Indexed UL can be applied to a wide variety of applications, in addition to providing tax-free death benefit protection.4
Supplemental Retirement Income
A portion of the Policy Value that is allocated to an indexed account. It dictates the portion of policy value that is exposed to the equity market. Typically, each segment has a duration of one year
Competitive and stable performance, and a fixed crediting rate, which is often guaranteed.
Serves as a “Holding Account” for Indexed Account options
Provides safety, now or in the future
Fewer restrictions than Indexed Accounts
Once they have an understanding of how interest credits are calculated, policyholders should choose their indexed accounts based on their risk tolerance and objectives along with their expectations of the account’s potential return within the next 12 months.
John Hancock offers the following options:5
Base Capped Indexed Account: the opportunity for upside potential
Base High Par Capped Indexed Account: more stable performace linked ot the S&P 500 Index
Capped Indexed Account: the opportunity for upside potential
High Capped Indexed Account: higher growth potential in exchange for taking on greater risk
High Par Capped Indexed Account: more stable performance linked to the S&P 500 Index
Capped Hang Seng Indexed Account: upside potential with growth opportunities linked to the Hang Seng Index
Enhanced Capped Indexed Account: the most growth potential in exchange for taking on greater risk
Enhanced High Capped Indexed Account: greater opportunity for upside potential
With John Hancock IUL policies, policy owners have the option of borrowing a portion of their policy value in one of three forms depending on their policy type6:
The difference between these three options lies in how the loans are secured.
1. Please have your clients consult with their professional advisors to find the insurance policy type and design that is most suitable for their needs.
2. Guaranteed product features are dependent upon minimum premium requirements and the claims-paying ability of the issuer.
3. Loans and withdrawals will reduce the death benefit and cash surrender value, and may cause the policy to lapse. Lapse or surrender of a policy with a loan may cause the recognition of taxable income. Withdrawals in excess of the cost basis (premiums paid) will be subject to tax, and certain withdrawals within the first 15 years may be subject to recapture tax. Additionally, policies classified as Modified Endowment Contracts may be subject to tax when a loan or withdrawal is made. A federal tax penalty of 10% may also apply if the loan or withdrawal is taken prior to age 59½. Withdrawals are available after the first policy year. Index loans and Fixed indexed loans are available after the third policy year.
4. Life insurance death benefit proceeds are generally excludable from the beneficiary’s gross income for income tax purposes. There are few exceptions such as when a life insurance policy has been transferred for valuable consideration. Comments on taxation are based on John Hancock’s understanding of current tax law, which is subject to change. No legal, tax or accounting advice can be given by John Hancock, its agents, employees or registered representatives. Prospective purchasers should consult their professional tax advisor for details.
5. The Index Account options may not be available on all products or in all jurisdictions. The Base Index Account options (Base Capped Index Account and Base High Par Index Account) are the only index account options available for new policies issued in New York. Please consult each product’s producer guide for index account availability.
6. The cost of an index loan can vary substantially compared to that of a standard loan and the risk of policy lapse is greater than it would be with a standard loan. At John Hancock, Fixed Index Loans are only available for the AIUL product.
For John Hancock IUL products, only one type of policy loan may be utilized at a given time. If there is an outstanding loan, and the policy owner wishes to take a loan under a different Loan Option, the policyholder must either repay the existing loan, or request a loan option change as described in the policy.
Standard loan requests in excess of the Fixed Account balance can be taken from the Indexed Accounts. Amounts borrowed from the Indexed Accounts will be transferred to the Loan Account at Segment maturity. Index loan and Fixed Index Loan requests in excess of the Index Appreciation Account will be secured by balances transferred from the Fixed Account to a Loan Account. See the applicable John Hancock IUL policy contract for more information.
Standard & Poor’s®, S&P®, S&P 500®, Standard & Poor’s 500 and 500 are trademarks of Standard and Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. Hang Seng Index®is a trademark of Hang Seng Data Services Limited. John Hancock has been licensed to use the trademarks of S&P and Hang Seng Index (collectively, the "Indices"). Products are not sponsored, endorsed, sold or promoted by the licensors of the indices and they make no representation regarding the advisability of purchasing Products. You cannot invest directly in the Indices.