1. Indexed Universal Life
Indexed UL Products:
A safe haven in today's volatile economy
presented by
Alan Watson CLU, ChFC
Wealth Designs Advisors Group
Indexed UL is the safe and lucrative growth strategy for permanent
insurance cash values.
Knowing how to use this valuable product in today's volatile market can
provide for your clients both a safe haven and significant upside potential,
all without subjecting cash values to market risk.
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2. Universal Life
Insurance
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3. What is Indexed Universal
Life?
S Although indexed universal life has the same flexible
death benefit and premium changes as a traditional
universal life policy, it credits interest differently.
S Rather than apply a company declared interest rate,
interest is credited to the client's policy based in part on
the movement of an index over a period of time, usually 1
year.
S The policy owner does not invest money directly in the
index or stock market.

4. Why Indexed UL?

5. Why Indexed UL?

6. Why Indexed UL?

7. What can Indexed UL
provide my client?
S In addition to the widely-known characteristics of
traditional universal life, such as premium and death
benefit flexibility and tax-deferred growth, indexed
universal life offers the following advantages:
S Competitively priced permanent protection
S Minimum interest rate guarantees
S Variable loan & withdrawal capabilities
S High growth potential

8. Why sell IUL?
S Upside potential with downside protection Indexed
universal life can illustrate a potentially higher rate of
return and offers downside protection from market
downturns.
S Market is booming and Indexed Universal Life is
"hot” The annualized premiums of indexed universal
life have grown significantly over the past few years.
The potential for further growth is especially great due
to a promotion by the industry and changes in
alternative products.

9. IUL Sales
S Indexed Universal Life
Annualized Premium * 2000 =
$63 Million 2002 = $96
Million 2004 = $124
Million 2005 = $186
Million 2006 = $338 Million *
Source: Advantage Compendium
From 2006 through 2010, IUL sales grew 192%:
an average of 38% annually, according to LIMRA.

10. Why sell IUL?
S Market Conditions are right. Variable universal life
sales have taken a big hit as the stock market took losses
in recent years. In many situations, this phenomenon is
difficult to overcome. Indexed universal life offers the
downside protection from such stock market losses.
S Low current rates on Traditional Universal Life. A
significant issue affecting traditional universal life
insurance policies is the current interest rate
environment. Interest rates in the 3% or 4% range may
be acceptable to some clients, but many others are
seeking potentially higher returns in other areas.

11. Market shift to
Indexed Universal Life
S Question:
Why has the market shifted to Indexed Universal Life?
S Answer:
The shift in market interest is a result of the low interest
rate environment. When rates fall to the point they have,
agents and consumers start looking for another, more
profitable, alternative - that alternative is indexed
universal life.

12. Who is the ideal Indexed Universal
Life Client?
Indexed universal life is ideal for clients looking for:
S Greater flexibility and control than term and whole life.
S Clients who want permanent life protection and also want a
flexible face amount, the flexible premium payment
frequency, or partial withdrawal options.
S Possibility of higher returns than traditional universal life.
S Protection from volatility and risks of variable universal life
and looking for minimum return.
S Many clients are looking for the potential upside of market
growth, but don't want the downside risk. Regardless of age
or risk classification, many clients simply are not prepared to
face the risks of variable universal life, and therefore, are
interested in the minimum guarantee and upside potential of
indexed universal life.

13. Indexed Universal Life Terminology
In order to fully understand how an indexed universal life product
works, producers must also have a clear knowledge of the terms
used. Listed below are some basic terms and their definitions.
S Index Cap Rate The Index Cap Rate is the maximum interest
rate that is used in the calculation of the Index Credit.
S Index Credit The amount credited to an Index Segment. The
Index Credit is calculated and added to an Index Segment at the
end of an Index Period.
S Index Crediting Date The Index Crediting Date is the date index
interest is applied to the policy.
S Index Crediting Method The method used to calculate the
index change.

14. Indexed Universal Life Terminology
S Index Floor Rate The Index Floor Rate is the minimum interest
rate that is used in the calculation of the Index Credit. Note that a
product with a high floor is not necessarily the best product, since
often times a higher floor is accompanied by a lower participation
rate or lower caps.
S Index Participation Rate The portion of the index change that is
used in the calculation of the Index Credit.
S Index Period The period of time during which an Index Credit is
calculated.
S Index Selection A combination of an index and an Index
Crediting Method (Example: NASDAQ-100® Point-to-Point).

15. How does IUL work?
S Policy owners can direct premiums to an account that offers a fixed rate
of return (the Fixed Account), to one or more Index Selections or to a
combination of both depending on what they think is right for them.
Note: If the policy owner chooses, 100% of premiums can be allocated
to the Index Selections.
S The Fixed Account earns interest at the company's declared rate.
S When premium is allocated to a particular Index Selection, an Index
Segment (or bucket) is created and an Index Period begins. The Index
Period is the length of time over which the index change is measured.
Each premium has its own bucket.
S Each Index Segment receives its own Index Credit (if any) on the
Index Crediting Date (the first business day on or after the end of the
Index Period).
S The Index Credit is affected by partial surrenders, and is subject to the
Index Participation Rate, the Index Cap Rate and the Index Floor
Rate.

16. Indexed & Fixed Account Options
S While the client does not invest directly in the stock
market or index, they choose an index, which is used to
calculate any Index Credit. Typical index options include:
S DJIAsm
S NASDAQ-100®
S S&P 500®
S Russell 2000 ®
S Hang Seng®
S EURO STOXX 50®
S Multi-Index or Blend Group
S The client can choose the index in which they would like
to allocate premiums. The client may change allocations
from one index to another or with each new premium
payment.

17. Index Crediting Methods
Possible Crediting Methods with an indexed universal life policy
include:
1) Annual Point-to-Point
2) Inverse Point-to-Point
3) Daily Averaging
4) Multi-Index Point-to-Point
5) Monthly Averaging
For each method, the change in index value, if any, is subject to
the Index Participation Rate, Index Cap Rate and Index Floor
Rate. Crediting Methods vary by product.

18. Buckets
S With the flexibility of indexed universal life, premium may
be received at different times. Indexed universal life uses
Index Segments, or buckets, to handle each payment.
S Each premium payment is handled as a separate bucket.
A policy with monthly premiums could have a minimum of
12 different buckets. That is to say, 12 different index
starting points and 12 different possible credited interest
rates and 12 different annual reset points to start the next
Index Period. There number of buckets a policy may
have is unlimited.

19. Credited Interest Rate
S Any Index Credit applied to your policy equals the Index
Segment value at the beginning of each Index Period,
minus any partial surrenders, multiplied by a credited
interest rate based, in part, on any index change.
S The credited interest rate may differ from the actual index
change because of three features: 1) Index Cap Rate; 2)
Index Participation Rate; and 3) Index Floor Rate.

20. Uses of Indexed Universal Life
S Retirement Supplement/ LIRP
S College Funding
S Low Cost Protection
S Buy-Sell
S Mortgage Protection with Early Payoff
S Starter Policy
S Limited Pay Plans
S Policy Rescue/Safe Harbor

21. Wealth Designs
Value Proposition
S In summary, we offer help with any IUL case and advanced
case consulting services and design sales solutions using IUL
for both LIRP and Safe Haven Rescue strategies.
S With our concierge approach and our multi-carrier platform, we
shop the market for the best carrier fit and consult with you on
our findings to prepare you for your presentation to your client.
S Contact information:
Wealth Designs Advisors Group
2140 11th Avenue South, Suite 200
Birmingham, AL 35205
205.939.8070 alan@wealthdesignsag.com
www.wealthdesignsag.com