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U p c o m i n g n e w s l e t t e r t h e m e s t o l o o k o U t f o rJuly: Advisory Services

August: First Heartland University

September: Life Insurance Awareness

October: Technology

November: Long Term Care and DI

December: Sales and Marketing Ideas

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1 0 r e a s o n s w h y g U a r a n t e e d i n d e x U l m a k e s s e n s e t o d a y

i n d e x e d U l : a n s w e r i n g t o U g h Q U e s t i o n s

l i v i n g B e n e f i t s & i n d e x e d a n n U i t i e s

Find out why Guaranteed Index UL makes sense for your clients in today’s market.

Find out how your clients can benefit from the upside potential and downside protection of indexed annuities.

i n s i d e t h i s i s s U e :

This article gives you the answers to the most common questions asked about Indexed UL.

June Spot l ight : I ndexed Life & Annuities

10Index Life Sales Opportunities

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4clients in the sandwich generation

clients funding educational plans

clients going through divorce

clients funding the “stay ” Bonus

Many baby boomers find themselves taking care of their parents as well as their children, and life insurance helps protect everyone who depends upon them. Often, these clients are seeking a responsible product that offers the potential of crediting rates that are higher than those offered by traditional universal life products. Advantage UL is an attractive product choice for these consumers.

For clients planning to pay for their children’s education, having life insurance coverage is important to provide funds in case of premature death. At the same time, these clients often want cash accumulation potential, so that they have the option to access the policy cash value to help supplement education funding while they are living.* Advantage UL offers death benefit protection and the opportunity to accumulate cash value while also providing downside protection.

Clients who are in the midst of divorce may be required to provide death benefit coverage for a spouse and/or children for a period of time. For clients who own the policy and provide the required protection through a temporary beneficiary designation on the policy, the chance to accumulate cash value may be attractive. If the client survives to the end of the required protection period, he or she can then use the policy for other purposes, including supplemental income. Advantage UL provides a combination of death benefit protection and potential cash value accumulation to help accommodate these considerations.

Contingency planning is a critical part of business planning. When a key owner or key person dies, it’s often necessary to retain key surviving employees. For this reason, life insurance is often issued on the key owner for death benefit purposes. If the key owner dies, the death benefit can provide the necessary funds for a “stay” bonus of a key surviving employee. However, if the owner lives to retirement and decides to exit the business, he or she can take the policy and any cash value as a distribution from the business. For these situations, the combination of death benefit features and potential cash value accumulation offered by Advantage UL may be the right choice.

General MarketinG ideas

Business Owner Market ideas

5 Business clients funding executive Benefits for conservative executives

Recruiting, rewarding, and retaining the right employees are essential steps to ensure small business success. A business may choose to fund life insurance policies as an executive benefit for key executives or employees. Advantage UL is an attractive product for executive benefit planning when the executive wants a death benefit with the potential for cash value accumulation.

Ages 35 to 55•

In need of death benefit protection•

Interested in the potential for cash value •accumulation

Intrigued by premium flexibility •

Seeking higher growth potential plus protection •from the negative impact of market losses

Target Market for PruLife’s Index Advantage UL:

Using PruLife’s Index Advantage UL

Click here to read 5 more sales ideas

Jay HokansonStaff Spotlight:

Jay Hokanson lives in Michigan with his wife Jen and five sons. He enjoys football, loves steak, and his favorite places to travel are to the beach or out west to go skiing. His favorite activities outside of work are playing with his kids, learning how to kite board, and taking his boys fishing. His first job was restoring antique furniture. Jay ‘s favorite product is Allianz IUL - he likes this product because of the indexing strategies that they use.

Jay gives everyone he meets two business cards. When the person says they only need one, he replies that one is for them and one is for them to give to someone they know that could benefit from Jay’s services. This unique marketing idea is a great way to reach even more prospects, and Jay says it seems to be increasing client referrals!

marketing idea: give out two Business cards

sales idea: life insurance retirement plansJay likes the Life Insurance Retirement Plan (LIRP). He meets with new clients and old clients and reviews their retirement goals as well as life insurance needs to provide a more comprehensive approach to their situation. By just talking about life insurance with his clients, Jay has cultivated much more interest and seen an increase in new applications.

Every month we bring you an agent spotlight that includes sales and marketing ideas and gives you a chance to get to know other FHC producers. Would you like to share your story? Let us know!

indexed Ul: answering tough QuestionsQuestions you will be able to answer after reading this article:

How does the carrier offer me something that is seemingly a free lunch?

How do I get a product where the downside is protected but I still get upside? That sounds too good to be true.

In regards to performance, how do I get a contract where I have no downside but I still have all of this great upside?

How does the carrier build this policy?

Indexed UL is probably one of the hottest topics in the life insurance industry today. More than just anecdotally, the numbers actually back that idea up. If you check the LIMRA statistics or if you talk to any of the carriers, they’re always very quick to tell you that IUL is growing. It’s the fastest growing product in the life insurance universe right now. It went from just about a $100 million segment of the market a few years ago to well over a billion dollars right now. In many cases, it has become the product of choice in sales that used

to be dominated by VUL, whole life and current assumption. IUL has found applicability across a broad spectrum of sales practices and agents are selling a lot of it.

Before diving into product design aspects of IUL, we will simplify IUL into three things that every carrier uses to

market IUL products:

1. indexed Ul products have market upside – These are equity indexed products where performance is linked, at least in part, to an external equity index

2. you have downside protection – This is what makes IUL products not variable contracts because they have a guaranteed floor in the policy

3. Over the long term, carriers will show an illustration where IUL out performs current assumption UL products

These three components contain some excellent information but may not answer all of an agent or client’s questions regarding IUL contracts.

Click here to read more

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Living Benefits and Indexed Annuities

and why your clients need themIf you are already selling variable annuities, you are familiar with their living benefits. They provide essential guarantees and more

importantly, peace of mind while keeping the potential for growth based on subaccount performance. However, depending

on the sequence of market returns, you may or may not benefit from that potential for growth. That is why, for some clients,

indexed annuity protection and benefits have been a much better value. Key benefits of indexed annuities include:

Critics have pointed out that the upside potential is very small in light of today’s low caps on index performance. While that is a valid point, combining the downside protection with a valuable living benefit makes the index annuity very attractive in the right client situation.

I often get asked what the best index annuity withdrawal benefit is. Virtually all index annuity carriers have come out with such riders and sorting through the field is very challenging. It always depends on the client circumstances and what they are trying to accomplish.

One of the best all around riders was rolled out by Allianz late last year. Here is a highlight of what the product/rider combo does:

The client gets a 50% interest credit bonus on the index •performance AFTER cap has been applied while the contract is in deferral.

There are NO two separate account values. The benefit •payout percentage is applied to the account value. So, the client isn’t confused why they have two account values and why they can’t withdraw or walk away with

the living benefit account.

Each year that the client defers benefit payout, the •income payout percentage increases. For example, if the payout based age today is 4%, waiting 10 years, makes the payout 8%. This is especially powerful when you know that the indexed annuity will never lose value.

The rider has two payout options. One, the higher of •them, gives a level guaranteed payout for the rest of the annuitant’s life. The second, which is more valuable, starts off lower but the payout GROWS each year that the annuity gets index credits. The income in option 2 ALSO GROWS EVEN IF THE ANNUITY ACCOUNT VALUE IS DEPLETED.

The rider charge of 0.95% is assessed on account •value, NOT on living benefit protected balance.

All of the above client benefits, coupled with great compensation options, give you a very valuable planning tool for retirement income. Call our illustration team for quotes and brochures.

downside protection – “zero is the hero” only upside potential tied to the performance of market indices

With all the new IULs coming on the market lately, an important question to ask yourself is: how do I compare products? While

running all Index ULs at the same interest rates may seem like the most reasonable way to do it, products have different indices

and caps that you have to take into consideration. Here is how we approach the problem:

What is the best rate to illustrate Index ULs and compare products?

Historical PercentilesBelow is a sample table of a 20-year realized rolling return for the S&P 500 since 1950. Highlighted in yellow is the return that has been achieved 90% of the time each rolling 20-year period. So, if you are comparing products, knowing what the historical experience has been arms you with the knowledge why some products should be run at lower rates vs. others.

Look at the underlying company’s renewal cap history. Since all Index UL products rely on the insurance company to renew caps at competitive limits, using a company with good track record is paramount of the client achieving the rates illustrated initially.

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Make sure you are comparing the same indices

Call our office or use online calculator (FHC, ING, Pacific Life, etc.) to generate historical confidence intervals for 10 or 20 years of rolling period returns. These are also known as probabilities of achieving a specified return.

Run illustrations based on where you feel comfortable of achieving a given return. I’d recommend using at least an 80% probability. Most software packages default to 50%.

IndexMinimum

Guar.Annual

CapRolling Returns & Percentiles

Average100th 90th 80th 70th 60th 50th

S&P 500 0% 10% 3.70% 4.91% 5.23% 5.48% 5.74% 5.93% 6.00%S&P 500 0% 11% 3.94% 5.20% 5.61% 5.90% 6.16% 6.40% 6.44%S&P 500 0% 12% 4.14% 5.44% 5.99% 6.27% 6.58% 6.80% 6.85%S&P 500 0% 13% 4.33% 5.71% 6.29% 6.58% 6.97% 7.20% 7.23%S&P 500 0% 14% 4.51% 5.98% 6.57% 6.91% 7.26% 7.54% 7.57%S&P 500 1% 10% 4.12% 5.31% 5.65% 5.84% 6.11% 6.30% 6.31%S&P 500 1% 11% 4.35% 5.58% 6.03% 6.25% 6.53% 6.72% 6.75%S&P 500 1% 12% 4.56% 5.82% 6.39% 6.61% 6.94% 7.16% 7.16%S&P 500 1% 13% 4.75% 6.13% 6.70% 6.97% 7.32% 7.53% 7.54%S&P 500 1% 14% 4.93% 6.40% 6.93% 7.26% 7.60% 7.89% 7.88%S&P 500 2% 12% 4.79% 6.29% 6.77% 7.03% 7.32% 7.50% 7.49%S&P 500 2% 13% 5.16% 6.59% 7.05% 7.37% 7.67% 7.88% 7.87%

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10 Reasons Why Guaranteed Index UL Makes Sense Today

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Guaranteed Death Benefit

Competitively Priced - only 5-10% more expensive on average than GUL.

GUL Premiums may carry the GIUL policy well past life expectancy on a guaranteed basis.

Potential for cash value growth

Cash value=more options down the road (i.e. 1035 into a better product, withdrawals, loans)

No restrictions on lump-sums and large 1035 exchanges.

More rider choices

More conservative than Guaranteed VUL

Great alternative to whole life - lower cost, guaranteed DB, and cash value potential

Higher target premiums than comparable GULs.

Scott Hoff has worked at First Heartland full time for six years. Before that, he did filing and miscellaneous tasks around the office. In high

school, Scott began to maintain the FHC website. He spends a lot of his free time reading and learning about new ideas and concepts.

When he needs to relax and “veg out,” he sits back and watches a show or movie on Netflix.

Scott’s allocates his time at FHC between recruiting, relationship management, and the use of technology to meet marketing and business needs. He loves working at FHC because he gets to use his disparate skill set all in one spot. Scott

gets to meet new people, build relationships, learn about new products and services, leverage his background in computer programming and web design and tie it all together by bringing meaningful and relevant solutions to FHC and our representatives.

Scott’s favorite place to visit is Italy. He would love to revisit Rome because that is where he had his first international experience when he studied abroad in college. Scott has really been enjoying Indian food lately - him and Brandon Hall enjoy visiting their local Indian buffet once a week. They have become regulars and the restaurant now gives them

occasional upgrades for free - VIP treatment!

Baseball is Scott’s favorite sport to watch. He likes to watch the Cardinals games at Busch stadium whenever he can. His favorite movies usually have Will Ferrell in them - he is a huge fan of quoting Talladega Nights and he never gets tired of watching Step Brothers. Even if Ferrell doesn’t have the most “sophisticated” form of humor, it consistently makes Scott laugh.

Scott with his family on his birthday

Scott HoffStaff spotlight:

Best of Breed

W e b r e a k d o w n w h a t i n d e x a n n u i t y c a r r i e r s a n d p r o d u c t s d o b e s t

Short Surrender Schedule

Death Benefit Options

Immediate Income

Best Potential for income step-up in

distribution phase

Low Cost

Highest Guaranteed Deferral

Factors for 10 Yrs

Highest Immediate

IncomeLong

Term CareEnhancements

Best Bonus 10-Yr and

Under Surrender Charge

Allianz ProV1 (5 Year)AVIVA MultiChoice 5 (5 Year)ING Secure Index 5 (5 Year)

Standard Index Growth 5 (5 Year)AVIVA MultiChoice 6 (6 Year)

Great American Safe Outlook (6 Year)Pacific Life Index Choice (6 Year)

aviva - InsurePay 4% Simple

great american- 10% simple for 10 Years

allianz GMWB value, if annuitized over

5 years on Endurance Plus, Endurance Elite, MasterDex Plus

and MasterDex 5 Plus

AllianzAVIVA

GenworthGreat American

LincolnPacific Life

AllianzAmerican Equity

American GeneralLife of the Southwest

allianz No cost on Endurance Plus and Endurance

Elite, 0.40% for Income Plus Rider on MasterDex Plus and MasterDex 5 Plus.

american equity No cost for IAV option 4.5%

north american income pay option one – 0.40%

great american income secure 10% Simple for 10 years

north american income pay option 2 7% Compound

allianz 360 Benefit Annual payout increase plus 50% interest

credit on annual index returns

life of the southwest 6.5% for 20 years

AllianzGenworth

Great AmericanAVIVA

Lincoln

Allianz MasterDex X – 6% Vested Bonus

American Equity Retirement Gold – 8% Bonus

North American 10 – 6% Bonus

AVIVA MultiChoice Xtra – 6% Bonus

Fidelity & Guaranty Prosperity Elite 10 Protection – 8%

National Western Impact 10 – 7%

Index annuity caps got you down?

1. You pick the index: S&P 500•Russell 2000•MSCI EAFE•Gold Index (IRA contracts only, London Gold •Market Fixing LTD PM Price/USD)Oil Index (IRA contracts only, NYMEX West •Texas Int Crude Generic Month Crude)

2. You pick the index: -10%•-20%•-30%•

3. Segments start on the 15th of each month

4. 5-Year CDSC (5, 5, 5, 4, 3%)

5. 0-85 Issue Ages

6. $25,000 Initial Contribution Minimum, $1.5 million max.

7. NO M&E

8. A+ rated Insurance Company

9. Index Tracking Site

10. 5% Option A GDC

consider the following variable annuity:

Best of BreedI n d i v i d u a l I n d e x U L P r o d u c t s

Pacific Life Pacific Index Accumulator IV & Pacific Index Performer Lt

Allianz Life LifePro+

Mutual life insurance company1. Best cap renewal history over last 7 years2. #1 Index UL carrier for past 2 years3. Multiple indices and strategies4. High caps, guaranteed participation rates5. Flexible duration guarantees6. Fixed and variable loan options7.

Longest renewal rate history in the industry1. Largest purchaser of index options2. Only carrier to use dynamic hedging of the 3. index block of businessHigh caps, guaranteed participation rates4. Multiple Indices, including a proprietary 5. blended index

Blending for optimal product placement8. High early cash value rider on PIA49. Persistency credit on PIPLT10. Accelerated benefit riders for terminal and critical illness11. Index return calculator12. Premium deposit fund13. Planned Performance Tracking14.

Cap enhancement options available6. Age last pricing7. Fixed participating and fixed loans available8. High early cash value options9. Indemnity LTC rider available10. Index return calculator11.

CAUL, GUL, GIULPutting it All Together:

How do premiums for Current Assumption UL, Guaranteed UL and Guaranteed Index UL compare? Here is a snapshot of a case

we ran recently. The CAUL pricing is the lowest, but the DB is not guaranteed. The GUL offers the lowest cost lifetime protection,

but no cash value. GIUL is slightly more expensive than GUL, but the potential for CV growth is there.

Year

1 $12,001 $13,721 $10,938

$10,938 $102,748

$10,938 $56,387

$10,938 $263,948

$10,938 $21,485

$10,938 $180,977

$10,938 $82,001$13,721 $178,716

$13,721

$13,721 $276,353

$13,721 $72,928

$13,721 $489,652

$13,721 $509,988

--- --- ---

--- ---

---

---

$12,001

$12,001 $34,410

$12,001 $74,063

$12,001 $97,449

$12,001

$12,001

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30

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Premium Premium PremiumCsV CsV CsV

GUL GIUL CAUL

How toimmunize a Bond portfolio against rising interest rates

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Purchase a 5-year surrender schedule index annuity

Tie annual account performance to the Barclays Aggregate Bond Index LESS 2% spread.

When interest rates rise, bond process falls. If Barclays Aggregate Bond Index loses value, the index annuity does not.

Annual reset feature - you keep your index gains every year

No clawbacks

No other fees

A-Rated insurance company

3.25% commission up to age 75

May Qualification StandingS

leaderS conference 2013at the Waldorf Astoria, New York

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