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AMS MYGA Calculator

THIS IS A HYPOTHETICAL ILLUSTRATION

This is a hypothetical illustration. The purpose of this illustration is to compare the performance between two separate Multi-year Guaranteed Annuities (“MYGAs”) taking into consideration factors including, contract length, premium, annual percentage Rate (“APR”), and first year interest bonus percentages. The illustration also has the ability to make fair and balanced comparisons of MYGA performance to the performance of a Certificate of Deposits (“CDs”) taking into consideration the term of the certificate, the intial deposit, and the certificate’s annual percentage yield (“APY”). The information provided by this calculator should not be relied upon in making a final determination to purchase any annuity or certificate of deposit. Detailed review and understanding of a product details, features, limitations, restrictions and other disclosures is recommended prior to the purchase of any bank deposit or annuity. This illustration is not intended to serve as a projection or prediction of future results and the values shown are not guaranteed.
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TERMS OF USE

Asset Marketing Systems Insurance Services, LLC (“AMS”), owns and operates this Multi-Year Guaranteed Annuity calculator (hereinafter the “Program”). By accessing and using this Program, you agree to each of the terms and conditions set forth herein (“Terms of Use”).

1. Use of Program

AMS hereby grant you a non-exclusive revocable license to use this Program subject to the terms and condition set forth in these Terms of Use. AMS reserves the right to revoke the license granted herein at anytime for any reason whatsoever. The license granted herein is personal to you and you alone. You may not copy, transfer, provide, or authorize use of the Program or your Producer Portal user name and login information to any other individual for any reason whatsoever. No right, title or interest in any Program is transferred to you. AMS reserves complete title and full intellectual property rights in the Program. You may not use, alter, copy, distribute, transmit, or otherwise derive another work from the program or the content contain in the Program. Unauthorized use or distribution of the Program is strictly prohibited.

2. Copyright

The Program is protected by U.S. and/or foreign copyright laws, and belongs to AMS. The copyrights in the Program are owned by AMS. You may not download and/or reprint the Program or the content contained in the Program for any reason whatsoever without the express written authorization from AMS.

3. Disclosure Requirements

Notwithstanding the provision, of Section 2 above, when using the Program with clients, you are required to print a copy of all the disclosure contained in the Program and provide such copies to the client upon the conclusion of the Program’s use. Additionally, you are required to print a copy of all hypothetical Program illustrations present to the client. Failure to comply with the requirements of this Section 3, shall be deemed a material breach of these Terms of Use.

4. Limitation of Liability

IN NO EVENT WILL AMS BE LIABLE FOR ANY DAMAGES WHATSOEVER, INCLUDING, BUT NOT LIMITED TO ANY DIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR OTHER INDIRECT DAMAGES ARISING OUT OF (I) THE USE OF OR INABILITY TO USE THE PROGRAM, THE SERVICE, OR THE CONTENT, (II) ANY TRANSACTION CONDUCTED THROUGH OR FACILITATED BY THE USE OF THE PROGRAM; (III) ANY CLAIM ATTRIBUTABLE TO ERRORS, OMISSIONS, OR OTHER INACCURACIES IN THE PROGRAM, THE SERVICE AND/OR THE CONTENT, OR (IV) ANY OTHER MATTER RELATING TO THE PROGRAM, THE SERVICE, OR THE CONTENT, EVEN IF AMS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IF YOU ARE DISSATISFIED WITH THE PROGRAM, THE SERVICE, THE CONTENT, OR WITH THE TERMS OF USE, YOUR SOLE AND EXCLUSIVE REMEDY IS TO DISCONTINUE USING THE PROGRAM. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, SOME OF THE ABOVE LIMITATIONS MAY NOT APPLY TO YOU. IN SUCH STATES, AMS’ LIABILITY IS LIMITED AND WARRANTIES ARE EXCLUDED TO THE GREATEST EXTENT PERMITTED BY LAW, BUT SHALL, IN NO EVENT, EXCEED $100.00.

5. User Conduct

You agree to use the Program only for lawful purposes. You agree not to take any action that might compromise the security of the Program, or otherwise cause damage to the Program or its content. You agree not to add to, subtract from, or otherwise modify the Program, or to attempt to access any content that is not intended for you. You agree not to use the Program in any manner that might interfere with the rights of AMS.

6. General Provisions

a. Entire Agreement/No Waiver. These Terms of Use constitute the entire agreement of the parties with respect to the subject matter hereof. No waiver by AMS of any breach or default hereunder shall be deemed to be a waiver of any preceding or subsequent breach or default.

b. Enforcement/ Choice of Law/ Choice of Forum. If any part of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, it will not impact any other provision of this Agreement, all of which will remain in full force and effect. Any and all disputes relating to this Agreement, your use of the Site, or the Content are governed by, and will be interpreted in accordance with, the laws of the State of California, without regard to any conflict of laws provisions, and exclusive venue shall be in San Diego, California.

List of Disclosures

1. THIS IS A HYPOTHETICAL ILLUSTRATION. The purpose of this illustration is to compare the performance between two separate Multi-Year Guaranteed Annuities (“MYGAs”) taking into consideration factors including, contract length, premium, annual percentage Rate (“APR”), and first year interest bonus percentages. The illustration also has the ability to make fair and balanced comparisons of MYGA performance to the performance of a Certificate of Deposits (“CDs”) taking into consideration the term of the certificate, the intial deposit, and the certificate’s annual percentage yield (“APY”). The information provided by this calculator should not be relied upon in making a final determination to purchase any annuity or certificate of deposit. Detailed review and understanding of a product details, features, limitations, restrictions and other disclosures is recommended prior to the purchase of any bank deposit or annuity. This illustration is not intended to serve as a projection or prediction of future results and the values shown are not guaranteed.

2. What is a Multi Year Guaranteed Annuity (“MYGA”)? A Multi Year Guaranteed Annuity is an insurance contract between a contract owner and a life insurance company wherein for an exchange of premium and a commitment of time (as defined by the terms of the contract), the issuing insurance carrier promises to pay a predetermined fixed rate of return on premiums paid for the period specified by the contract. MYGAs are not securities or debt instruments or time deposits with a bank. MYGAs are not FDIC insured. Principal protection for a MYGA is based upon the claims paying ability of the issuing insurance carrier.

3. What is a Certificate of Deposit (“CD”)? A certificate of deposit is a time deposit made by the depositor with a bank whereby in exchange for the deposit and a commitment of time (as specified by the CD certificate) by the depositor, the bank promises to pay a predetermined fixed rate of return (some CDs may have pay variable rates of interest) on the amount deposited for period specified by the CD certificate. CDs are not securities or insurance contracts. CDs are normally insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per CD, however, Congress has temporarily increased FDIC deposit insurance from $100,000 to $250,000 per depositor through December 31, 2009. (For further information regarding FDIC insurance see: http://www.fdic.gov/news/news/financial/2008/fil08102a.html). The longer the term of a CD, and the larger the initial deposit, the higher the interest rate paid. Terms generally range from 6 months to 5 years. During that time, the depositor will not have access to the funds. However, have the option of drawing out the interest as it's paid. If the depositor redeems the CD before the specified term, the Depositor may have to pay a early withdrawal penalty or forfeit a portion of the interest earned. (For more information about CDs see: “High-Yield CDs –Protect Money by Checking the Fine Print” at: http://www.sec.gov/investor/pubs/certific.htm)

4. Call Options: Some long-term high yield CDs have “call options” which allow the bank to call the CD in if the interest rate drops. A “Call Option” is in effect a termination of the CD certificate by the bank. (For more information about CDs see: “High-Yield CDs –Protect Money by Checking the Fine Print” at: http://www.sec.gov/investor/pubs/certific.htm)

5. How the Calculator Works: The Account Balance of a MYGA is calculated by taking the length of the MYGA term, the initial premium, the APR, and the first year interest bonus percentage in the following formula: Premium*(1+APR), each additional year is calculated as: Account Balance*(1+APR).

The Average Annual Yield of a MYGA is calculated by taking difference between the ending account balance and the starting premium, dividing it by the starting premium, and dividing that number by the length of the term in years. Formula = (Ending Balance-Initial Premium)/Initial Premium/Term (in years).

The Account Balance of a CD is calculated using the length of the certificate and type of compounding (Daily, Monthly, Quarterly, Semi-Annually, Annually), using the formula: (1+Initial Deposit/(factor for compounding)^(factor for compounding-1)*Initial Deposit)+initial deposit. Factors for compounding: Daily (365), Monthly (12), Quarterly (4), Semi-Annually (2), Annually (1).

The Annual Percentage Yield of a CD is entered by the end user. The Annual Percentage Rate is calculated by taking the type of compounding (Daily, Monthly, Quarterly, Semi-Annually, Annually), and the factor for compounding, and calculating the nominal rate using the formula: NOMINAL(APY,factor for compounding). Factors for compounding: Daily (365), Monthly (12), Quarterly (4), Semi-Annually (2), Annually (1).

6. Annual Percentage Rate (“APR”): The Annual Percentage Rate is a measure of interest earned on the principal invested over the period of one year. The APR does not take into account the effect of compounding interest.

7. Annual Percentage Yield (“APY”): Unlike the APR, the Annual Percentage Yield, does account for compounding interest. For example, on a loan at a rate of 1% per month, the APR will be 12*1% = 12%, but the APY will be (1+1%)^12–1 = 12.68%. At 2% per month, APR is 24%, and APY is 26.82%. The higher periodic rate and the more periods in a year, the larger the gap between APR and APY. APY is more economically meaningful than APR. Nevertheless, federal law requires banks, credit card issuers, and other consumer finance entities to disclose APR to the borrower. On the other hand, the higher APY figure is always reported rather than APR when depository institutions advertise rates on savings products such as CDs and money market accounts. APYs can be used to make fair and balanced comparisons between different types of investment or insurance related products where the interest rates credited to both products is based on different crediting methods (ie. monthly, daily, annually, quarterly).

8. Annual Rate of Return (“ROR”) / Also known as Return on Investment (“ROI”): The annual rate of return is the rate return on an investment, premium or bank deposit after taxes are paid, if any are due (See definition of tax-deferral).

9. Market Value Adjustment (“MVA”): Market value adjusted annuities (MVAs) have cash values that are held in a separate accumulation account. These accumulation account values are guaranteed as long as the contract is held for the period specified. If the annuity is surrendered early, then the account value will be based on the current market value. The formula for the market value adjustment may or may not equal the value of the separate account. Because the policyowner shares in the risk of the interest rate market with the insurance company in this style of annuity, a higher interest rate is usually credited to the accumulation account than what would be credited to a non-MVA annuity. The MVA can only affect the accumulation account value of the annuity if an amount withdrawn exceeds the amount that the contract will allow or if the contract is surrendered before the end of the specified period. MVAs reflect the changes in the interest rate market from the beginning of the guarantee, or contract period. The treasury constant maturity index is used to compute the changes based on the length of the guarantee period.

10. Banded Rates: When a Premium is “banded”, it means the more premiums placed in the annuity contract, the more competitive interest is paid, giving the policyowner the ability to earn more. The total premiums paid only during the first contract year will be used to determine premium banding.

11. Riders: MYGA products may include various riders including, but not limited to, liquidity, death benefits, and long-term care benefits. Detailed review of product brochures and disclosures is highly recommended prior to the purchase of any MYGA. Riders included in a MYGA may raise premium minimums.

12. Product availability: The availability of MYGA products and features vary by state. Review product brochures and policy contracts prior to purchasing any annuity.

13. Varying Interest Rates: Interest rates on MYGAs vary by state, carrier and product. Initial interest rates credited to new contracts may be declared by the issuing insurance carrier daily, weekly or monthly. Unless the contract provides for a variable interest rate, the rates credited to contracts previously issued remain unchanged for their full guarantee period. The rate credited to new contracts is subject to change without prior notice. Some annuity products are not eligible for issuance until the required minimum cash premium is received in the home office. The interest rate in effect at the time of contract issuance is the interest rate that will be credited to the contract, whether the rate has increased or decreased.

14. Free Look Period: All annuity contracts include a "free-look" period allowing you to review all of the contract provisions. The minimum length of the free-look period is mandated by state law and varies from state to state. The number of days in the free-look period will be shown on the front page of the contract. If within the specified free-look period, you do not wish to keep the contract, you may return the contract to the issuing insurance carrier to receive a full refund of the premium paid.

15. Withdrawals from MYGA: After the annuity contract anniversary date following your most recent premium payment, you may take penalty free withdrawals. Penalty-free withdrawals are limited up to 10% per contract year of the total premiums you have paid. Additional partial withdrawals that cause the totals withdrawals within a contract year to exceed 10% of the premiums paid, in most cases the amount in excess of the 10% shall be treated as a partial surrender subject to applicable surrender charges. In some cases the surrender charge will be applied retroactively to the full amount withdrawn within the contract year. Contract earnings are subject to ordinary income tax at the time they are withdrawn. If the tax payer is under the age of 59½ at the time of any withdrawal, the portion subject to ordinary income tax may also be subject to a 10% federal tax penalty.

16. Surrender Charges: Generally, if you withdraw money from an annuity contract, during a certain period defined in the contract after purchasing or making subsequent contributions to the annuity, the insurance company may assess a surrender charge that represents a percentage of the contributions to the account or account value. If, within the same year a free withdrawal was made, the contract is surrendered, the surrender charge will be retroactively applied to the amount previously withdrawn. Surrender charges imposed by insurance company are different from and in addition to the 10% penalty tax that the IRS may impose for withdrawing untaxed money from an annuity prior to age 59½.

17. Tax Penalties: If the tax payer is under the age of 591/2 at the time of any withdrawal (whether from a CD or annuity), the portion subject to ordinary income tax may also be subject to a 10% federal tax penalty.

18. Income Tax on MYGA: Interest earned by MYGAs grows tax-deferred. Distributions from your MYGA received after age 59½ will be subject to ordinary income tax.

19. Income Tax on CD: Taxes are paid annually on interest earned by the CD for each year. The interest earned each year is taxed as ordinary income. (See Internal Revenue Codes Publication 17 on Interest Income – page 55 at: http://www.irs.gov/pub/irs-pdf/p17.pdf)

20. Tax Deferral: Tax deferral means that income taxes that would otherwise be due on investment earnings are postponed until some point the future, often when you retire. Then tax is due on the amounts you withdraw, at the same rate you pay on your regular income. For example, if you contribute pretax income to a retirement savings plan, such as a 401(k) or 403(b), you owe no tax on the contributions or any earnings in the plan until you withdraw those funds. In other plans, such as individual retirement accounts (IRA), the contribution may be taxable but the earnings are tax deferred. Interest earned through CDs is not tax-deferred, whereas the interest earned through a MYGA is tax-deferred.

21. Loss of Premium: It is possible to lose the principal amount placed in a MYGA if the annuity contract is not held until maturity or if withdrawals are made before age 59½. Principal protection is based upon the claims paying ability of the issuing insurance carrier.

22. CD Withdrawal Fees: Because investing in a CD is intended for long term, banks charge a penalty for withdrawals made prior to the expiration of the term. Many times, those fees can add up to as much as three months of interest or more. (For more information regarding fees associated with CDs see “Watch for the Hefty Early Withdrawal Fees on CDs at: http://www.bankrate.com/brm/news/sav/19980212.asp)

23. Bonuses: Bonuses paid on MYGAs are interest rate bonuses paid on the first year interest rate and are not based upon the premium paid. The bonus is credited to the account only once; at the end of the first year. Bonus annuities may include higher surrender charges, longer surrender periods or other restrictions that are not included in similar annuities that do not offer a premium bonus feature. Bonuses may be lost if the contract is not held to maturity.

24. MYGAs and CDs require a long-term commitment of time and are designed to meet retirement and long-range goals. MYGAs are not suitable for everyone.

25. Combined Tax Rate: The combination of the applicable Federal Tax Rate, and the State Tax Rate.