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Effective August 17, 2013, in response to the continued low interest rate environment, Minnesota Life will lower the minimum guaranteed crediting rates on all newly issued indexed universal policies. In addition, we will modify the Surrender Value Enhancement Agreement (SVEA) on newly issued fixed and indexed universal life policies.
Note: Existing policyholders will not be impacted by these changes.
Guaranteed minimum crediting rate changes on Indexed UL's
As of August 17, 2013, Minnesota Life will adjust the lifetime guaranteed minimum crediting interest rate and the guaranteed minimum fixed account crediting rate from 3 percent to 2 percent on all newly issued indexed universal life policies.
Transition Rules:
- Applications must be signed and received in the Minnesota Life Home Office by Friday, August 16, 2013 at 4:00 p.m. Central Time to receive the 3% guarantees.
- Applications signed and received in the Minnesota Life Home Office after Friday, August 16, 2013 at 4:00 p.m. Central Time will receive the 2% guarantees.
Surrender Value Enhancement Agreement (SVEA) changes
As of August 17, 2013 Minnesota Life will adjust the SVEA benefit on all newly issued Eclipse IUL, Eclipse Survivor IUL and Accumulator UL policies.
Details:
- The Initial Premium Payment Threshold must be paid at policy issue.
- The threshold premium for subsequent years must be paid within 30 days from the policy anniversary date.
- If a policy with SVEA is later surrendered as an IRS Section 1035 exchange into another policy, the SVEA benefit will not apply. If a 1035 exchange surrender occurs, the normal cash surrender value will be paid.
- SVEA will only be available for business owned, business sponsored or premium financed cases.
- If contract is funded with a premium deposit account (PDA), cash surrender value will be no less than 100% of premiums paid.
- If contract is not funded with a premium deposit account (PDA), the cash surrender value will be no less than 100% of premiums paid less 5% of the Initial Premium Payment Threshold.
Example of guaranteed cash surrender value when contract is funded without a PDA:
| Policy year | Cumulative threshold premium | Reduction Amount
(if surrendered in that policy year) | Guaranteed cash surrender value |
|---|
| 1 | $1,000 | $50 | $950 ($1,000 - $50) | | 2 | $2,000 | $50 | $1,950 ($2,000 - $50) | | 3 | $3,000 | $50 | $2,950 ($3,000 - $50) |
Transition Rules:
- Applications must be signed and received in the Minnesota Life Home Office by Friday, August 16, 2013 at 4:00 p.m. Central Time to receive the current SVEA guidelines.
- Applications signed and received in the Minnesota Life Home Office after Friday, August 16, 2013 at 4:00 p.m. Central Time will receive the new SVEA guidelines.
Minnesota Life remains committed to you and your clients. With these changes, we're confident that we are well positioned to continue bringing the value you've come to expect from a highly rated insurance company.
Please contact our Life Sales Support Team at 1-888-413-7860, Option 1 with any additional questions. |
