| Annuity Changes Beginning September 1 As we all are painfully aware, economic conditions remain unstable, with interest rates hovering near all-time lows and investment yields down significantly. Reduced investment earnings lower the interest rates we can credit and make it difficult to offer our products on the basis that we originally envisioned. (For further discussion, see eNews story Dropping Annuity Rates) The chart below illustrates the drop in 10-year Treasury rates since January. 
As rates have dropped over the course of the last year participation rates and caps have dropped, and so, too, has the profitability National Life Group realizes from annuity sales. In the last week alone, interest rates have dropped as much as 25 bps. In light of the continuing drop in interest rates we have elected to take the following steps to adequately respond to the present low interest rate environment and position the company for continued long-term growth and stability. Commissions - At this time, commissions will be unchanged on SPDA policies. However, we are closely monitoring the situation to determine if changes are necessary.
- SecurePlus Silver, SecurePlus Gold and SecurePlus Platinum flexible premium indexed annuity policies will have new commission schedules effective for applications received on or after September 15, 2010. Commissions will be unchanged for salary deduction/reduction premiums but commissions on single sum premiums into flexible premium policies will be reduced at all commission levels by about 1/4. The exact change will be set forth in your new commission schedule which you will receive prior to September 15.
SPDA Rates - Participation rates, caps and declared rates are being held at current levels, but if current conditions continue we plan to reduce rates to, or close to, the guaranteed levels effective September 29. Please see the Competitive Edge for current rates and effective dates. The formal rate change announcement for SPDA rates will be distributed in mid-September.
Guaranteed Lifetime Income Rider (GLIR) - Indexed SPDA GLIR rates are being held at the current level for applications received through September 28, 2010. Effective for applications received September 29 and later, the Indexed SPDA GLIR will be modified to reduce the roll-up rate to 6% and lower the guaranteed withdrawal percentages by .50% for all ages.
- We currently do not anticipate changes to the GLIR for flexible premium indexed annuities.
- A new calculator and withdrawal benefit calculation charts reflecting the Indexed SPDA GLIR change will be available within the coming weeks.
Withdrawn Policy Forms and Riders - Saver Select will not be available for sale after August 31, 2010. Applications must be received in house by August 31, and premiums paid by October 31, 2010 for the policy to be issued.
- SecurePlus TLC will not be available for sale after August 31, 2010. Applications must be received in house by August 31, and premiums paid by October 31, 2010 for the policy to be issued.
- The GLIR for both National Life and LSW traditional fixed annuities will be withdrawn effective September 15, 2010. Applications must be received by September 14, and the policy issued by November 15, 2010.
Please note: Despite the current economic uncertainty, you still have the opportunity to qualify for some terrific incentives, including The Chairman’s Club, The Conference of Champions, Performance Plus and the Quarterly Life Bonus. Qualification requirements remain unchanged, and your life and annuity sales receive full production credit towards qualification for the sales incentives for which you are eligible. We have taken the above steps to manage our business for long-term financial strength and stability, and that strategy is validated in our continued strong financial strength ratings from A.M. Best, Standard & Poor’s and Moody’s. Please remember we are constantly evaluating our product portfolio and we must adjust the policies as economic conditions warrant. While we and most commentators do not see any indication that the economic environment will change significantly in the near-term, if and when the interest rate environment changes further, we will evaluate all aspects of policies and riders for further adjustment. Changes like the ones outlined above have happened in the recent past. In 2003 we were able to react quickly when the situation reversed itself to restore rates and commissions. And, like then, we anticipate being able to again quickly adjust when a better economic environment surfaces. |
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National Life Group® is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest, Dallas, TX and their affiliates. Each company of the National Life Group is solely responsible for its own financial condition and contractual obligations. Life Insurance Company of the Southwest is not an authorized insurer in New York and does not do an insurance business in New York. For Agent Use Only - Not For Use With The Public |
