Tax-Free Investment Planning Engage More Advisors with VUL FOR - - PowerPoint PPT Presentation

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Feb 12, 2023 280 likes •442 views

Tax-Free Investment Planning Engage More Advisors with VUL FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. The Power of Tax-Free $100,000 Invested for 20 Years $386,968 Tax Equivalent Yield (Federal) Tax Free Rate 24% Tax 32% Tax 35% Tax

SLIDE 1

Tax-Free Investment Planning

Engage More Advisors with VUL

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

SLIDE 2

The Power of Tax-Free

$- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000

Fully Taxable Tax-Deferred LTCG Taxed Tax-Free

$253,460 $295,139 $320,850 $386,968

$100,000 Invested for 20 Years

Tax Equivalent Yield (Federal) Tax Free Rate 24% Tax 32% Tax 35% Tax 5.00% 6.58% 7.35% 7.69% 6.00% 7.89% 8.82% 9.23% 7.00% 9.21% 10.29% 10.77% 8.00% 10.53% 11.76% 12.31% Tax Equivalent Yield (Federal & State) Tax Free Rate 29% Tax 37% Tax 40% Tax 5.00% 7.04% 7.94% 8.33% 6.00% 8.45% 9.52% 10.00% 7.00% 9.86% 11.11% 11.67% 8.00% 11.27% 12.70% 13.33%

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. Chart: 7% annual account growth. 32% federal tax rate and 15% LTCG rate assumed. Tax-deferred account is taxed as lump sum at end of year 20. Taxable account and LTCG account are taxed on gains annually at respective rates. For illustration purposes only. Tax-eq yield chart: Using estimated average state tax of 5%. Seven US states don't have state income tax: TX, FL, AK, SD, WY, WA, NV

Tip: Use the supplementary IRR report pages in the illustration

SLIDE 3

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Taxable Accounts Tax-Free Accounts Tax-Deferred Accounts 401(k) Pension Annuities IRA Roth IRA Muni Bonds

VUL

Stocks / Bonds Mutual Funds / SMAs Brokerage Accts.

Tax Diversification

SLIDE 4

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Characteristic Variable Annuity Roth IRA VUL Investment Accumulation Tax-Deferred Tax-Free Tax-Free Fees and Charges MA&E, Rider(s), Investment Account Charges, Investment Admin / Policy Charges, COI, Rider(s), Investment Client Income Taxable Tax-Free Tax-Free Death Benefit Taxable Bene Roth / Tax-Free Tax-Free Underwriting No No Yes Account Setup / Issue Fairly Immediate Fairly Immediate 10-40 days For illustrative purposes only. Accelerated underwriting programs available from Lincoln, John Hancock, Principal Financial, AIG, Nationwide, and Pacific Life (as of 7/2018).

Comparison

SLIDE 5

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Illustration Inputs Jackson’s Elite Access VA Sample VUL Policy Client Age 40 40 Client Gender Male Male Account Type Non-Qualified Non-Qualified Premiums (20k per year for 5 years) $100,000 $100,000 Assumed Illustration Gross Rate 7% 7% Sub-Account Investment Costs 1.03% 1.03% Duration of Annual Income (age 65) 10 10 For illustrative purposes only. Should not be reproduced. Preferred, non-tobacco. Sources: Jackson Elite Access VA Illustration Software & John Hancock VUL Illustration Software.

VA Comparison

SLIDE 6

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Illustration Outputs Jackson’s Elite Access VA Sample VUL Policy Withdrawals (Start at age 65) $38,930 $33,096 Total Distribution over 10 Years $389,301 $330,960 Taxable Distribution Amount $289,301 $0 Net Surrender Value (Age 75) $0 $20,531 Net Death Benefit (Age 75) $0 $34,237 Total Distribution After Tax (35%) $288,046 $330,960 Total Distribution After Tax (24%) $319,869 $330,960

For illustrative purposes only. Should not be reproduced. Preferred, non-tobacco. Sources: Jackson Elite Access VA Illustration Software & John Hancock VUL Illustration Software. VA Comparison

SLIDE 7

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

COT vs. COI

Assume a Cost Cost of Tax Cost of Insurance

SLIDE 8

The Power of Tax-Free

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Prem CV + DB

The Design Insurance Premium Policy Cash Value Death Benefit

SLIDE 9

World Cla lass In Investments

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. 9

SLIDE 10

World Cla lass In Investments

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

30% 20% 10% 20% 20%

American Funds Growth American Funds International Delaware Emerging Markets Franklin Templeton Global Bond Delaware SMID Cap Core

Annualized Returns QE 3/2018 1 Year 14.87% 3 Year 8.30% 5 Year 9.04% 10 Year 7.13%

Data from Lincoln Financial AssetEdge VUL Sub-Account Performance Quarter Ending 3/2018. For illustrative purposes only. Past performance is no guarantee of future results. 10

Sample 80/20 Portfolio

SLIDE 11

World Cla lass In Investments

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. 11

American Funds Growth:

4 of the 6 Managers for American Funds Growth Fund also manage the Growth Fund of America retail fund: Mark L. Casey, Martin Romo Michael T. Kerr, Alan J. Wilson Retail Fund Assets: $190 Billion

American Funds International:

3 of the 4 Managers for American Funds International Fund also manage the EuroPacific Growth retail fund: Sung Lee, Jesper Lyckeus Christopher Thomsen Retail Fund Assets: $163 Billion

Leverage Outlier Holdings Templeton Global Bond:

Same fund managers as the Templeton Global Bond retail fund: Michael Hasenstab Sonal Desai Retail Fund Assets: $40 Billion Male, Age 65, Standard NT GFOA MF Holding: $1,000,000 Liquidate Amount: $471,010 After Tax Amount: $400,356 Single Premium MEC VUL Premium: $400,356 $1 Million Death Benefit Target: $38,000 20th Year CV: $849,928 Lifetime No-Lapse Guarantee $528,990 in Growth Fund of America $1,000,000 Guaranteed DB + CV in American Funds Growth

Taxable Tax-Free Lincoln Financial VUL ONE Illustration Example 7% Net. LTCG at 15%.

SLIDE 12

Fin ind Henry ry and Louis

Broker World Article, May 2018: The $30 Trillion Transfer: Pre and Post Mortem

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

HENRY LOUIS

High Earners Not Retired Yet Loved Ones with Unneeded Income Streams Annuity / IRA / SS / Pension Max Estate / Legacy Planning LTC / Chronic Illness Reserve Outlier / Concentrated Asset Transfer Philanthropy / Special Cause Roth IRA Alternative / LIRP Variable Annuity (VA) Alternative College / Children Expense Funding Emergency Fund / Asset Protection LTC / Chronic Illness Reserve

Age 30-59 125 Million Age 60+ 60 Million

SLIDE 13

Offer a P Packaged Solution

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

Age 30 Age 55 Age 90+ “IF” Death Benefit Cash Value Access Return of Investment “IF” Chronic Illness “WHEN” Death Benefit College Funding Gifts / Expenses Emergencies / Debts Concern: Family Concern: You Tax-Free Income Buy term and invest difference. In Theory: In Reality: Forget to convert the term to perm. Forget to invest the difference.

6

Points of Flexible Value

1 2 3 4 5 6

SLIDE 14

To Protect Your AUM

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION.

$100,000 Annual Income Needed $20,000 from Social Security $10,000 from Pension $70,000 from Retirement Account 20 Year Time Period: 1973-1993 (Age 65-85) Retirement Account Start Value: $1,000,000 Investments Held: S&P 500 Index Tom, Age 65 (Owns a CVLI Policy Since Age 40) “Smooth Sailing” Strategy: Use the cash value of the life insurance policy to withdrawal the needed funds in the year following a year with a market decline, in hopes of giving the investment account an opportunity to recover. S&P 500 Negative Years (5): 1973, 74, 77, 81, 90

$444,791 $3,587,396

Without the Strategy: With the Strategy: 56% Decline 358% Increase

Figures from AXA Smooth Sailing Strategy Sales Flyer, GE-114931 (9/16) (Exp. 9/18) Cat. #156457, G38199 14

Retirement Account Ending Value:

SLIDE 15

Sale les and Positioning Artic icles

Top 5 Ways to Sell VUL – Reference Guide The Single Premium Alternative to the VA The Investments – The Untold Story of VUL Prudential VUL Protector – Rise and Success Want to Make That a Combo Meal? – Nationwide’s Life and LTC Combo Nationwide’s Single Premium LTC Solution The Future is Here with LincXpress and ExpressTrack – Accelerated Underwriting Principal BOES – Q&A with Dan Harty – Business Opportunities Using CVLI for Income and Asset Protection – A Simple Example Tyranny of the OR vs. Genus of the AND – Distribution White Paper Prove it Pru – What are Yours Strengths? Platinum or Bust – An Experience with John Hancock’s Vitality

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. 15

SLIDE 16

Conclusion and Questions

The key to any distribution model, especially as it pertains to disseminating a mass-market message, is three critical items. 1) Keep it simple. Really, really simple with the same message. 2) It must be relatable. Use the advisor’s language. 3) It must be repeatable. You are there when the advisor can sell it to their clients without you.

FOR BROKER USE ONLY. NOT FOR DISTRIBUTION. 16