Key Product Features:
FG Life-Elite®: Fixed Indexed Universal Life Insurance
- Tax deferred growth of account values, and the possible tax advantaged access to account values
- Ability to earn interest based on the performance of the S&P 500® Index, subject to a cap, without any downside risk
- Select between two death benefit options. You may also switch the death benefit option in the future based on your changing needs
- Access to surrender value through withdrawals or loans
- Beginning in the 11th policy year a 0.25% persistency bonus may be credited to the fixed and indexed account value
- 15 year guarantee that the life insurance policy will not lapse as long as the required premiums are paid
How Does FG Life-Elite® Work?
FG Life-Elite’s® account value consists of two portions that may be credited with different interest rates:
- Premiums paid up to the annual target premium are allocated to the basic account value
- Premiums paid in a policy year that exceed target premium are allocated to the excess account value
The account value can be allocated between a fixed account, indexed interest accounts, or a combination of these accounts.
- One is a fixed interest account where Fidelity & Guaranty Life declares and guarantees for one year period a rate of interest that is fixed for a year.
- The other accounts are indexed interest accounts. The account value earns interest based on the performance of the S&P 500® index, subject to a cap and/or participation rate. The cap rate is set in advance of each segment’s buy date and may change as each segment renews. The minimum cap guaranteed by policy varies as follows: 1.5% when the 140% participation rate is selected, 2% when the 100% participation rate is selected, or 1% when the Monthly Point-to-Point option is selected.
The rate for fixed and indexed interest accounts is guaranteed to never be less than .25%. Account allocations between the interest crediting accounts may be changed once every year on the account value segment anniversary, subject to at least 30 days prior notice.
When allocating account value into the indexed interest account, it’s important to understand how these accounts are managed. Fidelity & Guaranty Life places money into the indexed interest account up to twelve times per year on the 15th of every month, or the first business day thereafter.
When premium is received before the monthly account allocation date, it is held in a short-term interest earning account and earns a declared interest rate daily, until the next monthly account allocation date.
The fixed interest account is credited with interest daily at the then current declared interest rate.
The indexed interest account credit is based, in part, upon a formula linked to changes in the S&P 500® and is subject to a cap.
The index change is determined by dividing the current month’s index price by the prior month’s index price, then subtracting 1. A cap is applied to each monthly gain; negative monthly changes are not limited, and the 12 monthly index changes are totaled at the end of the segment anniversary to determine interest credited. The interest credited will not be less than 0.25%
The index change is determined by dividing the current month’s index price by the prior month’s index price, then subtracting 1. A cap is applied to each monthly change; negative monthly changes are not limited, and the 12 monthly index changes are totaled at the end of the segment anniversary to determine indexed interest credited, if any. The interest credited will not be less than 0.25%
The resulting indexed interest credit is multiplied by account value at the segment anniversary and the percentage allocated to each applicable indexed interest account. Any index interest credit will not be credited to any portion of the account value that is deducted to pay cost of insurance charges or have been withdrawn or used as collateral under a fixed loan structure.
Beginning in the 11th policy year, FGL may credit an additional 0.25% persistency bonus interest rate to the fixed and indexed account value. Although our intent and history is to pay this bonus, FGL reserves the right to not declare a bonus.
Permanent life insurance policies, have two basic features:
- The death benefit
- The account value of the policy
How the two features interact with one another is important to understanding the type of insurance death benefit option you choose:
Option A - Death Benefit
With this type of death benefit, your death benefit is the greater of the face amount and the minimum death benefit required by law.
Option B - Death Benefit
With this type of death benefit, your total death benefit is the greater of the face amount plus the account value in the policy and the minimum death benefit required by law. You have the option to change death benefit options on the policy anniversary.
Flexible Death Benefit
FG Life-Elite is issued with a minimum face amount of $50,000. As long as you meet underwriting criteria you may adjust the face amount upward or downward, once each year. An increase may be made after the first policy year and a decrease after the third policy year. The face amount may not be reduced below $50,000.
No Lapse Guarantee
Your policy will remain in effect for 15 years if, during each month of the 15-year period, the premiums you pay are never less than the minimum no-lapse premium amount increased by any outstanding loan balances and partial withdrawal values. You may be foregoing the advantage of building up account value by paying only the minimum no-lapse premium.
The no lapse guarantee may increase the likelihood may increase the likelihood that your account value will be insufficient to cover the monthly mortality costs and expense charges unless additional premium is paid. If additional premium is not paid, your policy may terminate. Please consult your agent for details.
Should you choose to surrender your life insurance policy, the surrender value is available to you. This is your total account value less any surrender charges thereon and/or outstanding loans.
Surrender charges begin at issue and decline to zero over the first 15 years of the policy. Should coverage be increased, a new 15 year surrender charge period will be applied to account values associated with the increase in face amount.
Surrender Charge Waiver
No surrender charge applies to premium added to your account value during any policy year that exceeds the annual target premium.
As long as the policy's surrender value is positive, withdrawals may be made from the policy after the first policy year. Withdrawals will reduce the face amount by an equivalent amount. There is a $25 charge for each withdrawal and surrender charges may be incurred. Consult your tax advisor before making a withdrawal as it may be taxable.
Partial withdrawals may increase the likelihood that your account value will be insufficient to cover the monthly mortality costs and expense charges unless additional premium is paid. If additional premium is not paid, your policy may terminate. Please consult your agent for details.
A highly important and very valuable feature of your life insurance policy is the ability to take loans against the surrender value. With FG Life-Elite®, loans are available after the first policy year, and there is no limit to the number of loans that can be taken, provided that there is uncollateralized surrender value in the policy.
FG Life-Elite® offers two types of loans: Fixed and Variable. The difference between the two relates to the rate of interest charged and how the account value that is collateralized to cover the loan continues to earn interest. As always, you should select the loan that best suits your needs.
Fixed Loan Option
Account value in excess of premiums paid will be available for a preferred loan. For loans made in policy years 2 - 10, loans will be charged no more than the declared annual interest rate plus 2%. The account value that is used as collateral to cover the loan is moved into a fixed interest account where it will be credited the declared annual interest rate.
In policy years 11 and beyond, the interest charged on the preferred loan is equal to the declared annual interest rate. The account value that is collateralized to cover the loan will be credited with a rate equal to the declared annual interest rate.
Variable Loan Option
FG Life-Elite® stands out from many traditional indexed universal life products in that it offers a variable loan option. With a variable loan, the rate charged on the loan is based on the Moody's Corporate Bond Yield Average Index.
Like the fixed loan, variable loans may be available after the first policy year. Unlike the fixed loan, with the variable loan the account value that is used as collateral for the loan may continue to earn interest and/or index credits in the same proportion as the unloaned portion of your total account value. As a result, you may continue to earn interest and/or index interest credits up to the cap for that index crediting period. This design gives you the ability to leverage the policy values through loans. For instance, you might borrow at a 5% rate of interest, but the cash value used as collateral for the loan may earn 10%. In this scenario, you have a 5% gain. On the other hand, there is the possibility that you can borrow at 5% and earn 0% if the index doesn't perform well that year. In that scenario, the loan design costs a full 5%. Variable loans are a higher risk option that may have either a positive or negative outcome relative to a fixed loan.
Variable loan option is subject to state availability, certain restrictions may apply and it may increase likelihood that your account value will be insufficient to cover the monthly mortality costs and expense charges unless additional premium is paid. If additional premium is not paid, your policy may terminate. Please consult your agent for details.
Accelerated Benefit for Terminal Illness
If a physician diagnoses you with a terminal illness that results in a life expectancy of less than 24 months, this rider can pay a benefit of up to 100% of your policy's death benefit, not to exceed $500,000. This could help with unexpected medical costs not covered by traditional medical coverage, travel, or anything else.
Your policy death benefit would be reduced by the benefit amount for this rider. You should seek advice from a tax professional before exercising this rider.
Accelerated Benefit for Critical Illness
This benefit will pay up to 100% of your policy’s death benefit, not to exceed $500,000, in the event you suffer a heart attack, stroke, or are diagnosed with cancer or end-stage renal failure. The covered critical illness must first occur on or after the 30th day following the effective date of the rider. This could help you in a variety of ways as you focus on your treatment. The benefit amount for this rider will be based on your age and severity of the illness - the policy death benefit would be reduced accordingly. You should seek advice from a tax professional before exercising this rider.
Waiver of Monthly Deduction Rider
This valuable feature keeps your policy in force by waiving the monthly charges in your life insurance policy should the insured become totally disabled for longer than six months and begins the policy anniversary on which you attain age 60. This prevents the cancellation of coverage and keeps the surrender value from being depleted.
Accidental Death Benefit Rider
This rider increases the death benefit in the event of certain accident related deaths as long as it is prior to the policy anniversary on which you attain age 70 and request is made within 120 days from the date of the accident. The total amount of coverage may not exceed the lesser of the policy face amount or $250,000.
Primary Insured Term Life Insurance Rider
This rider is designed to help minimize policy charges in order to maximize policy values and income distributions for heavily funded sales. This rider is available for newly issued contracts with base policy amounts of $150,000 and higher. The minimum face amount that can be chosen is $150,000.
The term life insurance is available up to nine times the face amount on the base policy and is available only on the primary insured. There are no unit expense charges; however, cost of insurance charges apply and may be different from the base coverage. Minimum premium is required and may be different from the base coverage. Surrender charges do not apply on the term life insurance coverage.
Spouse Term Life Insurance Rider
This rider is available for newly issued contracts with base policy amounts of $150,000 and higher. This rider provides annual renewable term life insurance for the insured’s legal spouse with a death benefit up to age 120. The rider allows for its own beneficiary who may vary from that of the primary insured’s base policy beneficiary (if so designated).
The death benefit is available up to the amount of the primary insured’s base policy amount. The minimum face amount is $150,000. There are no unit expense charges; however, cost of insurance charges apply and may be different from the base policy. Surrender charges do not apply to the term life insurance coverage.
The rider is convertible to permanent life insurance while the base policy is still in effect, before the policy anniversary on which the insured is age 65, and within the first five years from the effective date of the insured’s coverage or within 31 days after the death of the insured under the contract.
Children's Level Term Insurance Rider
This benefit provides term life insurance for the insured's children until they reach age 25. Once monthly premium charge will insure all your children up to a $10,000 face amount per child.
The rider is convertible to permanent life insurance within 31 days prior to the time the child ceases to be insured under the rider. The amount of insurance for a converted policy may be up to five times the amount of the rider without underwriting.
Ultimate Income Rider
This rider allows you to designate how your death benefit will be paid. Instead of a single lump sum at death, payments can be distributed for years, providing steady income to your beneficiaries.
Overloan Protection Rider
This rider can prevent your life insurance policy from entering a lapse status as the result of outstanding loans that exceed your surrender value provided the policy has been in effect for at least 15 years and you have attained age 75. Certain conditions must be met before the rider can be exercised, and there is a one-time administrative fee when the rider is exercised. This rider may be exercised one time during the lifetime of the life insurance policy.
Optional benefit riders may not be available in all states. Some riders are subject to additional charges. Additional restrictions and limitations apply; see policy for complete details. Should you elect the Critical Illness Benefit or Terminal Illness Benefit an administration fee of up to $500 may apply in some states. Consult your tax advisor before exercising benefits. The Overloan Protection Rider has an administrative fee of up to 5% of the account value at the time the rider is exercised.
A 7.5% premium expense charge will be deducted from premiums paid up to the annual target premium in the first 10 years. A 5% premium expense charge will be deducted from premiums paid up to the annual target premium beginning in year 11. A 5% premium expense charge will be deducted from premiums paid in excess of the annual target premium. Each month, the company will deduct the cost of insurance charge, unit expense charge, any rider charges applicable and an $8 expense charge from the account value.
Monthly deductions will be deducted against the basic account value starting with the most recent segments. If the basic account value is insufficient to cover the monthly deduction, the excess account value will be used to cover cost of insurance deductions starting with the most recent segments.