the company’s financial strength, operating performance, and ability to meet its obligations to policyholders. S&P Global Ratings is an independent, third-party rating firm that rates on the basis of financial strength. Ratings shown reflect the opinions of the rating agencies and are not implied warranties of the company’s ability to meet its financial obligations. The ratings apply to North American’s financial strength and claims-paying ability. A) A.M. Best rating affirmed on August 29, 2023. For the latest rating, access ambest.com. B) Awarded to North American as part of Sammons® Financial Group Inc., which consists of Midland National® Life Insurance Company and North American Company for Life and Health Insurance®. C) S&P Global rating assigned Feb. 26, 2009 and affirmed on May 24, 2023. D) Fitch Ratings, a global leader in financial information services and credit ratings, on Nov. 30, 2023, assigned an Insurer Financial Strength rating of A+ Stable for North American. This rating is the fifth highest of 19 possible rating categories. The rating reflects the organization’s strong business profile, low financial leverage, very strong statutory capitalization and strong operating profitability supported by strong investment performance. For more information access fitchratings.com.
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Special notice regarding the use of a living trust as owner or beneficiary of this annuity. The use of living trusts in connection with an annuity contract can be a valuable planning mechanism. However, a living trust is not appropriate when mass-produced in connection with the sale of an insurance product. We strongly suggest you seek the advice of your qualified legal advisor concerning the use of a trust with an annuity contract. Neither North American, nor any financial professionals acting on its behalf, should be viewed as providing legal, tax or investment advice. Consult with and rely on a qualified advisor. Under current law, annuities grow tax deferred. Annuities may be subject to taxation during the income or withdrawal phase. The tax-deferred feature is not necessary for a tax-qualified plan. In such instances, you should consider whether other features, such as the Death Benefit, lifetime annuity payments, and any other features make the Contract appropriate for your needs. Withdrawals taken prior to age 59 1/2 may be subject to IRS penalties. The “S&P 500®” and “S&P Multi-Asset Risk Control 5% Excess Return Index” (“the Indices”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and have been licensed for use by North American Company for Life and Health Insurance® (“the Company”). S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). It is not possible to invest directly in an index. The Company’s Products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the Company’s Products or any member of the public regarding the advisability of investing in securities generally or in the Company’s Products particularly or the ability of the Indices to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to the Company with respect to the Indices is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The Indices are determined, composed and calculated by S&P Dow Jones Indices without regard to the Company or the Company’s Products. S&P Dow Jones Indices has no obligation to take the needs of the Company or the owners of the Company’s Products into consideration in determining, composing or calculating the Indices. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the Company’s Products. There is no assurance that investment products based on the Indices will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment adviser, commodity trading advisory, commodity pool operator, broker dealer, fiduciary, “promoter” (as defined in the Investment Company Act of 1940, as amended), “expert” as enumerated within 15 U.S.C. § 77k(a) or tax advisor. Inclusion of a security, commodity, crypto currency or other asset within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, commodity, crypto currency or other asset, nor is it considered to be investment advice or commodity trading advice. S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE COMPANY, OWNERS OF THE COMPANY’S PRODUCTS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. S&P DOW JONES INDICES HAS NOT REVIEWED, PREPARED AND/OR CERTIFIED ANY PORTION OF, NOR DOES S&P DOW JONES INDICES HAVE ANY CONTROL OVER, THE COMPANY’S PRODUCTS REGISTRATION STATEMENT, PROSPECTUS OR OTHER OFFERING MATERIALS. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE COMPANY, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES. The Fidelity Multifactor Yield Index 5% ER (the “Index”) is a multi-asset index, offering exposure to companies with attractive valuations, high quality profiles, positive momentum signals, lower volatility and higher dividend yield than the broader market, as well as U.S. treasuries, which may reduce volatility over time. Fidelity is a registered trademark of FMR LLC. Fidelity Product Services LLC (“FPS”) has licensed this Index for use for certain purposes to North American Company for Life and Health Insurance® (the “Company”) on behalf of the Product. The Index is the exclusive property of FPS and is made and compiled without regard to the needs, including, but not limited to, the suitability needs, of the Company, the Product, or owners of the Product. The Product is not sold, sponsored, endorsed or promoted by FPS or any other party involved in, or related to, making or compiling the Index. The Company exercises sole discretion in determining whether and how the Product will be linked to the value of the Index. FPS does not provide investment advice to owners of the Product, nor to any other person or entity with respect to the Index and in no event shall any Product contract owner be deemed to be a client of FPS. Neither FPS nor any other party involved in, or related to, making or compiling the Index has any obligation to continue to provide the Index to the Company with respect to the Product. Neither FPS nor any other party involved in, or related to, making or compiling the Index makes any representation regarding the Index, Index information, performance, annuities generally or the Product particularly. Fidelity Product Services LLC disclaims all warranties, express or implied, including all warranties of merchantability or fitness for a particular purpose or use. Fidelity Product Any product that is linked to the performance of the index is not sponsored, endorsed, sold or promoted by Morgan Stanley & Co. LLC, or any of its affiliates (collectively, “Morgan Stanley”). Neither Morgan Stanley nor any other party (including without limitation any calculation agents or data providers) makes any representation or warranty, express or implied, regarding the advisability of purchasing this product. In no event shall Morgan Stanley have any liability for any special, punitive, indirect or consequential damages including lost profits, even if notified of the possibility of such damages. The index is the exclusive property of Morgan Stanley. Morgan Stanley and the index are service marks of Morgan Stanley and have been licensed for use for certain purposes. Neither Morgan Stanley nor any other party has or will have any obligation or liability to owners of this product in connection with the administration or marketing of this product, and neither Morgan Stanley nor any other party guarantees the accuracy and/or the completeness of the index or any data included therein. No purchaser, seller or holder of this product, or any other person or entity, should use or refer to any Morgan Stanley trade name, trademark or service mark to sponsor, endorse, market or promote this product, without first contacting Morgan Stanley to determine whether Morgan Stanley’s permission is required. Under no circumstances may any person or entity claim any affiliation with Morgan Stanley without the prior written permission of Morgan Stanley. Services LLC shall have no responsibility or liability whatsoever with respect to the Product. Morgan Stanley Dynamic Global Index (the “index”) is the property of Morgan Stanley & Co. LLC. In calculating the performance of the index, Morgan Stanley deducts, on a daily basis, a servicing cost of 0.50% per annum. This reduces the positive change or increase the negative change in the index level and thus decreases the return of any product linked to the index. The volatility control calculation applied by Morgan Stanley as part of the index’s methodology may decrease the index’s performance and thus the return of any product linked to the index. In addition, because the volatility control calculation is expected to reduce the overall volatility of the index, it will also reduce the cost of hedging certain products linked to the index. Goldman Sachs Equity TimeX Index This Index does not include dividends paid by the underlying companies. The North American Company for Life and Health Insurance® fixed indexed annuity product (“Annuity Product”) is not sponsored, endorsed, sold, guaranteed, underwritten, distributed or promoted by Goldman Sachs & Co. or any of its affiliates (including Goldman Sachs Asset Management, L.P.), with the exception of any endorsement, sales, distribution or promotion of this product that may occur through its affiliates that are licensed insurance agencies (excluding such affiliates, individually and collectively, “Goldman Sachs”) or its third-party data providers. Goldman Sachs is a trademark of Goldman Sachs and has been licensed for use by North American Company for Life and Health Insurance® (the “Company”). Goldman Sachs and its third-party data providers make no representation or warranty, express or implied, regarding the advisability of investing in annuities generally or in Fixed Indexed Annuities or the investment strategy underlying the Company’s Annuity Product, particularly, the ability of the Goldman Sachs Equity TimeX Index (the “Index”) to perform as intended, the merit (if any) of obtaining exposure to the Index or the suitability of purchasing or holding interests in the Annuity Product. Goldman Sachs and its third-party data providers do not have any obligation to take the needs of the holders of the Annuity Product into consideration in determining, composing or calculating the Index. GOLDMAN SACHS DOES NOT GUARANTEE THE ADEQUACY, TIMELINESS, ACCURACY AND/ OR COMPLETENESS OF THE INDEX OR OF THE METHODOLOGY UNDERLYING THE INDEX, THE CALCULATION OF THE INDEX OR ANY DATA SUPPLIED BY IT FOR USE IN CONNECTION WITH THE ANNUITY PRODUCT. GOLDMAN SACHS HEREBY EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY FOR DETERMINING, COMPOSING OR ANY OTHER ASPECTS OF THE DESIGN OF THE INDEX AND ANY RELATED INTELLECTUAL PROPERTY. GOLDMAN SACHS HEREBY EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN OR IN THE CALCULATION THEREOF. GOLDMAN SACHS EXPRESSLY DISCLAIMS ALL LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGE EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THIRD-PARTY DATA IS USED UNDER LICENSE AS A SOURCE OF INFORMATION FOR THE INDEX. THIRD-PARTY PROVIDER HAS NO OTHER CONNECTION TO THE INDEX OR GOLDMAN SACHS SERVICES AND DOES NOT SPONSOR, ENDORSE, RECOMMEND OR PROMOTE THE INDEX OR ANY GOLDMAN SACHS SERVICES. THIRD-PARTY PROVIDER HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE INDEX OR GOLDMAN SACHS SERVICES. THIRD-PARTY PROVIDER DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY MARKET DATA LICENSED TO GOLDMAN SACHS AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN THIRD-PARTY PROVIDER AND GOLDMAN SACHS.
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