EX-99.1(M) 4 b47121mnexv99w1xmy.txt CALCULATIONS FOR ILLUSTRATIONS VENTURE CORPORATE VUL (SURRENDER CHARGE VERSION) ILLUSTRATION SAMPLE CALCULATIONS THE ASSUMED POLICYHOLDER Male standard nonsmoker, age 45. Face Amount $365,000. Death benefit option 1. $20,000 planned annual premium paid on the policy anniversary. Assuming current cost of insurance rates and a hypothetical gross annual investment return of 12%. The sample calculations are shown for policy year 5 month 1. The following is a detailed representation of the interim policy value calculations during policy year 5.
POLICY BEGINNING NET VALUE ADMIN COI MONTHLY NET ENDING MONTH POLICY PREMIUM AFTER CHARGE CHARGE INVESTMENT POLICY VALUE PREMIUM FACTOR VALUE (Step 1) (Step 2) (Step 3a) (Step 3c) (Step 4) (Step 5) ---------- ----------- ------------ ------------- --------- ---------- ----------- ------- 1 92,945 19,600 112,545 12 124 1.008241017 113,336 2 113,336 0 113,336 12 123 1.008241017 114,134 3 114,134 0 114,134 12 123 1.008241017 114,939 4 114,939 0 114,939 12 122 1.008241017 115,751 5 115,751 0 115,751 12 122 1.008241017 116,570 6 116,570 0 116,570 12 122 1.008241017 117,396 7 117,396 0 117,396 12 121 1.008241017 118,229 8 118,229 0 118,229 12 121 1.008241017 119,070 9 119,070 0 119,070 12 120 1.008241017 119,918 10 119,918 0 119,918 12 120 1.008241017 120,773 11 120,773 0 120,773 12 119 1.008241017 121,636 12 121,636 0 121,636 12 119 1.008241017 122,507
THE GROSS ANNUAL INVESTMENT RETURNS Derivation of annual subaccount rate of return from hypothetical gross annual investment return. The calculation of Net Rate is done on a daily basis and then converted to an annual percentage. Annual Net SubAccount Rate of Return = Hypothetical Gross Annual Investment Return - Assumed Annual Investment Management Fees and Expenses* - Annual Mortality and Expense Charge = 12% - 1.09% - 0.56% = 10.35% * Investment management fees and expenses vary by subaccount. Actual investment management fees and expenses will vary with the policyholder's allocation of premium and policy value between the available subaccounts. Investment management fees and expenses represent investment advisory fees and other expenses paid by the portfolios. This illustration reflects an average of the current expenses for the available subaccounts, which is 0.982% per annum. THE ILLUSTRATED POLICY VALUES How the Policy Value is Calculated: Ending Policy Value = (Beginning Policy Value + Net Premium - Total Monthly Deductions) x (Monthly Net Investment Factor) Step 1: The Beginning Policy Value The Beginning Policy Value is the policy value at the end of the previous month. For year 5 month 1, the Beginning Policy Value is the policy value in year 4 month 12, or $92,945 Step 2: Calculating the Net Premium Net Premium = Gross Premium - Premium Charge For year 5 month 1, the premium charge is 2.0% of gross premium paid. There is no premium for the other months in year 5. Net Premium = $20,000 - ($20,000 x 2%) = $19,600 Step 3: Calculating the Total Monthly Deductions Total Monthly Deductions = Administrative charge + Cost of Insurance Charge Step 3a: Administrative charge of $12.00 per month. Step 3b: Cost of Insurance (COI) Charge = Monthly COI rate x [ (Death Benefit / Discount Factor ) - (Beginning Policy Value + Net Premium - Administrative charge) ] In the illustrated example, the Monthly COI rate for year 5 is .000493481, the Death Benefit is $365,000 and the Discount Factor is 1.0032737 The Beginning Policy Value is $92,945 COI Deduction = 0.000493481 x [ ( $365,000 / 1.0032737 ) - ($92,945+ $19,600 - $12.00] = $124. Total Monthly Deductions = $12.00 + $124.00 = $136.00 Step 4: Determining the Net Investment Factor The value of a unit of each sub-account was initially fixed at $10.00. For each subsequent Business Day the unit value for that sub-account is determined by multiplying the unit value for the immediately preceding Business Day by the net investment factor for the that sub-account on such subsequent Business Day. The net investment factor for a sub-account on any Business Day is equal to (a) divided by (b) where: a) is the net asset value of the underlying Portfolio shares held by that sub-account as of the end of such Business Day before any policy transactions are made on that day; and b) is the net asset value of the underlying Portfolio shares held by that sub-account as of the end of the immediately preceding Business Day after all policy transactions were made for that day; The value of a unit may increase, decrease, or remain the same, depending on the investment performance of a sub-account from one Business Day to the next. For the illustration, a hypothetical monthly net investment factor is calculated which is equivalent to a 10.240% net annual subaccount rate of return: Monthly Net Investment Factor (hypothetical) = (1 + 0.1035) to the power of 1/12 = 1.008241017 Step 5: Ending Policy Value Ending Policy Value = (Beginning Policy Value + Net Premium - Total Monthly Deductions) x (Monthly Net Investment Factor) For year 5 month 1Ending Policy Value = ( $92,945+ $19,600.00 - $136.00 ) x (1.008241017) = $113,336 THE ILLUSTRATED CASH SURRENDER VALUES How the Cash Surrender Value is Calculated: Cash Surrender Value = Ending Policy Value - Surrender Charge The Surrender Charge is expressed as a percentage of total premiums paid from issue to the applicable policy year. Amounts not included in this total premium paid for surrender charge purposes include: 1. Premiums in any year in excess of the target premium 2. Premium paid after the fifth policy year. A portion of the surrender charge is assessed on a partial withdrawal or a decrease in the face amount. The surrender charge percentages vary by policy year and as per the table below
SURRENDER POLICY CHARGE YEAR PERCENT ---- ------- 1 5.0% 2 4.0% 3 3.0% 4 2.5% 5 2.0% 6 1.5% 7 1.0% 8 1.0% 9 0.5% 10+ 0.0%
Surrender Charge = Surrender Charge Rate x Total Premiums Paid from Issue during the First Five Policy Years The Surrender Charge Rate used in this illustration is 2.0% The Total Premiums Paid from Issue during the First Five Policy Years is $100,000 The Target Premium is $20,000 per year For year 5 month 1, the Surrender Charge = 2.0% x ($100,000) = $2,000 and for month 12, the Surrender Charge = 2.0% x ( $100,000) = $2,000 Cash Surrender Value month 1 = $113,336 - $2,000 = $111,336 Cash Surrender Value month 12 = $122,057 - $2,000 = $120,057 The following is a detailed representation of the interim cash surrender value calculations during policy year 5.
POLICY ENDING SURRENDER TOTAL SURRENDER CASH MONTH POLICY CHARGE PREMIUMS CHARGES SURRENDER VALUE RATE PAID* VALUE ----- ------ ------ -------- ------- --------- 1 113,336 2.0% 100,000 2,000 111,336 2 114,134 2.0% 100,000 2,000 112,134 3 114,939 2.0% 100,000 2,000 112,939 4 115,751 2.0% 100,000 2,000 113,751 5 116,570 2.0% 100,000 2,000 114,570 6 117,396 2.0% 100,000 2,000 115,396 7 118,229 2.0% 100,000 2,000 116,229 8 119,070 2.0% 100,000 2,000 117,070 9 119,918 2.0% 100,000 2,000 117,918 10 120,773 2.0% 100,000 2,000 118,773 11 121,636 2.0% 100,000 2,000 119,636 12 122,507 2.0% 100,000 2,000 120,507
THE ILLUSTRATED DEATH BENEFITS How the Death Benefit is determined: Death Benefit = greater of [ Face Amount ] or [ Policy Value x Minimum Death Benefit Percentage ] In year 5 of the illustration, the attained age of the policyholder is 50 and the applicable Minimum Death Benefit Percentage is 130%. Death Benefit = greater of [ $365,000 ] or [ 130% x 122,507] = $365,000 THE CALCULATIONS IN OTHER POLICY YEARS How the Policy Value calculation will differ in other years:
YEAR PREMIUM CHARGE MONTHLY M&E CHARGE ADMINISTRATION CHARGE ---- -------------- ------------------ --------------------- 1 2.00% 0.50% 12 2 2.00% 0.50% 12 3 2.00% 0.50% 12 4 2.00% 0.50% 12 5 2.00% 0.50% 12 6 2.00% 0.50% 12 7 2.00% 0.50% 12 8 2.00% 0.50% 12 9 2.00% 0.50% 12 10 2.00% 0.50% 12 11+ 0.00% 0.20% 12
The monthly COI rates will vary by attained age. How the Cash Surrender Value will differ in other years: The surrender charge rate is based on the duration of the coverage. The surrender charge percentage decrease from policy year 1 to 9, and is zero for year 10 and later. Within a policy year, the surrender charge percentage is level on a monthly basis.
POLICY YEAR SURRENDER CHARGE PERCENTAGE ----------- ---------------- 1 5.0% 2 4.0% 3 3.0% 4 2.5% 5 2.0% 6 1.5% 7 1.0% 8 1.0% 9 0.5% 10+ 0.0%
How the Death Benefit will differ in other years: Under Death Benefit Option 1, the death benefit is the Face Amount of the policy or, if greater, the Minimum Death Benefit. The Minimum Death Benefit is required to ensure the policy continues to qualify as life insurance under the Internal Revenue Code, and is equal to the Policy Value times the applicable Minimum Death Benefit Percentage. VENTURE CORPORATE VUL (SALES LOAD VERSION) ILLUSTRATION SAMPLE CALCULATIONS THE ASSUMED POLICYHOLDER Male standard nonsmoker, age 45. Face Amount $365,000. Death benefit option 1. $20,000 planned annual premium paid on the policy anniversary. Assuming current cost of insurance rates and a hypothetical gross annual investment return of 12%. The sample calculations are shown for policy year 5 month 1. The following is a detailed representation of the interim policy value calculations during policy year 5.
POLICY BEGINNING NET VALUE ADMIN COI MONTHLY NET ENDING MONTH POLICY PREMIUM AFTER CHARGE CHARGE INVESTMENT POLICY VALUE PREMIUM FACTOR VALUE (Step 1) (Step 2) (Step 3a) (Step 3c) (Step 4) (Step 5) --------- -------- ---------- ------- --------- --------- ----------- --------- 1 91,125 19,400 112,345 12 81 1.008241017 111,343 2 111,343 0 111,343 12 81 1.008241017 112,167 3 112,167 0 112,167 12 80 1.008241017 112,998 4 112,998 0 112,998 12 80 1.008241017 113,837 5 113,837 0 113,837 12 80 1.008241017 114,683 6 114,683 0 114,683 12 80 1.008241017 115,535 7 115,535 0 115,535 12 79 1.008241017 116,396 8 116,396 0 116,396 12 79 1.008241017 117,263 9 117,263 0 117,263 12 79 1.008241017 118,138 10 118,138 0 118,138 12 78 1.008241017 119,021 11 119,021 0 119,021 12 78 1.008241017 119,911 12 119,911 0 119,911 12 78 1.008241017 120,809
THE GROSS ANNUAL INVESTMENT RETURNS Derivation of annual subaccount rate of return from hypothetical gross annual investment return. The calculation of Net Rate is done on a daily basis and then converted to an annual percentage. Annual Net SubAccount Rate of Return = Hypothetical Gross Annual Investment Return - Assumed Annual Investment Management Fees and Expenses* - Annual Mortality and Expense Charge = 12% - 1.09% - 0.56% = 10.35% * Investment management fees and expenses vary by subaccount. Actual investment management fees and expenses will vary with the policyholder's allocation of premium and policy value between the available subaccounts. Investment management fees and expenses represent investment advisory fees and other expenses paid by the portfolios. This illustration reflects an average of the current expenses for the available subaccounts, which is 0.982% per annum. THE ILLUSTRATED POLICY VALUES How the Policy Value is Calculated: Ending Policy Value = (Beginning Policy Value + Net Premium - Total Monthly Deductions) x (Monthly Net Investment Factor) Step 1: The Beginning Policy Value The Beginning Policy Value is the policy value at the end of the previous month. For year 5 month 1, the Beginning Policy Value is the policy value in year 4 month 12, or $91,125 Step 2: Calculating the Net Premium Net Premium = Gross Premium - (Premium Charge + Sales Load) For year 5 month 1, the premium charge is 2.0% of gross premium paid. The Sales Load is 1.0% of gross premium paid. There is no premium for the other months in year 5. Net Premium = $20,000 - ($20,00 x (2.0% premium charge + 1.0% sales load) = $19,400 Step 3: Calculating the Total Monthly Deductions Total Monthly Deductions = Administrative charge + Cost of Insurance Charge Step 3a: Administrative charge of $12.00 per month. Step 3b: Cost of Insurance (COI) Charge = Monthly COI rate x [ (Death Benefit / Discount Factor ) - (Beginning Policy Value + Net Premium - Administrative charge) ] In the illustrated example, the Monthly COI rate for year 5 is .000319784, the Death Benefit is $365,000 and the Discount Factor is 1.0032737 The Beginning Policy Value is $91,125 COI Deduction = .000319784 x [ ( $365,000 / 1.0032737 ) - ($91,125+ $19,400 - $12.00] = $81. Total Monthly Deductions = $12.00 + $81.00 = $93.00 Step 4: Determining the Net Investment Factor The value of a unit of each sub-account was initially fixed at $10.00. For each subsequent Business Day the unit value for that sub-account is determined by multiplying the unit value for the immediately preceding Business Day by the net investment factor for the that sub-account on such subsequent Business Day. The net investment factor for a sub-account on any Business Day is equal to (a) divided by (b) where: a) is the net asset value of the underlying Portfolio shares held by that sub-account as of the end of such Business Day before any policy transactions are made on that day; and b) is the net asset value of the underlying Portfolio shares held by that sub-account as of the end of the immediately preceding Business Day after all policy transactions were made for that day; The value of a unit may increase, decrease, or remain the same, depending on the investment performance of a sub-account from one Business Day to the next. For the illustration, a hypothetical monthly net investment factor is calculated which is equivalent to a 10.240% net annual subaccount rate of return: Monthly Net Investment Factor (hypothetical) = (1 + 0.1035) to the power of 1/12 = 1.008241017 Step 5: Ending Policy Value Ending Policy Value = (Beginning Policy Value + Net Premium - Total Monthly Deductions) x (Monthly Net Investment Factor) For year 5 month 1Ending Policy Value = ( $91,125 + $19,400.00 - $93.00 ) x ( 1.008241017 ) = $111,343 THE ILLUSTRATED DEATH BENEFITS How the Death Benefit is determined: Death Benefit = greater of [ Face Amount ] or [ Policy Value x Minimum Death Benefit Percentage ] In year 5 of the illustration, the attained age of the policyholder is 50 and the applicable Minimum Death Benefit Percentage is 130%. Death Benefit = greater of [ $365,000 ] or [ 130% x 128,809] = $365,000 THE CALCULATIONS IN OTHER POLICY YEARS How the Policy Value calculation will differ in other years:
YEAR PREMIUM CHARGE SALES LOAD MONTHLY M&E CHARGE ADMINISTRATION CHARGE ---- -------------- ---------- ------------------ --------------------- 1 2.00% 8.00% 0.50% 12 2 2.00% 6.00% 0.50% 12 3 2.00% 3.00% 0.50% 12 4 2.00% 2.00% 0.50% 12 5 2.00% 1.00% 0.50% 12 6 2.00% 0.00% 0.50% 12 7 2.00% 0.00% 0.50% 12 8 2.00% 0.00% 0.50% 12 9 2.00% 0.00% 0.50% 12 10 2.00% 0.00% 0.50% 12 11+ 0.00% 0.00% 0.20% 12
The monthly COI rates will vary by attained age. How the Death Benefit will differ in other years: Under Death Benefit Option 1, the death benefit is the Face Amount of the policy or, if greater, the Minimum Death Benefit. The Minimum Death Benefit is required to ensure the policy continues to qualify as life insurance under the Internal Revenue Code, and is equal to the Policy Value times the applicable Minimum Death Benefit Percentage.