Accumulation Builder IUL Sales Ideas

Larry FoutsRegional Life Specialist

All guarantees are based on the claims paying ability of the issuer. For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Penn Mutual Life Insurance Company

600 Dresher Road, Horsham, PA 19044

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Identifying the IUL Market►Accumulation / Lifetime Income Sale►Industry first introduced Indexed UL

in 1997►More than 20 companies now offer

IUL products►The growth of indexed annuities have helped

sales of indexed life products grow in recent years

►Represents a little less than 10% of all UL sales

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Identifying the IUL Market►IUL Sales almost doubled between 2005 and 2006

Indexed Universal Life Sales By Year(Annual Premium in Millions)

$64.7 $62.4 $63.5$85.7 $95.7 $93.5

$123.5

$185.7

$338.2

$-$50

$100

$150$200$250$300

$350$400

1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: Advantage Group Associates

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Accumulation Builder IUL►Penn Mutual’s IUL Interest

Crediting Approach● S&P 500 with Dividends Excluded

● Annual reset on Monthly Segments

● Illustrative rate reset each month● Current crediting rate: 8.92%*

►1 yr Avg 10.36%►5 yr Avg 8.10%►10 yr Avg 8.59%►20 yr Avg 8.92%

* As of 10/1/07

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

S&P 500 Index vs. Other Indices Historical

►Total Returns

S&P 500 Index vs. Other Indices - Total ReturnsAvg as of year end 2006

1 Year 10 Year 20 Year 30 YearS&P 500 15.80% 8.42% 11.80% 12.47%LB Aggregate 4.33% 6.24% 7.35% 8.38%MSCI EAFE 26.86% 8.06% 8.40% 12.83%DJ Industrial Average 19.05% 8.91% N/A N/ADJ Wilshire 5000 15.87% 8.67% 11.63% 12.69%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

S&P 500 Index vs.Other Indices Historical

►Returns Without Dividends

S&P 500 Index vs. Other Indices - Returns Without DividendsAvg as of year end 2006

1 Year 10 Year 20 Year 30 YearS&P 500 13.62% 6.71% 9.24% 8.98%LB Aggregate -1.02% 0.31% 0.28% 0.10%MSCI EAFE 23.47% 5.75% 6.27% 10.06%DJ Industrial Average 16.29% 6.81% 9.87% 8.76%DJ Wilshire 5000 13.89% 7.07% 9.24% 9.43%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Between 1984 and 2003, the S&P 500 Index1 grew by 12.98%. During that time, the average investor, however, earned only 3.51% while the average market timer lost 3.29%.2

1The S&P 500 Index is an unmanaged index of common stock performance, considered to be representative of the stock market in general. Indexes do not have sales charges and it is not possible to invest directly in an index. Past performance is no guarantee of future results.2DALBAR Quantitative Analysis of Investor Behavior, 1984-2003.

Consider This…

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Accumulation Builder IULKey Features

► Premiums allocated between a fixed and indexed account► Minimum 2% guaranteed interest floor on both accounts► Indexed account has a competitive cap (14%) and a 100%

participation rate which is guaranteed► Two Loan Options available (except NY)► Annual reset of starting S&P value on index segments► Overloan Protection Benefit available► 9 Year Surrender Charge► Rolling Targets in most states (except NY and NH)

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

The “CAP”►Caps set based on the company’s earned ROR and the cost of

hedging the performance of the index►Bonds “cover” product guarantees►Leftover $$$ cover cost of hedging the

index performance►Cost of hedging determined by market volatility►More volatility = lower cap due to higher cost of hedge►Lower earned rate = lower cap due to less $$$

available to hedge►Reverse is true for lower volatility or higher earned rate►Hedging strategy limits major cap movement up or down►Index Annuity products need to aggressively

manage cap

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Accumulation Builder IULHow the Indexed Account Works

►Annual reset of segment►Indexed account earnings are locked-in►In years of poor S&P 500 performance, a 2% floor

protects account valueAccumulation Builder IUL

Growth of $1,000 Policy ValueHYPOTHETICAL EXAMPLE

$1,200

$955

$1,230$1,163$1,310

$1,494

$1,077 $1,190$1,140

$1,285

$400$600$800

$1,000$1,200$1,400$1,600

1 2 3 4 5End of 1 year Segment

Investment Product Tied to S&P 500 Growth w/o Dividends IUL Policy Value Growth

+20% -10% 10% -20% 28%

S&P Return

Note: Assumes no charges or fees on either product

14%14% 2%2% 10%10%2%2%

14%14%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Probability of DoingWhat we show!

    3 yr 5 yr 10 yr 20 yr

  Annually Period Period Period Period

           

5.0% 69.7% 92.5% 97.9% 100.0% 100.0%

6.0% 68.0% 84.2% 90.0% 99.6% 99.6%

7.0% 63.1% 78.4% 83.8% 99.2% 99.2%

8.0% 58.5% 68.5% 72.2% 97.5% 84.2%

9.0% 55.2% 56.0% 57.3% 71.0% 47.3%

10.0% 51.5% 29.5% 34.0% 25.3% 8.7%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Accumulation Builder IUL - IRR

Policy Year IRR on CSV

Comparable After-Tax IRR with 35% Tax Bracket

1 -33.34% N/A

5 0.72% 0.10%

10 4.32% 5.83%

15 5.40% 7.29%

20 5.86% 7.91%

25 6.06% 8.18%

Male Age 45, Preferred PlusMaximum Non-Mec Premium 7% Illustration Rate

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Accumulation Builder IUL►Accumulation / Lifetime Income Sale►Index Account / Index Loan (except NY)►2% Minimum, 14% Current Cap, 100% Participation►One-Year Point to Point Reset►12 Investment Segments to Catch Lightening►Volatility is a “Friend”; Stay Invested

● If Market Tanks – Get 2%; Reset at Lower Point; Earn Interest as it Climbs Back

● Balance to Other Aspects of Client’s Portfolio

►Strong IRR on CSV with Life Insurance Protection

Sec 7702(A) Plan

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Probability of DoingWhat we show!

    3 yr 5 yr 10 yr 20 yr

  Annually Period Period Period Period

           

5.0% 69.7% 92.5% 97.9% 100.0% 100.0%

6.0% 68.0% 84.2% 90.0% 99.6% 99.6%

7.0% 63.1% 78.4% 83.8% 99.2% 99.2%

8.0% 58.5% 68.5% 72.2% 97.5% 84.2%

9.0% 55.2% 56.0% 57.3% 71.0% 47.3%

10.0% 51.5% 29.5% 34.0% 25.3% 8.7%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Sec 7702(A) Plan► A Tax-Free Retirement Income Benefit

● The tax benefits of this personal retirement strategy are made possible by utilizing a cash value life insurance policy. This is accomplished through a combination of withdrawals up to cost basis and policy loans thereafter. Policy loans and withdrawals will reduce the death benefit. This assumes that the policy remains in force and is not a modified endowment contract under IRC Section 7702A. If the policy is lapsed or surrendered prior to the death of the insured, the policy loans in excess of the cost basis will result in taxable income.

► Tax-Deferred Accumulation of Policy Values● Cancellation of a policy in the early years may have a significant impact on policy values. A detailed

illustration based on your specific facts and circumstances should be reviewed carefully before purchase.

► Individual Ownership and Control► Access to Funds Before age 59 ½ Without Penalty*

● The tax benefits of this personal retirement strategy are made possible by utilizing a cash value life insurance policy. This is accomplished through a combination of withdrawals up to cost basis and policy loans thereafter. Policy loans and withdrawals will reduce the death benefit. This assumes that the policy remains in force and is not a modified endowment contract under IRC Section 7702A. If the policy is lapsed or surrendered prior to the death of the insured, the policy loans in excess of the cost basis will result in taxable income.

► A Self-Completing Pre-Retirement Death Benefit***● Requires optional waiver of monthly deductions at an additional charge. The waiver of monthly

deduction agreement allows you to maintain your insurance protection during a period of disability by waiving all monthly expenses and cost of insurance charges.

Please Note: Life insurance policies are subject to certain fees and expenses which are not normally associated with other investment vehicles.

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Sec 7702(A) Plan► Income Tax-Free Death Benefits

►Proper Beneficiary Designations that Can Avoid Probate

►Possible Protection From Creditors

►Selectivity of Participants

►No Trust or Trustee Necessary

►No IRS Forms Required Please Note: Life insurance policies are subject to certain fees and expenses

which are not normally associated with other investment vehicles.

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

► Male Age 50 - $60,000 / YR, 10 Years, DB - $2,412,136► Target Premium - $41,009

Illustrated Interest Rate 7.0% 7.5% 8.0%

Annual Income $65,590 $84,108 $104,310

Net Payments @ age 95 $1,367,710 $1,923,240 $2,529,289

IRR@ age 95 5.51% 6.73% 7.86%

Death Benefit @ age 95 $363,264 $524,850 $820,773

Taxable Equivalent (Hypothetical Equity) 8.55% 10.00% 11.30%

Sec 7702(A) Plan

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Web Story – Premium Choice

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Executive Bonus Plan(with Leverage)

►Business Owner, Male Age 50● $100,000 Tax Deductible Contribution yrs 1-10

►Taxable to Business Owner● Paid via Policy loans yrs 2-11

►Net zero out of Pocket for Business Owner

►Tax Deferred Growth

►Income Tax Free Death Benefit

►Tax free Cash Flow - $140,000 Age 66-120● Tax Equivalent 13.17%

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Exec Bonus Report

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Leveraged Life►Male Age 50 – Sophisticated Investor

►Understands Margin Account

►Understands Put Option

►Pays Annual Premium, then borrows back to provide Leverage

►Maximizes use of funds!

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Leveraged Life

For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Leveraged Life

Accumulation Builder IUL Sales Ideas

Dan SoderbergRegional Life Specialist

All guarantees are based on the claims paying ability of the issuer. For Home Office and Producer Use Only. Not to be Used with Existing or Prospective Customers.

Penn Mutual Life Insurance Company

600 Dresher Road, Horsham, PA 19044