FIVE Plus Case Study If you are looking for a retirement paycheck plus control of your future income and assets, see how this hypothetical client named Betty could use Kansas City Life Insurance Company’s Century II FIVE Plus variable annuity rider to help with her retirement income challenges.
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Betty Age 65 Retiring now
Betty wants to retire within the year. She is 65 years old, has been widowed for several years and has $200,000 to invest. Since her husband’s death she has been worried about running out of retirement money. As a teacher, she’ll receive a pension but wants to supplement her pension with a guaranteed withdrawal.
A Kansas City Life Century II variable annuity with FIVE Plus is a great tool for supplementing Betty’s pension paycheck with an immediate guaranteed withdrawal. The optional FIVE Plus benefit can help her improve the possibility of capturing market gains to increase her income. Even after Betty starts withdrawing money from her annuity, there is the possibility her minimum withdrawal amount will go up – and it will never go down plus she controls her assets as she doesn’t have to annuitize her contract. Upon Betty’s retirement at age 65, she can start withdrawing $10,000 a year from her Century II variable annuity. This amount will not change unless the Guaranteed Withdrawal Balance or GWB goes up with an increase in Betty’s investment performance or she takes a withdrawal in excess of $10,000. If Betty wishes, she could take a lump-sum of the contract value at any time. If Betty didn’t make any withdrawals in the first few years of her retirement, each year she didn’t withdraw money her withdrawal benefit would go up by the 5 percent bonus amount. In year 3, if her contract value is greater than the GWB, the GWB will step up to equal this value.
Patience pays Betty gets a bigger annual guaranteed income payment the longer she delays taking withdrawals. The graph shows how much she would get if she began withdrawals immediately, or took advantage of the bonus provision and delayed withdrawals until year 3 or year 5. Positive investment performance could raise delayed withdrawals even more with the step-up provision in year 3. Year 5 $250,000 Year 3 $230,000
$250,000
$12,500 annually for life
Year 0 $200,000
Initial Deposit $200,000
Age
$11,500 annually for life
$10,000 annually for life
65
66
67
68
69
70
Guaranteed Withdrawal Balance (including 5 percent bonus, assuming no withdrawals or additional deposits) For illustration purposes only. The example assumes a FIVE Plus purchase at contract issue. The monthly charge for FIVE Plus is 0.079 percent (0.95 percent on an annual basis) of the GWB. Contact your registered representative or see the prospectus for more information about these optional guarantees.
Variable Product Series Building your future with a secure partner
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This brochure is authorized for distribution only when preceded or accompanied by product and fund prospectuses. The prospectuses contain more complete information about the product including charges, limitations, expenses and investment options. As an investor, you should carefully consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. Read the prospectuses carefully before investing money. Additional prospectuses can be obtained from your registered representative or by calling our toll-free 1-800-616-3670. Variable annuities are long term investments designed for retirement. The value of the variable investment options will fluctuate and, when redeemed, may be worth more or less than the original cost. Withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. If withdrawals and other distributions are taken prior to age 59½, a 10 percent federal tax penalty may also apply. A withdrawal charge may also apply. Withdrawals will reduce the value of the death benefit and any optional benefits. FIVE Plus withdrawals are not annuity payouts until the settlement phase begins. Annuity payouts generally receive a more favorable tax treatment than other withdrawals. FIVE Plus bonuses are not treated as earnings but the rider charges will increase. Once the FIVE Plus is elected, it may not be canceled for five years after the rider effective date. Asset allocation matches risk to a portfolio. It does not guarantee future results, assure a profit or protect against loss. All guarantees made within this document are backed by the claims-paying ability of Kansas City Life and assume compliance to the FIVE Plus rules and conditions outlined in the product prospectus. The federal and state income tax laws in this area are complex and subject to change. Representations made herein are neither complete nor necessarily up to date. Neither Kansas City Life nor its representatives give tax or legal advice. You should consult your tax advisor or attorney for complete details. Kansas City Life is licensed to issue individual life insurance and annuity products in all states except New York and Vermont. Product availability and features may vary by state. Kansas City Life’s Century II Variable Product Series is distributed by Sunset Financial Services, Inc., Member FINRA and SIPC, a wholly owned subsidiary of Kansas City Life Insurance Company.
Kansas City Life Insurance Company Variable Administration Department P.O. Box 219364 Kansas City, Missouri 64121-9364 1-800-616-3670 8 a.m. — 4:15 p.m. Central Time Fax: 1-816-931-3585 E-mail: customerservice@kclife.com
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