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At Fleming Financial Services, Inc., our role is to assist our clients in defining and realizing their financial objectives and goals. We work with our clients to implement personalized plans designed for their unique situations. Our areas of concentration are: Retirement planning, Estate and Wealth Transfer strategies, and Business Continuation planning. We emphasize the importance of conducting our business with integrity and professionalism. As a member of PartnersFinancial, an independent national financial services company, we are able to provide access to sophisticated resources for the benefit of our clients. Some of the professionals with our firm are currently registered to conduct business through NFP Securities, Inc. With those additional resources in place, we help facilitate the complex corporate and personal financial decisions our clients must make.
INDEXED UNIVERSAL LIFE: Mechanics and Capabilities - Part 3
Celeste Moya, AVP, Product Management, NFP Life With most insurance companies, when premiums are paid into an IUL policy, the following occurs (See Exhibit 2):
  1. The insurance company will first deduct premium-based charges.
  2. The premium net of charges then goes into the fixed account.
  3. On a preset date, commonly referred to as the sweep date, the remaining funds that have been designated by the client to the indexed account(s) are moved accordingly, and a segment is created for each strategy to which the client allocates funds.
  4. At the end of the segment term, when the segment matures, the index account is credited with interest based on index returns up to the limits set for each strategy. An index account will never be credited anything less than the minimum guaranteed interest rate, or floor.
  5. A new segment begins for each strategy based on the client’s selected allocation. The index value used for the start date of the new segment will be the same as the index value used for the previous segments end (or maturity) date. Each premium payment made by the client is handled by the insurance company as a separate segment.
Exhibit 2   Exhibit 4   For example, a policy with annual premiums (assuming a one-year point-to-point strategy) would have one index value starting point and one credited interest rate at the end of the segment term. However, a policy with monthly premiums could have 12 different segments, meaning that it would have 12 different index value starting points and possibly 12 different credited interest rates. Additionally, two policies with similar crediting strategies but different sweep dates could have very different returns. For example, a policy with a one-year point-to-point strategy and a sweep date of Jan. 15 could have a different return, or crediting rate, than a similar policy with a one-year point-to- point strategy and a sweep date of Jan. 30; the beginning index value and end index value in each segment could be different, resulting in different crediting rates for each policy. 6. This cycle continues throughout the life of policy with the opportunity for the client to make changes in allocation percentages and selected strategies before the start of a new segment. Exhibit 5 Copyright © 2013 NFP. All rights reserved.
Thomas Joseph
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Categories: Fleming Financial Services, Fleming Financial, General Information, Life Insurance
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