NEW YORK TIMES BESTSELLER

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NEW YORK TIMES BESTSELLERThe Number
Theres a large crowd gathered at the
intersection of Easy Street and Middle Age
Boulevard. Financial planners, tax preparers,
nursing home developers, cosmetic surgeons, AARP
and pharmaceutical companiesall vying for prime
store front locations. Lee Eisenberg, The Number
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But The One Question That Seniors Want to Know?

• How can I guarantee a lifetime of income and
  maintain control of my money?

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What Are Senior Concerns?

• Dependable monthly income
• Income that cant be outlived
• Maintaining control of their funds
• Continued growth of their funds
• Flexibility to meet unexpected needs

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RISKS

• What do the experts say
• if you go it alone?

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3 Risks To Avoid

• Longevity Risk
• Asset Allocation Risk
• Sequence Risk

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Long life is a blessingand a challenge

• Its what I refer to as the unexpected marathon,
  says Jim McCarthy, managing director in Morgan
  Stanleys retirement group.
• I get to 65, and Im exhausted because Ive
  gone through this long savings phase. Then the
  guy with the clipboard comes over and says, The
  starting line is over there.

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Risks To Avoid

• Life Expectancy at age 90 is 7.9 years
• National Vital Statistics Reports, Vol. 54,
  Number 14

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Risks To Avoid

• Asset Allocation Risk?

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Odds of income running out in 35 years or longer,
with 4.5 inflation adjusted withdrawal?
Ameriaks, Veres, Warshawsky (2001) Making
retirement income last a lifetime Journal of
Financial Planning 14, 12 pg. 66
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Odds of income running out in 35 years or longer,
with 4.5 inflation adjusted withdrawal?

• 90

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Risks To Avoid

• Sequence Risk?

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Sequence Risk

• How long and how much would it take to recover?
• 45
• 21
• 13
• 10
• 8

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The Income Solution
SPDA SPIA

• Advantages of an
• SPDA
• Safety of principal.
• Annual interest.
• Flexible withdrawal amounts and timing.
• Accessible account value.
• Death benefit.

• Advantages of a
• SPIA
• Income known up-front.
• Income guaranteed for life.
• Guarantees based on single or joint lives.

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The Concept

• The GLIR significantly increases the annual
  retirement income you can withdraw from your
  annuity while retaining control of the annuity.

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Example 60 year old wants to take withdrawals at
age 70

• What if I could guarantee you the right, after
  10 years, to withdraw 12 a year of your original
  premium, each year for the rest of your life?
• How is it possible?
• This is accomplished by annually increasing
  the Income Base by 7 for each of the first 10
  years and assumes a 6 guaranteed withdrawal
  percentage at age 70, with no additional
  withdrawals before age 70.

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Example 60 year old wants to take withdrawals at
age 70

• Age 60 100,000 Premium
• Age 70 200,000 Income Base
• Withdrawal Rate 6
• Income 12,000 per year!

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Enhanced Guaranteed Lifetime Income Rider

• OR9 Withdrawal Rate!
• 10 years from issue elect the GLIR payment and
  qualify for the Enhanced Benefit (two out of six
  activities of daily living), receive 18,000 per
  yearguaranteed for the rest of your life!
  Thats 18 of my original premium, for the rest
  of my life!
• This example assumes the Guaranteed Lifetime
  Income Riders 7 percent Rollup Rate on the
  Income Base, as is currently guaranteed on new
  issues.

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Innovations LSWs Guaranteed Lifetime Income
Rider

• 7 roll-up rate for the Income Base
• Income Base grows at Roll-up Rate for up to 20
  Years
• Enhanced Benefit when client cannot perform 2 out
  of six ADLs (3 percent additional withdrawal
  percentage added to guaranteed withdrawal
  percentage)
• Five-year automatic reset of the Income Base take
  the higher of the Accumulation Value versus the
  Income Base
• Guaranteed Withdrawal Percentage beginning _at_ age
  60 at 5.00 and grows 0.10 per year until age 90
  (8)

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Innovations LSWs Guaranteed Lifetime Income
Rider

• Guaranteed Lifetime Payments may Step-up with
  Attained Age percentages
• Joint Withdrawal Option - Only a .50
  reduction to Single life percentages
• Guaranteed Lifetime Payments made from Declared
  Account Interest to date of withdrawal

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Guaranteed Lifetime Income Rider Features

• Available for new issues on any LSWs
  SecurePlus Saver Series, (SPDAs)

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Guaranteed Lifetime Income Rider Features

• Issue Age 40 and older
• Can elect the riders Guaranteed Lifetime
  payments at attained age 60 or older and after
  the first policy year
• Enhanced Benefit also is available at attained
  age 60 or older and the policy has been in-force
  for 5 years.

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How the Rider Works

• The Accumulation Phase
• GLIR provides an Income Base that is separate
  from the annuity policys Accumulation Value.
• LSW uses the Income Base solely to determine the
  guaranteed lifetime payments from the policys
  Accumulation Value.

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Income Base - Accumulation Phase

• The Income Base
  is an independently calculated value
  
• At issue it is
  Premium paid Any
  immediate interest credit
• Grows at the Rollup Rate thereafter
• (Reduced proportionally for withdrawals
  during the
  Accumulation Phase)

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Income Base Accumulation Phase

• LSW guarantees the Income Base will increase
  at a percentage that is guaranteed for the
  Accumulation Phase, with a maximum of 20 years .
  The current percentage is 7
  annually. The rate is set
  at issue.

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Income Base the Policys Accumulation Value
Below is a chart that shows the Riders Income
Base growing at 7 percent annually. It also
shows a theoretical growth of the annuitys
Accumulation Value.
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How the Income Base is Reset
A hypothetical initial premium of 100,000 and a
7 Rollup Rate on the Income Base
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The Distribution Phase

• When the owner elects to take the guaranteed
  lifetime payments, LSW calculates the payment
  amount using the higher of the contracts Income
  Base or the Accumulation Value.

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Case Study
100,000 SecurePlus Saver Issue Age of Owner 55
Waits 10 yrs. and takes guaranteed lifetime
payments
Guaranteed Withdrawal
Percentage 5.5 percent _at_ age 65 X
Income Base Account 196,715.14 ( AV is
142,428) Guaranteed lifetime
Payment of 10,819.33
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Case Study
100,000 SecurePlus Saver Issue Age of Owner 55
Foregoes election beyond age 65. The guaranteed
lifetime payments would be higher
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Guaranteed Withdrawal Percentage Table
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Step Up Issue Age 69, 100,000 Premium

• Step 1
• Income Base at Election 107,000 vs. AV of
  106,000
• Attained Age 70 Factor 1 year later 6.0
• Guaranteed Lifetime Payment 6,420 (107,000 x
  .06)

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Step Up Issue Age 69, 100,000 Premium

• Step 2
• AV after 1st Guaranteed Lifetime Payment
  99,580
• 106,000 - 6,420 99,580
• Actual Interest Credited at end of year 2
  7,000
• 7,000 99,580 106,580

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Step Up Issue Age 69, 100,000 Premium

• Step 3
• AV at end of Year 2 106,580
• New Attained Age 71 Factor 6.1
• Stepped-Up GLP 6,501.38 (.061 x 106,580)

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Guaranteed Lifetime Income Rider
LSW GLIR

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How Does LSW Compare?
Lets Take A Look at Competition
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Income Rider Comparisons Aviva Income Edge ING Income Protector NWL Income Outlook Forethought Destination LSW GLIR Rider
Guaranteed Rollup Rate 4 4 5 5 7.00
Income Bonus 5 NA NA 12 NA
Commission - - - - 1.00
Rollup Guarantee Term 10 Years, Subject to Restart 10 Years, Subject to Restart 10 Years, Subject to Restart MA with no fee gtd. 10 years 20 Years
Automatic Restart Every 5 Years NO NO NO NO YES
Step-Up Every Year NO NO NO 10 YES
Inflation Protection - 1.5 Annually - - -
Enhanced ADL Benefit NO NO NO NO Yes 3.00
Joint WD Rate Decrease 50 bps 50 bps 100 bps 100 bps 50 bps
Lag Between W/d Percent Increases 5 Years 5 Years 1 Year Flat 5 1 Year
Current Annual Charge 40 bps Maximum 100bps 35 bps 35 bps Interest Only Embedded Spread Crediting Method/MA 2.40 40 bps Maximum 50bps
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INCOME BASE COMPARISON LSW vs. Forethought
   
           
      Premier 8 Income Base Income Base
  BAV _at_ EY BAV Accum Val Premier 8 Forethought
Grows at--gt 3.50 transfer 3.50 7.00 5.00
At Issue 5,000   103,000 103,000 112,000
EY 1 5,175   106,605 110,210 117,600
2 5,356   110,336 117,925 123,480
3 5,544   114,198 126,179 129,654
4 5,738   118,195 135,012 136,137
5 5,938   122,332 144,463 142,944
6 6,146   126,613 154,575 150,091
7 6,361   131,045 165,395 157,595
8 6,584 1,317 136,948 178,290 166,792
9 5,452 1,363 143,104 192,133 176,494
10 4,232 1,411 149,523 206,993 186,730
11 2,920 1,460 156,217 222,943 197,526
12 1,511 1,511 163,195 240,060 208,913
           
     
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LSW vs. Forethought
INCOME COMPARISON INCOME COMPARISON INCOME COMPARISON          
               
  Secure Plus Premier 8 Secure Plus Premier 8 Destination Income Destination Income      
Assumed Income Annual Income Annual Which is By How What
Att'd Age Pctg Gtd Inc Pctg Gtd Inc Higher? Much ? Pctg?
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61 5.1 5,621 5.0 5,880 Competition (259) -4.6
62 5.2 6,132 5.0 6,174 Competition (42) -0.7
63 5.3 6,688 5.0 6,483 Premier 8 205 3.2
64 5.4 7,291 5.0 6,807 Premier 8 484 7.1
65 5.5 7,945 5.0 7,147 Premier 8 798 11.2
66 5.6 8,656 5.0 7,505 Premier 8 1,152 15.3
67 5.7 9,428 5.0 7,880 Premier 8 1,548 19.6
68 5.8 10,341 5.0 8,340 Premier 8 2,001 24.0
69 5.9 11,336 5.0 8,825 Premier 8 2,511 28.5
70 6.0 12,420 5.0 9,336 Premier 8 3,083 33.0
71 6.1 13,599 5.0 9,876 Premier 8 3,723 37.7
72 6.2 14,884 5.0 10,446 Premier 8 4,438 42.5
               
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