Class Plus 2 Information Folder and Contract Provisions - Empire Life

CLASS PLUS 2 – JOINT TIERED INCOME NOW SCENARIOJohn and Mary are a married couple who will be turning 65and 60 this year. They have $500,000 in savings. They wanta joint equity-based investment that will guarantee them afixed annual income with the potential for a future increasein income. The Class Plus 2 contract with a GuaranteedWithdrawal Benefit (“GWB”) offers the features to meet theirobjective. John is the Annuitant and Mary is the Joint Life.Under the GWB, the Lifetime Withdrawal Amount (“LWA”) isthe maximum amount guaranteed to be available each calendaryear for withdrawal for the life of the Annuitant or Joint Life,provided the younger of the Annuitant or Joint Life is 55 orolder and an excess withdrawal does not occur.When the initial deposit is made, the LWA is determined basedon the amount of the deposit and a Joint Tiered LWA Percentage.The Joint Tiered LWA Percentage used is based on the youngerof the Annuitant and Joint Life’s age in the calendar year ofdeposit. In this case, the Joint Tiered LWA Percentage will bebased on Mary’s age.On December 31st of each year the LWA is calculated for thefollowing year.If there have been no excess withdrawals during the year, theLWA for the following year will be the greater of:1) the current LWA: and2) a new LWA that is calculated based on the current IncomeBase* (after all transactions have been processed) and theJoint Tiered LWA Percentage that corresponds to Mary’s agein the next calendar year.If there have been excess withdrawals the LWA for the followingyear will be an amount equal to the Joint Tiered LWA Percentageof the current Income Base (after all transactions have beenprocessed). The Joint Tiered LWA Percentage will be determinedbased on Mary’s age in the next calendar year.The current Joint Tiered LWA Percentages are as follows:Youngest of Annuitantor Joint Life's AgeJoint Tiered LWA Percentage55 – 59 2.50%60 – 64 3.00%65 – 69 3.50%70 – 74 3.75%75 + 4.50%The initial Income Base will equal $500,000. Given that Marywill be turning 60 in the current year, Mary’s age at the time ofthe initial deposit is 60. John and Mary’s LWA at the time of theinitial deposit will be $15,000 ($500,000 x 3.00%). John andMary may withdraw up to $15,000 in the current calendar yearwithout incurring an excess withdrawal. An excess withdrawalmay significantly reduce or eliminate the value of the GWB.* Income Base is the notional value that is the basis for determining theLWA each calendar year.Income Now – Down Market ScenarioAssuming poor market conditions, John and Mary’s investmentmay deplete by Mary’s 82nd birthday or John’s 87th birthday.On December 31st of the first year• Mary will be 61 in the following year. Their Joint Tiered LWApercentage will be 3%.• the Income Base is reduced to $485,000 (the initial IncomeBase of $500,000 reduced by the first withdrawal of$15,000).39