Annuities
Physicians Mutual Types of Annuities
| Product* | Traditional Fixed Deferred | Market Value Adjusted Deferred | Index Deferred | Immediate | Single Premium | Flexible Premium | Issue Age | Income Stream Feature | Free Partial Withdrawals |
| Vista Custom Direct | * | * | 18-85 | * | Up to 10% min $500 | ||||
| Vista 7 | * | * | 18-85 | * | Up to 10% min $500 | ||||
| Vista Income Provider | * Min.$100 payout | * | 18-100 | * | $5000 - $1,000,000 | ||||
| Vista Index Accelerator | * | * | 18-75 | ||||||
| Vista Index Advantage | * | * | 18-80 |
Vista Custom Direct
The Vista Custom Direct is designed for customers looking for safety when investing their money but who also want the power of tax deferred growth. This annuity is similar in some ways to a bank Certificate of Deposit (CD) and may offer the customer higher rates and more flexibility.
CD versus Vista Custom Direct
|
Feature |
Certificate of Deposit |
Vista Custom Direct |
|
Taxes |
Paid every year |
Deferred until funds are withdrawn |
|
Liquidity – access to partial funds |
Penalty for early withdrawal for every reason |
Annually allows 10% partial free withdrawals |
|
Access to funds for nursing home care |
0 |
20% of Account Value per year with no penalty |
|
Access to funds for home health care |
0 |
1% of Account Value on a monthly basis (12% annual) |
|
Access to funds for terminal illness |
0 |
Entire Account Value is available |
|
Exit period at the end of the initial guarantee period |
Typically 10 days |
30 days |
|
Minimum guarantee interest |
None |
1.5% to 3% (varies by state and is subject to change) |
Vista Custom Direct 5, 7, 10 year guarantee periods The declared interest rate will be guaranteed and will not change during the initial interest rate guarantee period.
The interest rate for the VCD will never be below the guaranteed minimum in the contract, which will never be less than the minimum required in each state (varies by state from 1.5% to 3%). Texas 2%
While there are various guarantee periods, the VCD has a ten-year surrender charge period. The guarantee periods are five, seven and 10 years. Once the initial guarantee period has passed, the policyowner has a 30-day exit window during which he/she may leave the contract without any penalty. When the policyowner remains in the contract, a new interest rate will be declared for the remainder of the 10-year surrender charge period. At the end of the surrender charge period, an annually declared interest rate will be set.
The surrender charge schedule is as follows (may vary by state):
|
Year |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11+ |
|
Charge |
9% |
9% |
8% |
7% |
6% |
5% |
4% |
3% |
2% |
1% |
0% |
Annuitization
While the Vista Custom Direct is designed for accumulation of money, it also has a feature for the policyowner to obtain an income stream by annuitizing all or part of the Account Value payout. There are payout options available from lifetime payouts to periods certain to meet the policyowner’s needs.
Free Partial Withdrawals
After the first year contract anniversary, the policyowner may withdraw up to 10% of the Account Value in the contract annually without surrender charge or Market Value Adjustment. The 10% free partial withdrawal may be a single payment or a series of payments; however, each withdrawal must be at least $500.
Exit Window
The Vista Custom Direct has a 30-day exit window at the end of the initial interest rate guarantee period. During the 30-day exit window, all surrender charges and Market Value Adjustments are temporarily suspended, which allows the policyowner partial or full access to the Account Value for withdrawal.
Riders
There is no charge for the riders included on the Vista Custom Direct, and they are automatically included unless the policyowner does not qualify or if there has been an exception. To qualify for the riders at the time of application, there are three health questions on the annuity application that must be answered.
Nursing Home Rider
The Nursing Home Rider provides the VCD owner with increased access to the Account Value if he/she is confined to a licensed nursing care facility for more than 60 consecutive days. The owner may access up to 20% of the Account Value per year without any surrender charge or MVA. Withdrawals must be made during confinement or within 90 days of release from the licensed care facility and while the owner is alive.
Home Health Care Rider
If the VCD owner is unable to perform two or more of the Activities of Daily Living (ADL) and is receiving home health care assistance, the owner has increased Account Value access. The owner is permitted to access up to 1% of the Account Value on a monthly basis to help cover some home health care expenses. ADLs for this rider include eating, dressing, bathing, transferring and toileting.
Terminal Illness Rider
If the VCD owner is diagnosed with a terminal illness in which life expectancy is determined to be less than 12 months, the entire Account Value will be made available to the owner without any surrender penalty or Market Value Adjustments.
Death Benefit
In the event of the death of any owner of the VCD, a death benefit will be provided to the beneficiary. The death benefit will be the Account Value at the time death proceeds are requested and will not be subject to surrender charges or MVA. In many situations, the death benefit of an annuity paid to a named person beneficiary avoids the cost, delay and publicity of probate.
Vista 7 Single Premium Deferred Annuity
The Vista 7 has an interest rate that is reset each year by Physicians Life. The Company tries to renew the rate near the initial base rate and is guaranteed to never be set below the guaranteed minimum interest rate, which is set in the contract. The minimum guaranteed interest rate range is from 1% to 3% depending on the state (subject to change). The Vista 7 has a seven-year surrender charge schedule. After the 7th year, the customer can take the money with no penalty or leave it in the contract and continue to have an annual renewable interest rate.
The Vista 7 can be issued for individuals who are ages 18 - 85 for qualified and non-qualified funds.
The Vista 7 accepts single premium deposits from $2,000 to $500,000. Deposits for different amounts require approval from the Home Office.
Surrender Early
The Vista 7 is designed as a long-term savings vehicle so penalties may apply in the event of an early surrender. After the 7th year, the policyowner may access the entire Account Value without penalty. The penalty for surrendering the policy during the first seven years of the contract is based on the surrender charge schedule, which is as follows:
|
Year |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
Charge |
7% |
7% |
7% |
7% |
6% |
4% |
2% |
0% |
Other Benefits
There is a Nursing Home and Hospital Confinement Rider, a Home Health Care Rider and a Terminal Illness Waiver Rider available for those who qualify. Note: not all riders are approved in every state.
If the policyowner is confined to a Nursing Home and/or Hospital on or after the Issue Date and if confined to a nursing home or hospitalized for 60 or more consecutive days, 20% of the Account Value per Contract Year is available without a Surrender Charge or Market Value Adjustment. The confinement must be medically necessary and prescribed by a physician.
For the Home Health Care Benefit rider, if unable to perform two or more or the activities of daily living (ADLs) and is receiving home health care assistance, the policyowner is permitted to exceed the annual 10% penalty-free withdrawal limit and access up to 1% of the Account Value on a monthly basis (an annual total of 12%) to help cover home health care expenses.
If diagnosed by a physician to have a Terminal Illness that was not diagnosed prior to the Issue Date of the contract and the remaining life expectancy is determined by the physician to be less than twelve months, the Account Value is available without a Surrender Charge or Market Value Adjustment.
Death Benefit
In the event of the death of any owner of the Vista 7, a death benefit will be provided to the beneficiary. The death benefit will be the Account Value at the time death proceeds are requested and will not be subject to surrender charges. In many situations, the death benefit of an annuity paid to a named person beneficiary avoids the cost, delay and publicity of probate.
Vista Income Provider
A SPIA is when a customer makes a one-time premium payment to the insurance company and then immediately starts receiving payouts. It is very important to understand that a SPIA is sold on a payout amount, NOT an interest rate. The customer does not have an Account Value they can access; instead they are purchasing an income stream.
When selling this product, you will have to use the quoting software to determine a payout amount because payout amounts will be based on the payout option, age and gender.
The Vista Income Provider is designed for the customer who has assets that they need to turn into an income stream. The income can be for everyday living expenses, mortgage payments or premium payments.
Life Only
Payouts are guaranteed for life. All payments stop at death, regardless of when death occurs. This option generally offers the highest payout, but the return of principal is not guaranteed. This option is only available for individuals who are ages 0 - 85.
Life with Period Certain
Payouts are guaranteed for life. A period certain provides that payments will continue to the beneficiary should the customer die before the end of the period certain. If the customer dies after the period certain, there are no payments to the beneficiary. You can choose a period certain of 5-30 years.
Life with Cash Refund
Payouts are guaranteed for life. If the customer dies before the initial premium is recovered, the remainder is paid to the beneficiary in a lump sum. Life with Installment Refund-Payouts are guaranteed for life. If the customer dies before the initial premium is recovered, the annuity payments continue to be paid to the beneficiary in installments until the balance of the premium has been refunded.
Joint & Survivor Lifetime OnlyPayouts are guaranteed for the life of the joint annuitants. Upon the death of one annuitant payments will continue at the percentage requested until the survivor's death when all payments stop. This option is only available for individuals who are ages 18 - 85.
Joint & Survivor Life with Period Certain
Payouts are guaranteed for life. Upon the death of either annuitant, payments will continue to the survivor at the percentage requested until the survivor's death. The period certain provides payments to continue to a beneficiary should both annuitants die before the end of the period certain, which can be 5-30 years.
Temporary
The policyowner receives guaranteed income payments for life or payments over the period of years chosen, whichever occurs first. Payments stop upon death or the end of the defined period, whichever comes first. This option is only available for individuals ages 18 - 85
Annuity PricingPhysicians Life invests money received from policyowners in order to provide the future guaranteed value of the product sold. Physicians Life annuity investment portfolio can consist of US Treasuries, corporate bonds and mortgages. Investments that are generally considered unacceptable are stocks, real estate, and venture capital. We also have reserves over and above the policyowner's Account Value, which are funds set aside to honor our financial obligations.
The annuity application is a one-page application; however, there may be other required forms. There are some key things to consider when meeting with a customer to know what may be required besides the application form:
• Has the applicant acknowledged having received and understood the Product Disclosure, Brochure, and the Buyer’s guide?
• Is the money being used to purchase the annuity a traditional IRA, Roth IRA, or non-qualified annuity?
• Will the annuity premium be paid with a check or be coming from another company? Annuity premiums paid by check and are new contributions are typically referred to as cash applications.
• Is it a cash application? If no, then you need to determine if it will be:
Section 1035 Exchange ----- Non-Qualified Money A non-taxable form of replacement in which a life insurance or non-qualified annuity contract is exchanged for another. The following conditions must be met to qualify under Section 1035 of the Internal Revenue Code:
1-Insured/Owner must remain the same. ---- 2- Replacement must be life insurance to life insurance, life insurance to non-qualified
annuity, or non-qualified annuity to non-qualified annuity. ---- 3 - Premium received to fund the new insurance agreement must
be received from the previous carrier directly and cannot be received by the insured/owner.
IRA Transfer ----- The movement of one Individual Retirement Account/Annuity (IRA) directly to another IRA. An IRA Transfer is not a cash
distribution and is not taxable or reportable to the IRS.
Rollover ---- A non-taxable event in which an employer sponsored plan is exchanged either directly or indirectly for an Individual Retirement Account/Annuity (IRA), or an IRA is exchanged indirectly for another IRA. The following conditions must be met to qualify as a Rollover: 1) To qualify as a Direct Rollover, the rollover must occur from one Trustee directly to another Trustee. 2) To qualify as an Indirect Rollover, funds are disbursed from the former carrier to the participant. The participant must then contribute all or part of the funds to the new carrier within 60 days. There are varying penalties that may be incurred.
Is the annuity being purchased replacing an annuity or life insurance policy? If the annuity is a replacement, a replacement form must be completed to be sure the applicant and agent have compared the annuity being purchased to the original policy. This ensures that it is in the customer’s best interest.
Non-Qualified Money - from savings, bank cd, money market account.
