Flexible Mortgage Protection with Life Insurance Product issued by 10% Life Insurance Company of the Southwest™ 62686 MK2272(1112) TC68396(0612) Protect your home, family and income – all in one policy A house is one of the largest purchases you will ever make, and your home mortgage will likely be your largest financial obligation. Maintaining adequate insurance protection will help your family to keep their home should something happen to you. A mortgage protection plan based on a life insurance policy from Life Insurance Company of the Southwest (LSW) helps you to protect your home and your family in case of premature death or a long-term illness. 1 Half of all foreclosures have medical causes.2 Protection for Today and Tomorrow In addition to the death benefit protection, the optional Accelerated Benefits Riders1 (ABR) provide access to your death benefit while you are still alive if you are diagnosed with a chronic, critical or terminal illness. From blindness and heart attacks to Alzheimer’s and cancer, your Life Insurance Company of the Southwest policy can be there to help. Best of all, the protection comes at no additional cost Use your accelerated benefit to cover any expense (with the exception of chronic illness in the state of Massachusetts, which can only be used to pay for expenses incurred for Qualified Long-Term Care services3), including but not limited to: • nursing home care • drug therapies • medical procedures • home health care • quality-of-life expenditures • household expenses • experimental medical treatments 1 Receipt of accelerated benefits will reduce the policy’s death benefit and cash value (for policies with such values) and may result in a taxable event. Actual payments are discounted since the benefit is received prior to death. Riders are optional and may not be available in all states. 2C hristopher T. Robertson, Richard Egelhof, & Michael Hoke, “Get Sick, Get Out: The Medical Causes of Home Foreclosures.” HEALTH MATRIX18 (2008) 65-105. 2 3 Qualified Long-Term Care services: The necessary diagnostic, preventative, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and are provided pursuant to a plan of care prescribed by a licensed health care practitioner. Why Life Insurance Company of the Southwest? Purchasing a life insurance policy may be one of the best decisions you ever make because of the death benefit protection it provides your family. With a life insurance policy from LSW, it can be so much more! LSW’s Life Insurance protection offers a combined affordable solution that can help provide protection for you and your family. This flexible package can help protect your plans for today and tomorrow through: • Death benefit protection for your loved ones • Optional living benefits help to provide financial security in the event of a qualifying illness4 • The choice of Universal Life that offers the potential for cash value accumulation or affordable Term coverage for a specific period of time, and • Disability Income Rider to help with financial obligations should you become disabled5 All riders described herein involve an additional cost except for the ABR. Riders may not be available on all policies and in all states. We call it: Life insurance you don’t have to die to use. 4 Riders are optional, may be available at additional cost, and may not be available in all states or on all products. Living Benefits are provided by no additional premium Accelerated Benefit Riders. Receipt of Living Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy, may result in a taxable event, and may affect your eligibility for public assistance programs. Benefits may not be mutually exclusive, and the use of one benefit may affect the availability of another. 5 Certain occupations are ineligible for coverage. Disability riders stay in force until the policy anniversary following the insured’s 65th birthday. 3 The Choice One of the first and most important decisions to make is whether to choose Universal Life or Term coverage. For many situations, term coverage may be the right decision for both your needs and your budget. One important question to ask yourself is, “How long do I need coverage?” If the answer is just until your mortgage is paid off, then choosing Term coverage may be sufficient to meet those needs. Term If you are someone who is looking for high-quality coverage for a specified amount of time at an affordable cost, then Term may be the right solution for you. If your situation changes and you should need permanent coverage, the option to convert your term policy to a permanent Universal Life policy also exists. Universal Life For people looking for more permanent protection, a Universal Life policy may be the answer. A Universal Life policy does more than just provide a death benefit, it also has the potential to build cash value for other needs that may arise such as taking supplemental income through policy loans and withdrawals for retirement or meeting other family life events that may occur.6 Regardless of what type of coverage you choose, life insurance can help provide both flexibility and security to help protect what’s important to you. 6 Policy loans and withdrawals will reduce the policy’s cash value and death benefit and may result in a taxable event. Surrender charges may reduce the policy’s cash value in early years. 4 7 Alzheimer’s Disease Education & Referral Center, U.S. Department of Health & Human Services - 2012. As many as 5.1 million Americans have Alzheimer’s Disease.7 5 Cash Value Accumulation With your Universal Life insurance policy, you can enjoy the potential for tax-deferred cash value accumulation. You can access your cash value8 through policy loans and withdrawals to help achieve your unique and personal objectives, including: • Help your children pay for college • For a down payment on a second home • Take advantage of new opportunities • Meet unexpected emergencies Whatever your needs and goals may be, the cash value accumulation that your universal life insurance policy may provide can help you with your future plans. Cash value in a universal life insurance policy could also be used to reduce or eliminate out of pocket premium payments.9 8 Loans and withdrawals will reduce your policy’s death benefit and cash value and may result in a taxable event. It may also become necessary for you to resume making premium payments if the policy’s cash value is not sufficient to fund the cost of your coverage. Surrender charges may reduce the policy’s cash value in early years. 9 It is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage. 6 Living Benefits Accelerated Benefits Riders10 Each year, about 795,000 people suffer a stroke in the US.12 [form series 8052(0798), 8095(0399), 8165(0703), ICC10-8844(0310)] The optional Accelerated Benefits Riders are an exceptional benefit – available at no additional cost – that allows you to accelerate all or part of your death benefit to help pay costs associated with a terminal9, chronic or critical illness. ABR benefits can be used towards any expense(with the exception of chronic illness in the state of Massachusetts, which can only be used to pay for expenses incurred for Qualified Long-Term Care services13) 10 Payment of Accelerated Benefits will reduce the Death Benefit and Cash Value (for policies with such values) otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you, your spouse and your family’s eligibility for public assistance. Accelerated Benefits Riders are optional and not available in all states. 11 A terminal illness is defined as one that’s expected to result in death within 2 years (one year in PA and VT). A chronic illness is defined as one that leaves you unable to perform two of the six normal activities of daily living without assistance or that leaves you with deterioration or loss in intellectual capacity. The six activities of daily living include bathing, continence, dressing, eating, toileting, and transferring. Covered critical illnesses are heart attack (myocardial infarction), stroke, diagnosis of cancer, diagnosis of end-stage renal failure, major organ transplant, diagnosis of ALS (amyotrophic lateral sclerosis), or blindness (corrected vision of no better than 20/200 in both eyes). Terminal and Critical Illness riders pay lump sum distribution. Chronic Illness rider accelerates up to 2% of the death benefit each month. 12 American Heart Association, Heart Disease & Stroke Statistics 2012 Update. 13 Qualified Long-Term Care services: The necessary diagnostic, preventative, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and are provided pursuant to a plan of care prescribed by a licensed health care practitioner. 7 Family Protection Currently, one in four deaths in the United States is due to cancer.14 If you rely on two incomes, as so many families do, you can apply for coverage for both spouses under this plan. The optional Other Insured Rider [form series 8057(0707)] offers term insurance protection for your spouse. You can also select the optional Children’s Term Rider [form series 8056 (0707)] to provide life insurance coverage for all of your children until they reach the age of 23. Your child can convert this coverage to his or her own individual policy. Disability Income Rider coverage is also available to help protect both you and your spouse’s income. Optional riders offer a choice of a two-year or five-year benefit period. 14 Cancer Statistics, 2012, American Cancer Society. 15 If the policy lapses while the benefit is being paid, it will be paid to you until your disability ends. 8 16 Waiver of Premium stays in force until the policy anniversary following the insured’s 60th birthday. Disability Benefits Disability benefits can help meet financial obligations such as your mortgage and household expenses in the event you become disabled: Disability Income Rider15 [form series 8054(0798), 8065(0798)] The Disability Income Rider is available should you become disabled and unable to work. It pays a fixed monthly benefit amount to help you cover expenses that you may no longer be able to meet while not working. Depending on your disability and needs, there is either a Two-Year Disability Rider or a Five-Year Disability Rider. Waiver of Premium Rider16 [form series 8053(0798)] In the event you become totally disabled, this rider waives your planned premium up to a specified limit, helping to alleviate your financial obligation, while keeping your policy in force. Riders are optional and require additional premium unless otherwise noted. Riders are not available in all states. 9 Customizing Your Coverage All in all, life insurance can help provide security and help accomplish goals for you and your family. Your death benefit can be used to pay off debts such as a mortgage, fund a college tuition or supplement a spouse’s income. With multiple options and riders to choose from, your agent can custom design a policy for you. Adjustable Death Benefits Your life insurance policy provides the flexibility to increase or decrease the death benefit as your needs change without having to purchase a new policy.17 Guaranteed Insurability Rider [form series 8051(0798)] If your needs shift and you need more coverage, this rider allows you to increase protection without producing evidence of insurability during certain option periods. Accidental Death Benefit Rider [form series 8050(0798)] If in the unfortunate event you should die as a result of an accident, this rider pays an additional death benefit.18 Unemployment Rider [form series 8058(0798)] If you were to involuntarily become unemployed from your full-time job, this rider allows you to waive your policy premiums for three months. Riders are optional and require additional premium unless otherwise noted. 17 Increases in coverage may require evidence of insurability. 18 This rider stays in force until the policy anniversary following your 70th birthday, as long as your life insurance coverage remains in force. 10 19 American Heart Association, Heart Disease & Stroke Statistics 2012 Update. This year, about 1.2 million Americans will have a coronary attack.19 11 Compare our flexible universal life policy to a traditional mortgage insurance policy: Our Policy Traditional Policies Flexibility 3 Structure your policy to meet your needs The mortgage determines the structure Choice 3 You choose your beneficiary The mortgage holder is the beneficiary Security 3 The death benefit goes to your family, they choose how to use it The death benefit automatically goes to the mortgage holder Protection 3 The death benefit does not decrease automatically The death benefit generally decreases in step with the outstanding mortgage debt Portability 3 You can take your policy with you when you sell your home or refinance A traditional mortgage protection policy is normally tied to a specific mortgage Cash Value 3 If you choose a universal life policy, your policy can build cash value for the future Traditional mortgage policies do not build any future value Living Benefits 3 Riders can provide access to your death benefit in case of a terminal, chronic, or critical illness No living benefits Optional Riders 3 Optional riders can provide benefits in case of disability or unemployment No disability or unemployment benefits Experience the Advantage of Flexible Mortgage Protection through an LSW Life Insurance Policy. 12 Die Too Soon Become Ill Live Too Long Die Too Soon Life Changes. Protect It. Become Ill Live Too Long LSW Foundation UL [form series 8640/8640ID (0708)] Universal Life Insurance, along with LSW Level Term Life Insurance [form series 8119/8120(0899), 8109-8112(0906), 8115-8117(0906)] and applicable riders are underwritten by Life Insurance Company of the Southwest, Addison, Texas. Riders are optional and are available at additional cost, unless otherwise noted. All riders are not available on all products and may not be available in all states. Benefits may not be mutually exclusive. The use of one benefit may reduce or eliminate other benefits. • The Accelerated Benefits Rider for Chronic illness is not available in Connecticut, Kansas, Maryland and Minnesota. The Critical illness rider is not available in Connecticut and New Jersey. • We currently limit the amount of death benefit that may be accelerated under all accelerated benefit riders applying to the same insured to $1,000,000. We reserve the right to change this limit in the future, however the limit will never be less than $500,000. National Life Group® is a trade name representing various affiliates, which offer a variety of financial service products. Life Insurance Company of the Southwest is a member of National Life Group. 800-732-8939 | www.NationalLifeGroup.com Centralized Mailing Address: One National Life Drive, Montpelier, VT 05604 Home Office: Addison, TX