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Lee DuncanVice President & National Training
Director678.969.9000
Million Dollar Baby
Agenda• Why “Million Dollar Baby” using IUL
is so Important• Quick overview of IUL portfolio• Case Study• Illustrating the concept• Underwriting and completing the
application
• Each premium payment they make funds their death benefit and also helps build cash value.
• Cash value can be used to help pay for college tuition and expenses, buying a home, retirement and everything in between.
• Living Benefits in case of an illness.• Death benefit protection – protecting their
insurability.
What It Costs to Go to College
• Can vary widely depending on institution; public vs. private
• College costs are rising at twice the rate of inflation
• Average annual tuition plus expenses at a private four-year college is about $35,000 (U.S. News, August 2010)
The College Debt Crisis
• Americans now owe more on their student loans than they do on their credit cards.
• College debt will surpass $1 trillion in 2012 – growing at a rate of $2,853 per second.
• As of 2009, 67 percent of graduates had debt, averaging $24,000 per student (this does not include loans taken out by parents)
• Student loan defaults have doubled since 2005
(CNBC, “Price of Admission: America’s College Debt Crisis”, 2012)
Cost of Buying a Home
• Varies widely across the U.S.• Average sales price of new homes
sold in U.S. was $272,900 in 2010.• 20% down would translate to over
$54,000
(Census.gov)
Cost of Retirement• Saving $1 million will only amount to about
$40,000 per year for the average retiree (assuming you limit your withdrawals to 4% of your savings during your first year in retirement).
• 41% of women and 32% of men believe they will have to work after retirement just to make ends – retirement has become a luxury.
• When the stock market was soaring people became obsessed with their nest egg number; now the focus is shifting to a more important number: how much retirement income your savings will provide.
Retirement saving is not just about accumulating a big
pile of money!
The OTHER Living Benefit
• Tax Free Retirement
• Cash Value Accumulation
• College Education Expenses
• Be Your Own Banker!!!!!
Why Tax-Free?
If you were a farmer would you rather pay tax on the
seed…
…or the harvest?
LSW Indexed UL Products
SecurePlus® Provider• Middle market• Upside potential without the risk of losses • Issue ages 0-85 • Minimum face amount - $25,000• 4 interest crediting strategies• 1.25% Annual Account Value Enhancement
starting at year 10• 10-year surrender charge period
LSW FlexLife ®
• 4th Generation IUL• Business or affluent/emerging affluent clients• Issue ages 0-85 • Minimum Face: $100,000
(Base Face Amount + APB* Face Amount)• 5 interest crediting strategies• Price banding at $250k, $1MM, and $3MM • Lifetime Income Benefit Rider
*Additional Protection Benefit Rider. Riders are optional, may require an additional premium and may not be available in all states.
Case Study: John Smith• LSW FlexLife• Newborn baby (at least 15 days old);
male• Parents each have $500,000 of life
insurance in force; are both in early 30s
• Face Amount: $200,000, Increasing Death Benefit for 50 years
• Interest Strategies Allocation: 50% strategy 1, 50% strategy 2; illustrated rate of 8.3%
• Initial premium of $50 per month• In 5 years they increase premium to
$75 per month• In 10 years they increase premium to
$100 per month
Case Study: John Smith
• Child takes out max loan at age 23 to repay college loans – four years $10,000 per year. Total of $40,000 to repay college loans.
• At age 27 child takes over ownership of the policy and begins paying $100 per month.
• By age 33 career has taken off; increased premium to $150 per month.
• At age 35 takes out $40,000 to buy first house.
Case Study: John Smith
• At age 36 continues to pay $150 per month.
• At age 40 increases to $200 per month.
• Retires at age 67 and begins taking retirement income from policy at age 70 – projected $289,420 per year for 35 years!
• John Smith dies at age 93 and his children receive over $1.5 million of tax-free death benefit.
Case Study: John Smith
Summary of Benefits
• Total paid in premium: $101,700 over lifetime
• Total “income” paid to child during lifetime: $6,556,660!
• Death Benefit Paid to family: $1,582,873!
• Total benefits paid from policy: $8,239,533!
Juvenile ApplicationsStart saving from day one.The sooner you start, the better.
Encourage loved ones to give the gift that keeps on giving.When family members and friends celebrate your child’s birth, subsequent birthdays, holidays, and religious events, tell them about your child’s college savings account. Every monetary gift they give will be part of a legacy of learning.
Turn to your parents.Often, grandparents are the ones who are most aware of how difficult it is for parents to manage the financial burden alone, especially if more than one child is involved.
Juvenile ApplicationsBecause college is seen as the immediate expense, parents often focus on saving for education and leave retirement funding solely to their children.However, what we are experiencing RIGHT NOW is the risk of OUTLIVING your money.
Think about it this way - Most children are eligible for financial aid for education in a way that they are not eligible for in saving for retirement.
However, what we are experiencing RIGHT NOW is the risk of OUTLIVING
YOUR MONEY
Parents focus:Education…
NOT RETIREMENT WILL FINANCIAL AID BE AVAILABLE FOR:
ANOTHER WAY TO LOOK AT IT
EDUCATION
RETIREMENT
YES
NO
When all is said and done, a huge
head start on their financial
security could be the best gift you could possibly
bestow…
Juvenile ApplicationsWill Consider face amount of coverage on a minor applicant EQUAL to that of the coverage on either parent (or legal guardian); unless state law dictates otherwise.
Ownership / Premium Payers for minors can be parents/legal guardians or grandparents ONLY.
Larger face amounts for a juvenile should include a detailed outline of the family / household income, net worth, premium funding sources, and any other supporting information.
HIPAA form is required for each child.
Signatures are required at age 15 and over, as well as an HIV form.
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