by Tammy Melvold, Broker Dealer Annuity Sales Consultant - Creative Marketing
How helpful would it be if you could go back in time and know where the rainbow would appear before the rain started? It would make finding the pot of gold easier. And, wouldn’t it be nice if you place a bet on the winning horse … after the race? Would knowing the long shot help turn your $2 bet into $10? What annuity buyer wouldn’t want that kind of hindsight when picking a safe money option for their retirement assets? National Western Life’s uncapped NWL Global Lookback® annuity is designed to do just that! Their “Retrospective Allocation,” which is central to the design, could forever change the earning potential of fixed indexed annuities.
Global Lookback uses a variation of the rainbow crediting method that began showing its performance colors as the market began rebounding. While it still uses a look-back after-the-fact to optimally weight indices and maximize interest crediting, it also employs an “annual ratchet” to lock in annual gains, potentially boosting yields with a basket of indices working for them, not just the S&P 500®.
Global Lookback uses year-end performance weighting of S&P 500 Index, Dow EUROSTOXX 50, Hang Seng 30 and the Nikkei 225. These indices are ranked to provide maximum gain. The retroactive allocation creates “Smart Crediting” and begins by using 40% of the top performing index, 30% of the second performer, 20% of the third, and 10% of the worst performer. This means the strategy uses 70% of the leading two indices performance while only considering 30% of the weaker performers. Imagine the type of client gains that are possible if two indices break the 20% mark in a year!
NWL’s index breakdown is 40%/30%/20%/10% at lookback. This is interest Option K and it has no cap. With no cap and combining indices that zig when others zag, this annuity has the potential to create exceptional performance. For example, if your clients purchased NWL’s Global Lookback (Option K) with “Smart Crediting” every week beginning in October 2008, the average annual return through April 2010 was 17.8%. Capped products returned 5% to 7% generally1.
“Smart Crediting” is the major selling feature of the Global Lookback product. Agents will no longer have to recommend monthly average instead of monthly cap, or annual point-to-point over term endpoint. This takes the pressure off agents who formerly had to make a selection for their clients. How often was the selection optimal? In fact, how often do agents have to explain to clients at statement time why they picked method “A” instead of method “B”?
The Optimal Difference
Just what kind of difference can the optimal retroactive allocation within a basket of four indices make? Let’s consider Global Lookback’s Option K performance. This option offers performance weighted, uncapped indexing. Returns credited on the first policy anniversary with an 80% participation rate and first year Asset Fee Rate of 1.5%.
Remember that past performance is no guarantee of future results. It is also important to keep in mind participation rates and assets fees are subject to change annually. However, Global Lookback’s Rainbow Crediting strategy might earn interest in years the S&P is flat or down. This is the type of “warm and fuzzy” index annuity buyers want.
The Real Value
So what is the real value of the Global Lookback annuity? The design is simple, the allocations guaranteed to be optimal, and clients simply get to sit back and earn competitive yields based on the performance of global indices … even if the S&P 500 under-performs. Additional features like the optional Income Outlook and Income Outlook Plus 5 lifetime withdrawal benefit options and 10% penalty free withdrawals are available on this annuity. Throw in an “A” Excellent rating from AM Best, cash loan privileges, the ability to leave a death benefit equal to the contract value, and a company that since 1956 has placed the emphasis on financial strength for the protection of its policyholders, and your clients may actually find a pot of gold at the end of the rainbow!
Talk to your Annuity Sales Consultant today to find out more about NWL’s Global Lookback and the other fine annuity products they have available for your clients.
FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC 11088-2010/6/14
1Advantage Compendium, May 2010
NWL® Global Lookback (form 01-1144-07 and state variations) is a flexible premium deferred fixed indexed annuity issued by National Western Life Insurance Company, Austin, Texas.
The Income Outlook Rider (01-3128-07 and state variations) and Income Outlook+5 rider (01-3128-09 and state variations) as well as the underlying annuity products and are issued by National Western Life Insurance Company, Austin, Texas.
Products not approved in all states. Certain limitations and exclusions apply. See Policy for complete information and Policy benefits and limitations.