Positioning Life Insurance Opportunities

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Positioning Life Insurance Opportunities A simple way to tell a compelling story

Table of Contents Three Buckets...................................................................................................................

2

Supporting Tools & Resources.........................................................................................

5

Consumption..................................................................................................................

6

Life Insurance Retirement Planning (LIRP)...............................................................

7

College Funding........................................................................................................

8

Municipal Bond Maximization..................................................................................

9

Contingency.................................................................................................................... 10 Income Replacement Calculator.............................................................................. 11 CD Maximization....................................................................................................... 12 Spousal Lifetime Access Trust.................................................................................. 13 Key Person Insurance............................................................................................... 14 Buy–Sell.................................................................................................................... 15 Custodial.......................................................................................................................... 16 Life Insurance as an Asset........................................................................................ 17 Estate Maximization (Annuity Maximization)............................................................. 18 Estate Maximization (Bond Maximization)................................................................ 19 Economics of Gifting................................................................................................. 20 Dynasty Trusts with Life Insurance............................................................................ 21 Concentrated Stock Position.................................................................................... 22 IRA Enhancement...................................................................................................... 23 Charitable Annuity Arbitrage for Income and Endowments...................................... 24 Estate Tax Analyzer.................................................................................................... 25

The Three Buckets

A new way of thinking about your assets

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The Three Buckets

Three Asset Use Categories/Buckets • Each “bucket” has a different purpose. • Investment decisions are different for each. • Planning opportunities are different for each. • You may have assets in any or all of these buckets.

“Consumption”

“Contingency”

“Custodial”

Assets that you need to live on, spend or enjoy during life

Your emergency or “just in case” money

Assets not needed during your lifetime – Held for someone or something else family/friends/ charity

Which “third bucket” asset are you willing to reposition for the benefit of your heirs? It is possible to design a strategy that: • Works today • Takes advantage of the current economic environment • Retains flexibility for the family and the grantor

“Custodial” Cash & Bond Portfolio Assets not needed during your lifetime – Held for someone or something else family/friends/ charity

“Third Bucket” Assets

Unneeded IRAs

Annuities

Commercial Real Estate

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The Three Buckets

“Third Bucket” Asset Allocation Options

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If you could get a rate of return of no less than ____% over the next ____ years, how much of your third bucket assets would you reposition?

Growth Funds

Value Funds

Income Funds

International Funds

Bond Funds

Small Cap

Mid Cap

Cash Equivalents

Index Fund

EFT’s

Technology

REIT’s

Financials

Utilities

Guaranteed Account

Real Estate

Closely Held Business Interests

______%

Using asset allocation as part of your investment strategy neither assures no guarantees better performance and cannot protect against loss of principal due to changing market conditions. Please see page 28 for information regarding these asset classes.

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Supporting Tools & Resources HCB Positioning Life Insurance Opportunities \ 5

Consumption Assets that you need to live on If a client does not have enough assets to fully support the lifestyle they desire, there are many ways annuities and life insurance can be structured as financial tools to help them accomplish their objectives for today. The following examples provide clear explanations to help you share these ideas with your clients. Life Insurance Retirement Planning (LIRP) College Funding Municipal Bond Maximization

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Supporting Tools & Resources

Where to Find

Consumption

Life Insurance Retirement Planning (LIRP) HCB Solutions piece located in the Resources section of Life Concepts.

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Supporting Tools & Resources

Where to Find

College Funding HCB Solutions piece located in the Resources section of Life Concepts.

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Consumption

Supporting Tools & Resources

Where to Find

Consumption

Muni Bond Max Customizable Case Study located in the Life Concepts Toolbox.

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Contingency Your emergency money Life poses many “what if” scenarios and for your clients who have allocated “just in case” money to cover the possibilities, there are all types of insurances. We specialize in life, long term care and disability income coverages. The following sample materials are just a few of the items available that can help you assess needs and explain concepts for personal and business needs. Income Replacement Calculator CD Maximization Spousal Lifetime Access Trust Key Person Insurance Buy-Sell

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Supporting Tools & Resources

Where to Find

Contingency

Income Replacement Calculator Located under Quick Analysis & Calculators in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

CD Max Customizable Case Study located in the Life Concepts Toolbox.

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Contingency

Supporting Tools & Resources

Where to Find

Contingency

Spousal Lifetime Access Trust Customizable Case Study located in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

Key Person Insurance HCB Solutions piece located in the Resources section of Life Concepts.

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Contingency

Supporting Tools & Resources

Where to Find

Contingency

Buy/Sell HCB Solutions piece located in the Resources section of Life Concepts.

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Custodial Assets not needed during your lifetime that are really for the benefit of someone else For clients who are confident that their consumption and contingency buckets are full, life insurance can be an attractive component of legacy planning. Often times, repositioning certain assets can make a big difference. The following sample items provide an overview how these concepts can benefit your clients. Life Insurance as an Asset Estate Maximization (Annuity Maximization) Estate Maximization (Bond Maximization) Economics of Gifting Dynasty Trusts with Life Insurance Concentrated Stock Position IRA Enhancement Charitable Annuity Arbitrage for Income and Endowments Estate Tax Analyzer

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Supporting Tools & Resources

Custodial

“Third Bucket” Asset Allocation Options

?

If you could get a rate of return of no less than 5.5% after tax over the next 30 years, how much of your third bucket assets would you reposition?

Growth Funds

Value Funds

Income Funds

International Funds

Bond Funds

Small Cap

Mid Cap

Cash Equivalents

Index Fund

EFT’s

Technology

REIT’s

Financials

Utilities

Guaranteed Account

Real Estate

Closely Held Business Interests

______%

Using asset allocation as part of your investment strategy neither assures no guarantees better performance and cannot protect against loss of principal due to changing market conditions.

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Supporting Tools & Resources

Where to Find

Life Insurance as an Asset Located under Quick Analysis & Calculators in the Life Concepts Toolbox.

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Custodial

Supporting Tools & Resources

Where to Find

Custodial

Estate Maximization (Annuity Maximization) Customizable Case Study located in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

Estate Maximization (Bond Maximization) Customizable Case Study located in the Life Concepts Toolbox.

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Custodial

Supporting Tools & Resources

Where to Find

Custodial

Economics of Gifting Customizable Snapshot located in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

Dynasty Trusts with Life Insurance Customizable Case Study located in the Life Concepts Toolbox.

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Custodial

Supporting Tools & Resources

Where to Find

Custodial

Concentrated Stock Position Customizable Case Study located in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

IRA Enhancement Customizable piece located in the Life Concepts Toolbox.

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Custodial

Supporting Tools & Resources

Where to Find

Custodial

Charitable Annuity Arbitrage for Income and Endowments Customizable Snapshot located in the Life Concepts Toolbox.

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Supporting Tools & Resources

Where to Find

Custodial

Estate Tax Analyzer Customizable piece located under Quick Analysis & Calculators in the Life Concepts Toolbox

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Supporting Tools & Resources

Custodial

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Asset class definitions from page 4: Growth Fund – A diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividend payouts. Portfolio companies would mainly consist of companies with above-average growth in earnings that reinvest their earnings into expansion, acquisitions, and/or research and development. Value Fund – A stock fund that primarily holds stocks that are deemed to be undervalued in price and that are likely to pay dividends. Value funds are one of three main mutual fund types; the other two are growth and blend (a mix of value and growth stocks) funds. Income Funds – A type of fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market, and dividend-paying stocks. International Funds – A fund that can invest in companies located anywhere outside of its investors’ country of residence. Also referred to as a “foreign fund”. Bond Fund – A fund invested primarily in bonds and other debt instruments. The exact type of debt the fund invest in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities.   Small Cap – Refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion. Mid-Cap – A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company’s shares outstanding by its stock price. Mid cap is an abbreviation for the term “middle capitalization”. Cash Equivalents – Investment securities that are short-term, have high credit quality and are generally highly liquid. Index Funds – A type of fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500). An index fund is said to provide broad market exposure, low operating expenses and low portfolio turnover. You cannot directly invest in a index. Exchange-Traded Funds – ETF’s – A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Technology Fund – A fund that invests primarily in technology based firms and the tech industries. Real Estate Investment Trust – REIT’s - A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Real estate investing (REIT) involves risks such as refinancing in the real estate industry, interest rate risk, lease terminations, and potential economic and regulatory changes. The value of the shares in the trust will fluctuate with the portfolio of the underlying real estate related investments. There can be no assurance that a secondary market for the REIT will be maintained by the issuer. The investment may be illiquid. Redemption price of a REIT may be worth more or less than the original price paid for units of the trust. Financial Sector – A category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Utilities Sector – A category of stocks for utilities such as gas and power. The utilities sector contains companies such as electric, gas and water firms and integrated providers. Guaranteed Account – A brokerage account that has its margin requirements or losses guaranteed by the assets of another account.

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For Rep/Agent Use Only. Not For Further Distribution. 85798 exp. 7/13