©2007 Lincoln National Corporation LCN0710-2008492 FAX-0385-07 For agent or broker use only. Not...

©2007 Lincoln National CorporationLCN0710-2008492 FAX-0385-07

For agent or broker use only. Not for use with the general public.

Lincoln SmartIncomeSM

Inflation Annuity

Presenter Name TitleDate

Helping keep pace during retirement

Lincoln Financial Group is the marketing name

for Lincoln National Corporation and its affiliates.

LCN0710-2008492 FAX-0385-07For agent or broker use only. Not for use with the general public.

Agenda

Managing retirement income

Lincoln SmartIncomeSM Inflation Annuity

How it works

Operational Issues

Marketing Materials

Potential Buyers


Traditional income solutions

Social Security

Pension

Personal Savings

Retirement Income


Traditional solutions

Hypothetical value of $500,000 invested at year-end 1972. Portfolio: 50% large company stocks, 50% intermediate-term bonds. Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. Past performance is no guarantee of future results.

Source: Morningstar, 9/2007

Chart timeline ends at 1995 because every withdrawal option has run out of money.


Source: Bond Rates, St. Louis Federal Reserve, 9/2007; CDs, Federal Reserve, 9/2007; CPI, U.S. Bureau of Labor Statistics, 9/2007. Past history cannot predict future results.

Moody’s AAA Corporate Bond Rates U.S. Consumer Price Index

6 month CD rates -59.5%52.3%

134.6%

Traditional solutions

Bond portfolios• 1980-2006


Income Challenges

Clients’ four fear factors


Lincoln SmartIncomeSM Inflation Annuity

Revolutionizing retirement income

Guarantees are based upon the claims-paying ability of The Lincoln National Life Insurance Company.


How it works

% Change

in CPIScheduled

Payment

1 ------ $5,188

2 4.2% $5,289

3 4.7% $5,535

4 6.3% $5,883

5 3.0% $6,058

6 - 15 varies Varies

16 2.2% $7,971

17 1.8% $8,112

18 3.5% $8,397

19 3.5% $8,688

20 2.0% $8,859

HYPOTHETICAL EXAMPLE

Client: David, age 65

Premium: $100,000

Payments: Annual

Note: % change in CPI from historical years 1988 – 2007; actual results will vary based on the applicable CPI for January 1 of each year of scheduled payments. Uses hypothetical income rates. Rates are subject to change.

The first scheduled payment is

the lowest check amount your

client will receive.*

*Assumes no unscheduled withdrawals.


How it works

Year

% Change

in CPIScheduled Payment

1 ------ $5,188

2 1.95% $5,289

3 4.66% $5,535

4 6.27% $5,883

5 2.99% $6,058

6 - 15 varies varies

16 2.20% $7,971

17 1.77% $8,112

18 3.52% $8,397

19 3.46% $8,688

20 1.97% $8,859



Premium: $100,000

Payments: Annual


Your client’s payment amount

will adjust each year on Jan 1.

The first year adjustment will be

a partial adjustment.


Calculating the first adjustment

Assumptions – $5,350 initial scheduled payment

(December CPI – July CPI)/July CPI (120.3 – 118.0) / 118.0 = 1.95%

Year 2 payment will = $5,299

Contract

issue date

Published CPI

= 118.0

Published CPI

= 120.3

July Year 1 Aug. 15, Year 1

Partial year

adjustment

Dec. Year 1 Jan Year 2


Calculating annual adjustments

Year

% Change

in CPI Scheduled Payment

1 ------ $5,188

2 1.95% $5,289

3 4.66% $5,535

4 6.27% $5,883

5 2.99% $6,058


16 2.20% $7,971

17 1.77% $8,112

18 3.52% $8,397

19 3.46% $8,688

20 1.97% $8,859



Premium: $100,000

Payments: Annual


Published December CPI year 1 : 120.3

Published December CPI year 2: 129.9

(129.9 -120.3) / 120.3 = 4.7%.

Year 3 payment = $5,535


What about deflation?


Access to the money

Scheduled Payments will continue for the life of the annuitant (s).

The Scheduled Payment continues adjusting annually by the change in the CPI.

Year

% Change

in CPIScheduled Payment

Reserve Value

Death Benefit

1 ------ $5,188 $94,812 $94,812

2 1.95% $5,289 $91,371 $91,371

3 4.66% $5,535 $90,089 $90,089

4 6.27% $5,883 $89,860 $89,860

5 2.99% $6,058 $86,488 $86,488


16 2.20% $7,971 $26,109 $26,109

17 1.77% $8,112 $18,458 $18,458

18 3.52% $8,397 $10,711 $10,711

19 3.46% $8,688 $2,394 $2,394

20 1.97% $8,859 $0 $0



Premium: $100,000

Payments: Annual



Lincoln SmartIncomeSM

Assumes a 65 year old male single owner and a single premium of $100,000, with no unscheduled payments. Guarantees are based upon the claims-paying ability of The Lincoln National Life Insurance Company. Above chart is hypothetical based on past performance because the product was not available, and the chart shows what would have happened had it been available. Past performance does not guarantee future results

Guaranteed Minimum Scheduled Payment

Scheduled Payment

Reserve Value


Death benefit protection

Pays out any remaining premium in the contract

The greater of:

Reserve Value, or

Remaining premium net of any premium tax,less all scheduled and unscheduled payments (including related charges and taxes)


Also known as unscheduled payments

• Up to 10% of the Reserve Value available per contract year without charges

• Reserve Value is reduced by the amount of the unscheduled payment and related charges and taxes.

• An unscheduled payment will reduce the scheduled payment proportionate to the reduction in Reserve Value withdrawn (Example: 20% of Reserve Value taken = 20% decrease in scheduled

payment and minimum guaranteed payment amount.)

• Nursing Home and Terminal Illness Waiver benefits

Applies to withdrawals in excess of 10%

Contract year 1 2 3 4 5 6 7 8+

Unscheduled payment charge

7% 7% 7% 6% 5% 4% 3% 0%

Emergency Withdrawals


What if they change their mind?

Free Look

20 days

Voids contract from beginning

Refund of premium paid (less any payments received)

Terminating the contract

After 20 days

Return remaining reserve value (less any unscheduled payment charges and related taxes)

Ends all benefits and income payments


Tax Advantages

Nonqualified moneyHypothetical Example

Premium

InterestTaxable portion of

each payment


Operational information

Premium Amount Ranges

Age Minimum Maximum

50 – 65 $50,000 $2,000,000

65 – 85 $50,000 $500,000

Single premiumNonqualified: 50 – 85 single or joint annuitants

Qualified: 50 – 85 for single annuitants

50 – 75 for joint annuitants

For joint annuitants, both annuitants must fall within the age limits.


Purchasing Lincoln SmartIncomeSM

Application

Disclosure = Signed illustration

LP Plus Illustration Software

Download current rates regularly from Web site

Select payment intervals:monthly, quarterly, semiannual, or annual

Select payment start date


Trail commissions available

• Trail is paid to writing agent on Reserve Value

• Chargebacks

– first contract year only

– on death and unscheduled payments in excess of 10% of the Reserve Value

Commissions and chargebacks

Policy months 1 – 6 . . . . . . . . . . . . . . . 100%

Policy months 7 – 12 . . . . . . . . . . . . . .

50%


Client-approved material

Tools to use

Brochure:Helping keep pace during your retirement Lit code: FA-CORE-CPI

Presentation and seminar invitationDownload from LFD.com

Facts-at-a-GlanceLit code: FA-FACTS-CPI


Lincoln SmartIncomeSM Clients

Managing systematic withdrawals

Savings

Bond owners

Nonqualified money

Qualified money


Disclosures

This material was prepared to support the promotion and marketing of an insurance product. Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult an independent advisor as to any tax, accounting, or legal statements made herein.

Lincoln SmartIncomeSM Inflation Annuity single premium immediate annuity (contract form 07-611, or state variation) is issued by The Lincoln National Life Insurance Company. The Lincoln National Life Insurance Company is not authorized nor does it solicit business in the state of New York. Contract may be referred to as “certificate” in certain states (certificate may not be available in all states). The certificate is a group annuity certificate issued under a group annuity contract issued by The Lincoln National Life Insurance Company to a group annuity trust. Guarantees and contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company.

Lincoln SmartIncomeSM Inflation Annuity contracts sold in New York (contract form 07-611NY) are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. Guarantees and contractual obligations are backed by the claims-paying ability of Lincoln Life & Annuity Company of New York.

Product and features are subject to state availability. Limitations and exclusions may apply.


Disclosures

If purchased prior to age 59½, any additional withdrawals taken within the first 5 years, or before reaching age 59½, may subject current and prior taxable distributions to a 10% federal penalty. Unscheduled payments in excess of 10% of the annual free withdrawal of the Reserve Value are subject to applicable unscheduled payment charges.

Waiver of Unscheduled Payment Charges for Nursing Home Confinement Rider and Waiver of Unscheduled Payment Charges for Terminal Illness Rider (form AE-219 and form AE-218, respectively, or state variation) may not be available in all states. Nursing Home Rider not availablefor contracts issued in Massachusetts.

“Standard & Poor’s®”, and “S&P 500®” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by The Lincoln National Life Insurance Company. Lincoln’s Annuities are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing this Annuity.


Questions?

Phone number

Contact info

©2007 Lincoln National Corporation LCN0710-2008492 FAX-0385-07 For agent or broker use only. Not...

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