West Virginia Code of State Rules
Agency 114 - Insurance Commission
Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER
Series 114-11E - Annuity Disclosure
Appendix A - Annuity Illustration Example
Annuity Illustration Example
[The following illustration is an example only and does not reflect specific characteristics of any actual product for sale by any company]
ABC Life Insurance Company
Company Product Name
Flexible Premium Fixed Deferred Annuity with a Market Value Adjustment (MVA)
An Illustration Prepared for John Doe by John Agent on mm/dd/yyyy
(Contact us at Policvownerservice@ABCLife.com or 555-555-5555)
| Sex: Male | Initial Premium Payment: $100,000.00 |
| Age at Issue: 54 | Planned Annual Premium Payments: None |
| Annuitant: John Doe | Tax Status: Nonqualified |
| Oldest Age at Which Annuity Payments Can Begin: 95 | Withdrawals: None Illustrated |
| Initial Interest Guarantee Period | 5 Years |
| Initial Guaranteed Interest Crediting Rates | |
| First Year (reflects first year only interest bonus credit of 0.75%): | 4.15% |
| Remainder of Initial Interest Guarantee Period: | 3.40% |
| Market Value Adjustment Period: | 5 Years |
| Minimum Guaranteed Interest Rate after Initial Interest Guarantee Period *: | 3% |
* After the Initial Interest Guarantee Period, a new interest rate will be declared annually. This rate cannot be lower than the Minimum Guaranteed Interest Rate.
Annuity Income Options and Illustrated Monthly Income Values
This annuity is designed to pay an income mat is guaranteed to last as long as the Annuitant lives. When annuity income payments are to begin, the income payment amounts will be determined by applying an annuity income rate to the annuity Account Value.
Annuity income options include the following:
* Periodic payments for Annuitant's life
* Periodic payments for Annuitant's life with payments guaranteed for a certain number of years
* Periodic payments for Annuitant's life with payments continuing for the life of a survivor annuitant
Illustrated Annuity Income Option:Monthly payments for annuitant's life with payments guaranteed for 10-year period
Assumed Age When Payments Start: 70
| Account Value | Monthly Annuity Income Rate/$ 1,000 of Account Value* | Monthly Annuity Income | |
| Based on Rates Guaranteed in the Contract | $164,798 | $5.00 | $823.99 |
| Based on Rates Currently Offered by the Company | $171,976 | $6.50 | $1,117.84 |
*If, at the time of annuitization, the annuity income rates currently offered by the company are higher than the annuity income rates guaranteed in the contract, the current rates will apply.
| Values Based on Guaranteed Rates | Values Based on Assumption that Initial Guaranteed Rates Continue | |||||||
| Contract Year/Age | Premium Payment | Interest Crediting Rate | Account Value | Case Surrender Value Before MVA | Minimum Cash Surrender Value After MVA | Interest Crediting Rate | Account Value | Cash Surrender Value Before and After MVA |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) |
| 1/55 | $100,000 | 4.15% | $104,150 | $95,818 | $92,000 | 4.15% | $104,150 | $95,818 |
| 2/56 | 0 | 3.40% | $107,691 | $100,153 | $93,000 | 3.40% | $107,691 | $100,153 |
| 3/57 | 0 | 3.40% | $111,353 | $104,671 | $95,614 | 3.40% | $111,353 | $104,671 |
| 4/58 | 0 | 3.40% | $115,139 | $109,382 | $98,482 | 3.40% | $115,139 | $109,382 |
| 5/59 | 0 | 3.40% | $119,053 | $114,291 | $114,291 | 3.40% | $119,053 | $114,291 |
| 6/60 | 0 | 3.00% | $122,625 | $118,946 | $118,946 | 3.40% | $123,101 | $119,408 |
| 7/61 | 0 | 3.00% | $126,304 | $123,778 | $123,778 | 3.40% | $127,287 | $124,741 |
| 8/62 | 0 | 3.00% | $130,093 | $130,093 | $130,096 | 3.40% | $131,614 | $131,614 |
| 9/63 | 0 | 3.00% | $133,996 | $133,996 | $133,996 | 3.40% | $136,089 | $136,089 |
| 10/64 | 0 | 3.00% | $138,015 | $138,015 | $138,015 | 3.40% | $140,716 | $140,716 |
| 11/65 | 0 | 3.00% | $142,156 | $142,156 | $142,156 | 3.40% | $145,501 | $145,501 |
| 16/70 | 0 | 3.00% | $164,798 | $164,798 | $164,798 | 3.40% | $171,976 | $171,976 |
| 21/75 | 0 | 3.00% | $191,046 | $191,046 | $191,046 | 3.40% | $203,268 | $203,268 |
| 26/80 | 0 | 3.00% | $221,474 | $221,474 | $221,474 | 3.40% | $240,225 | $240,225 |
| 31/85 | 0 | 3.00% | $256,749 | $256,749 | $256,749 | 3.40% | $335,643 | $335,643 |
| 36/90 | 0 | 3.00% | $297,643 | $297,643 | $297,643 | 3.40% | $335,643 | $335,643 |
| 41/95 | 0 | 3.00% | $345,050 | $345,050 | $345,050 | 3.40% | $396,717 | $396,717 |
Column Descriptions
(1) Ages shown are measured from the Annuitant's age at issue.
(2) Premium Payments are assumed to be made at the beginning of the Contract Year shown.
Values Based on Guaranteed Rates
(3) Interest Crediting Rates shown are annual rates: however, interest is credited daily. During the Initial Interest Guarantee Period, values developed from the Initial Premium Payment are illustrated using the Initial Guaranteed Interest Rate(s) declared by the insurance company, which include an additional first year only interest bonus credit of 0.75%. The interest rates will be guaranteed for the Initial Interest Guarantee Period, subject to an MVA. After the Initial Interest Guaranteed Period, a new renewal interest rate will be declared annually, but can never be less than the Minimum Guaranteed Interest Rate shown.
(4) Account Value is the amount you have at the end of each year if you leave your money in the contract until you start receiving annuity payments. It is also the amount available upon the Annuitant's death if it occurs before annuity payments begin. The death benefit is not affected by surrender charges or the MVA.
(5) Cash Surrender Value Before MVA is the amount available at the end of each year if you surrender the contract (after deduction of any Surrender Charge) but before the application of any MVA. Surrender charges are applied to the Account Value according to the schedule below until the surrender charge period ends, which may be after the Initial Interest Guarantee Period has ended.
| Years Measured from Premium Payment: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8+ |
| Surrender Charge: | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 0% |
(6) Minimum Cash Surrender Value After MVA is the minimum amount available at the end of each year if you surrender your contract before the end of five years, no matter what the MVA is. The minimum is set by law. The amount you receive may be higher or lower than the cash surrender value due to the application of the MVA, but never lower than this minimum. Otherwise the MVA works as follows: If the interest rate available on new contracts offered by the company is LOWER than your Initial Guaranteed Interest Rate, the MVA will INCREASE the amount you receive. If the interest rate available on new contracts offered by the company is HIGHER than your Initial Guaranteed Interest Rate, the MVA will DECREASE the amount you receive.
Values Based on Assumption that Initial Guaranteed Rates Continue
(7) Interest Crediting Rates are the same as in Column (3) for the Initial Interest Guarantee Period. After the Initial Interest Guarantee Period, a new renewal interest rate will be declared annually. For the purposes of calculating the values in this column, it is assumed that the Initial Guaranteed Interest Rate (without the bonus) will continue as the new renewal interest rate in all years. The actual renewal interest rates are not subject to an MVA and will very likely NOT be the same as the illustrated renewal interest rates.
(8) Account Value is calculated the same way as Column (4).
(9) Cash Surrender Value Before and After MVA is the Cash Surrender Value at the end of each year assuming that Initial Guaranteed Interest Rates continue and that the continuing rates are the rates offered by the company on new contracts. In this case, the MVA would be zero and Cash Surrender Values before and after the MVA would be the same.
Important Note: This illustration assumes you will take no withdrawals from your annuity before you begin to receive periodic income payments. Withdrawals will reduce both the annuity Account Value and the Cash Surrender Value. You may make withdrawals of up to 10% of your account value each contract year without paying surrender charges. Excess withdrawals (above 10%) and full withdrawals will be subject to surrender charges.
This illustration assumes the annuity's current interest crediting rates will not change. It is likely that they will change and actual values may be higher or lower than those in the illustration.
The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. For more information, read the annuity disclosure and annuity buyer's guide.
MVA-adjusted Cash Surrender Values (CSVs) Under Sample Scenarios
The graphs below shows MVA-adjusted Cash Surrender Values (CSVs) During the first five years of the contract, as illustrated above ($100,000 single premium, a 5-year MVA Period), under two same scenarios, as described below.
Graph #1 shows if the interest rate on the new contracts is 3% LOWER than your Initial Guaranteed Interest Rate, the MVA will increase the amount you receive. The other line shows the Cash Surrender Values if the Initial Guaranteed Interest Rates continue (from Column (9) above).
Graph #2 shows if the interest rate on new contracts is 3% HIGHER than your Initial Guaranteed Interest Rate, the MVA will decrease the amount you receive, but not below the minimum set by law (Column (6) above), which in this scenario limits the decrease for the first 2 years. The other line shows the Cash Surrender Values if the Initial Guaranteed Interest Rates continue (from Column (9) above).
These graphs and the same guaranteed interest rates on new contracts used are for demonstration purposes only and are not intended to be a projection of how guaranteed interest rates on new contracts are likely to behave.
