ING IncomeProtector Withdrawal Benefit Guaranteed Income for Life Todd Kloewer Regional Vice President ING Fixed Annuities 151072 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
According to a study by the Fidelity Research Institute, the typical American household is on track to replace 58% of its income in retirement. 1 Where is the other 42% going to come from? 1 The Fidelity Research Institute, March 2007 ING 2 2 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Traditional Guaranteed Sources of Income Social Security • 78 million baby boomers will turn 62 between 2008 and 2026 • It’s estimated that by 2017, Social Security benefit payments will begin to exceed Social Security tax income. 2 Pension Plans • Only 37% of baby boomers about to enter retirement have a traditional pension plan coming from their employer. 3 • “About half of employers with defined-benefit pension plans have frozen one or more of those plans, putting the retirement income of millions at risk.” 4 2 Social Security Administration, 2007 3 Standard & Poor’s, 2008 4 GAO: Half of companies froze pensions, USA Today, 7/25/2008. ING 3 3 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
4 4 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION Life Expectancy 2 ING
Retirement Concerns • In a recent survey, 67% of respondents retired prior to age 65. 5 • At an annual inflation rate of 3%, expenses could more than double in 25 years. • 70% of baby boomers surveyed say that they want to discuss income planning. Less than 40% actually have an income discussion with an advisor. 6 56% of Americans say the greatest risk facing them in retirement is outliving their assets. 7 5 Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Retirement Confidence Survey 6 Fidelity Advisor 2006 Survey of Investors at Retirement 7 Metflife Mature Market Institute, June 2008 ING 5 5 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
The Need • Steady income stream that you can’t outlive • Flexibility to turn income on or off any time • Potential for income to grow ING 6 6 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
ING IncomeProtector Withdrawal Benefit Optional living benefit that can be added at issue to any ING USA Annuity and Life Insurance Company (ING USA) fixed index annuity contract • Guaranteed Income for Life • Ability to turn income on or off anytime • Guaranteed Growth during the first 10 years of Deferral Phase Annuity income is defined as a series of periodic payments, a part of which may be return of your premium or principal, which is guaranteed by the issuing insurance company for a specified period of time or for the life of the annuitant. ING 7 7 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Key Features • 7% Compounding Roll-Up during the first 10 years of the Deferral Phase • Annual Ratchet during both the Deferral and Withdrawal Phase • 100% Return of Rider Charges at Death. ING 8 8 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
How it Works Guaranteed Withdrawal Base Equal to all of your premiums (and any premium bonus, if applicable) accumulated with the 7% Compounding Roll-Up (first 10 years of Deferral Phase) with an Annual Ratchet. Maximum Annual Withdrawal (MAW) Percentage of your guaranteed withdrawal base that you may withdraw each year under the rider ING 9 9 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
The Deferral Phase Illustration is based on hypothetical index performance and hypothetical index credits. This performance is not an indication of current or future results. This example assumes no withdrawals were made. ING 10 10 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Deferral Phase AV Roll-Up GWB with Accumulation Increase New GWB (%) Roll-Up Value (%) Year 1 7% 6.25% $107,000 $106,250 $107,000 Year 2 7% 10.00% $114,490 $116,875 $116,875 Year 3 7% 6.00% $125,056 $123,888 $125,056 Year 4 7% 8.00% $133,810 $133,799 $133,810 Illustration is based on hypothetical index performance and hypothetical index credits. This performance is not an indication of current or future results. This example assumes no withdrawals were made. ING 11 11 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
The Deferral Phase Illustration is based on hypothetical index performance and hypothetical index credits. This performance is not an indication of current or future results. This example assumes no withdrawals were made. ING 12 12 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
The Withdrawal Phase Illustration is based on hypothetical index performance and hypothetical index credits. This performance is not an indication of current or future results. This example assumes no withdrawals were made. ING 13 13 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Rider Charge Refund ING will refund 100% of the rider charges if: • Rider is terminated due to death • Owner dies before age 95 • Accumulation Value is greater than zero • An excess MAW has not been taken ING 14 14 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
ING IPWB v1/v2 Comparison ING IPWB v1 ING IPWB v2 Rollup during Deferral Phase 4.0% 7.0% Withdrawal Withdrawal and Annual Ratchet Phase only Deferral Phase Cost 35 bps 40 bps Return of Rider Charges at Yes Yes Death All Withdrawals End Deferral Yes No Withdrawal Waiting Period Yes - 1 year No ING 15 15 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Meet Bill Bill is a 65-year old who has just placed $100,000 into the ING Secure Index Opportunities Plus Annuity and added the ING IncomeProtector Withdrawal Benefit. Let’s see what his guaranteed income would be depending on how long he defers payments. Hypothetical illustration is based on $100,000 placed in the ING USA Secure Index Opportunities Plus annuity with a 5% premium bonus. This example assumes no withdrawals were made. ING 16 16 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Income Deferral Income Deferral Immediate 5 years 10 years Guaranteed Withdrawal $105,000 $147,268 $206,551 Base Maximum Annual 5.5% 6.0% 6.5% Withdrawal (%) Maximum Annual $5,775 $8,836 $13,426 Withdrawal ($) Hypothetical illustration is based on $100,000 placed in the ING USA Secure Index Opportunities Plus annuity with a 5% premium bonus. This example assumes no withdrawals were made. ING 17 17 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Case Study Female, Age 65 Managed Assets: $1,000,000 Risk Tolerance: Low to Moderate Needs: Guaranteed Income Beginning Year 11 Protection of Assets Opportunity to Build Assets 18 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Income Generation Scenario 1- Variable Annuity with a Guaranteed Minimum Withdrawal Benefit Rider (GMWB) $1,000,000 Assets Allocate half of assets to $500,000 $500,000 satisfy income needs Managed Assets Income Generation Utilize GMWB for $500,000 Income Generation GMWB $59,015 of income Annual: generated at the start of Income- $59,015* year 11 Expense- $51,812 (75 bps) * Assumes 7% growth, a 6% annual withdrawal factor beginning year 11, and a 75 bps rider fee each year. 19 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Income Generation Scenario 2- GMWB Compared to the ING IncomeProtector Withdrawal Benefit Rider $1,000,000 Assets $500,000 $500,000 Allocate half of assets to Managed Assets Income Generation satisfy income needs Utilize GMWB and ING $250,000 $250,000 IncomeProtector Withdrawal GMWB IPWB Benefit for Income Generation $61,473 of income Annual*: Annual**: generated at the start of Income- $29,507 Income- $31,966 second year Expense- $25,906 Expense- $13,816 *Based on 7% growth in years 1-10, a 6% annual withdrawal factor beginning year 11, and a 75 bps rider fee. ** Based on 7% growth in years 1-10, a 6.5% annual withdrawal factor beginning year 11 and a 40 bps rider fee. 20 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Comparison of Scenarios 1 and 2 Scenario 1 Scenario 2 Difference Annual Income $59,015 $61,473 + $2,458 Cumulative $51,812 $39,722 - $12,090 Expense (through year 10) Assets- Protected** 0% 25% + 25% Income- Protected** 50% 50% 0% * $13,816 of the of the cumulative expense is attributed to the ING IncomeProtector Withdrawal Benefit which is refundable to the beneficiary under specific circumstances. ** The fixed Index annuity provides protection of assets from market risk while both the fixed index annuity and variable annuity with GMWB provide for protection of an income stream from market risk. 21 AGENT/REGISTERED REPRESENTATIVE USE ONLY – NOT FOR PUBLIC DISTRIBUTION
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