Pacific Trident Indexed Universal Life (IUL)

The Pacific Trident Indexed Universal Life (IUL) policy, offered by Pacific Life, is a permanent life insurance product designed to provide both a death benefit and potential for cash value accumulation linked to the performance of a market index, while offering flexibility in premium payments and death benefit options. It is positioned as a competitive option for individuals seeking lifelong coverage, tax-advantaged growth potential, and protection against market downturns.

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Core Features and Benefits

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1. Death Benefit Protection

The primary purpose of the policy is to provide a guaranteed death benefit to the beneficiaries, typically income tax-free, upon the insured's death. This benefit offers financial security for family members, covering expenses such as mortgage payments, education costs, and lost income.

2. Cash Value Accumulation

A portion of the premium payments, after deductions for policy charges and the cost of insurance, is allocated to the policy's cash value. The growth of this cash value is tied to the performance of an underlying stock market index (or indices), such as the S&P 500.

• Indexing Strategy: The cash value growth is calculated based on various indexing methods (e.g., Annual Point-to-Point, Monthly Average) and often features a choice of indices.

• Participation Rate and Cap: Growth is typically limited by a cap rate (the maximum percentage of gain credited in a given period) and/or a participation rate (the percentage of the index gain credited).

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3. Principal Protection (Floor)

A crucial feature of the Pacific Trident IUL is its minimum guaranteed interest rate, or "floor," which is typically 0% or higher. This protects the cash value from negative index returns, meaning that in periods when the linked index declines, the policy's cash value will not lose credited interest due to market performance.

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4. Premium Flexibility

As a Universal Life product, the Pacific Trident IUL allows the policyholder flexibility in determining the amount and timing of premium payments, within IRS guidelines and subject to maintaining sufficient cash value to cover policy charges. This flexibility can be beneficial for individuals with fluctuating income.

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5. Tax Advantages

The policy offers significant tax benefits:

• Tax-Deferred Growth: The cash value grows without current taxation.

• Income Tax-Free Death Benefit: The proceeds paid to beneficiaries are generally income tax-free.

• Tax-Advantaged Access: Policyholders can access the cash value through loans and withdrawals, which are generally not taxable up to the basis (premiums paid), provided the policy does not lapse or become a Modified Endowment Contract (MEC).

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Policy Options and Riders

Pacific Trident IUL typically includes various options and riders to customize the coverage:

Death Benefit Options

Policyholders can usually choose between two main death benefit options:

• Option A (Level Death Benefit): The death benefit remains constant. As the cash value grows, the net amount at risk (the pure insurance component) decreases.

• Option B (Increasing Death Benefit): The death benefit equals the specified face amount plus the current cash value. This option requires higher premiums but can lead to a larger total payout.

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Available Riders (May vary by state and policy version)

Rider Name

Description

Accelerated Death Benefit (ADB) Riders

Allows access to a portion of the death benefit if the insured is diagnosed with a chronic, critical, or terminal illness.

Waiver of Stipulated Premium Rider

Waives premium payments if the insured becomes totally disabled, helping to keep the policy in force.

Guaranteed Insurability Rider

Allows the insured to purchase additional coverage at specified future dates without proof of insurability.

Children's Term Rider

Provides a small amount of term life insurance coverage on the lives of the insured's children.

Target Audience

The Pacific Trident IUL is generally suited for individuals who:

• Require permanent life insurance protection (e.g., for estate planning or business succession).

• Seek tax-advantaged growth opportunities.

• Are comfortable with the variability of index-linked returns, balanced by the principal protection floor.

• Value the flexibility in premium payments and death benefit structuring.

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