Essential Guaranteed® UL 5 - Universal Life Insurance

Question 1

What is EGUL-5

Answer 1

Essential Guaranteed Universal Life (UL) 5 is a flexible premium permanent life insurance policy that provides your clients with
the ability to choose a guaranteed death benefit for any length up to age 120, subject to premium payment requirements

Question 2

Markets

Answer 2

Essential Guaranteed UL 5 is designed for clients seeking guaranteed lifetime death benefit protection
and could suit many individuals and purposes:
* For conservative clients searching for death benefit guarantees.
* For meeting family obligations on a limited budget.
* As protection for outstanding loans, whether these loans are personal or business.
* To provide affordable coverage for other family members through the Children’s Term
Insurance Rider.

Question 3

Highlights

Answer 3

• Death benefit guarantee for any length up to age 120 (subject to premium paying requirements)
• Low-cost premiums to guarantee death benefit
• Accelerated Death Benefit Endorsements for Critical, Chronic and Terminal Illnesses, subject
  to eligibility requirements
• Premium Recovery Endorsement Feature that provides the opportunity to recover part or all
  of the total premiums paid within a 60-day window following the 15th, 20th, and 25th policy
  anniversary.
• Five underwriting classes
• Guaranteed Exchange Privilege: ability to exchange up to the policy’s Specified Amount to an
  indexed universal life policy available at the time of exchange without evidence of insurability
  or surrender charge (see Guaranteed Exchange Privilege section)
• A Five-Year No-Lapse Guarantee for all issue ages (see No-Lapse Guarantee section)
• Two-year rolling target premiums

Question 4

Issue Age

Answer 4

Preferred Plus Non-Tobacco
Preferred Non-Tobacco Ages 18-85
Preferred Tobacco
Non-Tobacco Ages 0 (15 days)-85
Tobacco Ages 15-85

Question 5

Death Benefit

Answer 5

Death Benefit Options
* Option 1 – Level Death Benefit
* Option 2 – Increasing Death Benefit
Minimum Death Benefit
* $50,000 for issues ages 0-70
* $100,000 for issue ages 71-85
Maximum Death Benefit
Limited only by underwriting considerations. For ages 0-17, the maximum death benefit is $999,999.
Banding
Decreases
Decreases in a specified amount are allowed after the second policy year. Any requested decreases to
the specified amount will be subject to a decrease charge if the policy is still in the surrender charge
period. If the decrease occurs during the Five-Year No-Lapse Guarantee period, we will calculate a
new minimum premium based on the reduced specified amount.
Markets
Highlights
Issue Age
Preferred Plus Non-Tobacco
Preferred Non-Tobacco Ages 18-85
Preferred Tobacco
Non-Tobacco Ages 0 (15 days)-85
Tobacco Ages 15-85
Death Benefit
Essential Guaranteed®
5
Universal Life Insurance
Band 1 $50,000 to $99,999
Band 2 $100,000 to $999,999
Band 3 $1,000,000 and above

Question 6

Five-Year No-Lapse Guarantee

Answer 6

If the minimum premium requirement is met, coverage will not expire during the Five-Year No-Lapse
Guarantee Period. The Five-Year No-Lapse Guarantee Period is the first five policy years for all
issue ages. Payment of a premium amount that is equal to, but not greater than, the 5-Year No-Lapse
Guarantee Premium will keep the policy in force during the 5-Year No-Lapse Guarantee Period but
may result in the buildup of a lower Cash Surrender Value for your client. If the 5-Year No-Lapse
The guarantee period is terminated, and significantly higher premiums than those required to satisfy the 5-Year
No-Lapse Guarantee Period may be necessary to maintain the policy in force

Question 7

Extended No-Lapse Guarantee

Answer 7

After the Five-Year No-Lapse Guarantee period, the Extended No-Lapse Guarantee extends the
policy’s guaranteed death benefit for any length up to age 120. The guarantee will vary depending on
the amount and timing of premium payments. No premiums are payable after age 120. Because the
performance of the Extended No Lapse Guarantee is sensitive to the timing of premium payments,
you should advise your client to make sure the premium payments are made on time and consistent
with their plan in order to keep the guarantee

Question 8

Extended Maturity Date

Answer 8

If the contract is still in force at the insured’s age 120, and if the IRS will still treat the policy as life
insurance past age 120, the policyowner may elect to extend the maturity date. The Death Benefit
Option must be Option 1. If the extension is elected, the following restrictions apply: no increase
in Specified Amount; no changes in death benefit options; no further premium payments; and no
monthly deductions.

Question 9

Premium Recovery
Endorsement

Answer 9

The Premium Recovery Endorsement allows the owner to fully surrender the policy during the
premium recovery period and recover all or a portion of the total premiums paid less any policy
debt or withdrawals, including withdrawal charges and processing fees. The total premiums paid will
be reduced by the same portion as the death benefit for any acceleration of the death benefit. This
endorsement will remain in effect until the 25th policy anniversary as long as the qualification test is
satisfied at each policy anniversary. Generally, the qualification test is met if the gross premiums paid to
guarantee the policy to at least the insured’s attained age of 95, assuming no policy loans are taken.
Sometimes, additional premiums may be required based on underwriting class, table ratings, or
flat extras. If the Premium Recovery Endorsement terminates, it cannot be reinstated. This benefit is
available for a 60-day window following the 15, 20, and 25-year policy anniversaries. The owner may
recover up to 50% of paid premiums if exercised following the 15th anniversary, and up to 100% of
paid premiums if exercised following the 20 or 25-year anniversaries. The maximum amount that can
be recovered is capped at 50% of the lowest specified amount of the policy. The premium recovery
value will never be less than the net cash surrender value. Please reference the policy for complete
details.

Question 10

Underwriting

Answer 10

Underwriting Classes
Essential Guaranteed has five underwriting classifications. Refer to the Underwriting Guidelines
brochure for details.
* Preferred Plus Non-Tobacco
* Preferred Non-Tobacco
* Non-Tobacco
* Preferred Tobacco
* Tobacco

Question 11

Guaranteed
Exchange Privilege

Answer 11

The Guaranteed Exchange Privilege allows the policy owner to exchange the policy, without evidence
of insurability, and without a surrender charge, to one of Midland National’s cash value accumulation
individual universal life policies available at the time of exchange.
* Exchanges are not available for policy ages 76 and above.
* The Cash Surrender Value on the new policy may not be greater than the Cash Surrender Value
on the policy being exchanged
There cannot be any outstanding policy loans at the time of exchange.
* Accelerated Death Benefit Endorsements or Riders are guaranteed convertible to the new
policy only if a full exchange is completed.
* Premium for the new policy must be at least equal to the new policy’s No-Lapse Guarantee
Premium

Question 12

Minimum Premium

Answer 12

The total minimum premium for a contract is determined by adding the minimum premium for the
primary insured, the minimum premium for Waiver of Charges and Accidental Death Benefit riders,
if included, and the current premium for any other riders that may be included, plus the $72 per year
policy expense charge. The minimum premium is increased for substandard cases.
The minimum premium will increase at the time of a specified amount increase. The increase in
minimum premium will be the increase in specified amount divided by 1,000, multiplied by the per unit
minimum for the insured’s attained age and underwriting class at the time of the increase. The FiveYear No-Lapse Guarantee Period is not extended at the time of a specified amount increase.

Question 13

Maximum Premium Limit

Answer 13

Essential Guaranteed has a premium limit of $500,000 in any policy year. The maximum premium limit
is not contractual.
Please note that premium limits are subject to change

Question 14

Target Premium

Answer 14

The target premium shown in the illustration software is the maximum amount of premium on which
the highest rate of first-year commissions will be paid. Premiums in excess of the Target Premium will
receive commissions at the excess rate. (Refer to your agent contract.)
The target premium is typically greater than the level-pay premium to guarantee the policy to
maturity.
Essential Guaranteed has two-year rolling target premiums

Question 15

Extended No-Lapse Guarantee (NLG) Premium

Answer 15

The Extended NLG premiums must be calculated in ExactIllustrations by doing a solve. In
ExactIllustrations, there may be restrictions in the length of the guaranteed death benefits. Refer to
ExactIllustrations for details.

Question 16

The Cash Value Accumulation Test (CVAT)

Answer 16

Requires that the account value does not at any time exceed the net single premium that would be
necessary to fund future benefits under the policy. If needed, the death benefit will be increased to
ensure that this requirement is met

Question 17

Payment Modes

Answer 17

All payment modes except direct bill monthly are allowed. Payment modes include annual,
semi-annual, quarterly, and monthly EFT. In addition, a Civil Service payment mode is available for
an additional fee

Question 18

Minimum Payment

Answer 18

The minimum premium cannot be less than $50 annually, $50 semi-annually, $25 quarterly, or
$10 EFT. Payments must be at least this large even if the minimum premium requirement would
seem to allow less.

Question 19

Interest Rates

Answer 19

Current Interest Rate
Contact the Administrative Office for the current interest rate.
Guaranteed Interest Rate
The guaranteed interest rate is 2.50% in all years.

Question 20

Premium Load

Answer 20

The premium load is the percentage of insurance premiums deducted from the premium payments for universal life insurance policies to cover policy expenses, including the agent’s sales commissions.

Question 21

Premium Load

Answer 21

The premium load is the percentage of insurance premiums deducted from the premium payments for universal life insurance policies to cover policy expenses, including the agent’s sales commissions.

Question 22

Loans

Answer 22

Standard Policy Loans at a guaranteed rate of 6.0% are available beginning in policy year one. After 20
policy years, guaranteed Net Zero-Cost Loans (loans charged and credited at 2.5% for a net zero cost)
are available on the full loan value (the policy’s net cash surrender value less loan interest to the next
policy anniversary).

Question 23

Withdrawals

Answer 23

Partial withdrawals of the net cash surrender value are limited to 50% in policy year one and to 90%
each year thereafter. The first withdrawal in each year is free. After that, each subsequent withdrawal
is subject to a $25 withdrawal processing fee. Minimum withdrawal amount is $500. If a partial
withdrawal results in a reduction of the Specified Amount, a withdrawal charge will apply if the policy
is within the surrender charge period. The withdrawal charge equals the withdrawal’s pro rata share of
the specified amount times the surrender charge on the date of the withdrawal

Question 24

Monthly Expense Charge

Answer 24

The per policy expense charge is $6 a month ($72 annually). On a current and guaranteed basis, the
charge applies in all years up to age 120

Question 25

Unit Expense Card

Answer 25

The Per Unit Charge is based on the Specified Amount and varies by issue age, underwriting class,
and gender of the insured. On a current basis, the charge applies to the earlier of 30 years or to age 120.
On a guaranteed basis, it applies in all years up to age 120.

Question 26

Surrender Charge

Answer 26

Earlier of 20 years or attained age 95. Varies by issue age, sex, smoking status and duration. If the
specified amount is decreased while a surrender charge is in effect, then a decrease charge will apply.
Future surrender charges will be lowered to reflect the lower Specified Amount. See the policy for
details

Question 27

Accelerated Death Benefit Endorsements

Answer 27

Refer to feature card for additional information.