Leveraging Alternative Assets

Transcription

1 Life Insurance as an Asset Class Leveraging Alternative Assets A Supplemental Illustration Prepared for Valued Client Prepared by Premier Producer Premier Brokerage 1 Sales Drive Anytown, USA Life insurance is issued by Symetra Life Insurance Company, th Ave NE, Suite 1200, Bellevue, WA Products are not available in all U.S. states or any U.S. territory. Symetra UL-G is a flexible premium universal life insurance policy. LIM /18

2 Important Information About This Supplemental Illustration A complete understanding of this supplemental illustration shown here requires an understanding of the risks associated with re-positioning assets to maximize assets left to your beneficiaries. This understanding will allow you to evaluate the strategy and explore the advantages of using life insurance as an asset. However, this presentation is intended as a planning option and is not a recommendation to use assets to fund the purchase of life insurance. This supplemental illustration is not intended as investment, accounting, legal or tax advice and Symetra Life Insurance Company does not give investment, accounting, legal or tax advice. This illustration does not attempt to provide more than general U.S. tax information associated with life insurance policies. This information is written to support the promotion or marketing of life insurance issued by Symetra Life Insurance Company. You should seek advice based on your particular circumstances from an independent tax advisor. Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for valuation of standard ordinary life insurance. Joint and survivorship life will provide different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. Leveraging Alternative Assets provides a planning alternative based on the assumptions and data provided by you, the client. The accuracy of this data will be enhanced by assumptions that correctly reflect your situation. Page 2 of 11

3 In the same way auto and homeowners insurance provide protection from unexpected financial losses, life insurance can provide your beneficiaries or business with a predictable death benefit if something were to happen to you. Often, the policy's proceeds will yield a more competitive rate of return when compared to legacy assets held in a taxable investment. Life insurance adds predictability In times of economic uncertainty, many individuals turn to life insurance to help stabilize their investment portfolios. Why? The death benefit paid to beneficiaries is based on a combination of conservative investments and the mortality predictions based on actuarial tables. In other words, the life insurance company's ability to estimate the time of death of those who pay into a life insurance pool means the policy's proceeds are largely insulated from the market's ups and downs. Additionally, if properly structured in a trust that exists outside of the taxable estate, the death benefit proceeds are paid to the trust free of federal income and estate taxes. Benefits of owning life insurance When properly structured, life insurance may provide several additional benefits: Access to Money The life insurance death benefit can help equalize the inheritance received by your beneficiaries, and provide them with the money they may need to: Pay off a mortgage. Replace income. Pay estate, income and capital gains taxes. Control As the owner of the policy, you direct how the death benefit proceeds are distributed to beneficiaries, and help ensure your legacy avoids the costs and delays of probate. Self Completion The life insurance policy death benefit can facilitate "self completion" of your financial strategy by: Providing cash to replace lost income and future contributions to savings. Avoiding the need to sell assets during a down market and allowing assets to continue growing. Funding a business transition plan and providing cash flows to help your business stay afloat during the transition period. Maximizing Wealth Transfer Life insurance proceeds are generally paid to the beneficiaries free of federal income taxes. Or, if properly structured in a trust that exists outside the taxable estate, the death benefit proceeds are paid to the trust free of federal income and estate taxes. Note: Although proceeds of life insurance are generally received income tax free by beneficiaries, estate and local taxes may apply. Page 3 of 11

4 Benefit of Leveraging Alternative Assets Initial Trust Asset Balance of $5,000,000 Assumes federal income tax rate of 25.00% Life Expectancy 1 Plan A Current Plan Plan B Proposed Plan using Life Insurance End of Year End of Year Trust Annual Trust Balance Net to Life Insurance Balance 2 Life Insurance Net to Year Age 6.00% (Net 4.50%) Beneficiaries Premium 6.00% (Net 4.50%) Death Benefit Beneficiaries $5,225,000 $5,225,000 $65,825 $5,156,213 $5,000,000 $10,156, $5,460,125 $5,460,125 $65,825 $5,319,455 $5,000,000 $10,319, $5,705,831 $5,705,831 $65,825 $5,490,044 $5,000,000 $10,490, $5,962,593 $5,962,593 $65,825 $5,668,309 $5,000,000 $10,668, $6,230,910 $6,230,910 $65,825 $5,854,595 $5,000,000 $10,854, $6,511,301 $6,511,301 $65,825 $6,049,265 $5,000,000 $11,049, $6,804,309 $6,804,309 $65,825 $6,252,695 $5,000,000 $11,252, $7,110,503 $7,110,503 $65,825 $6,465,279 $5,000,000 $11,465, $7,430,476 $7,430,476 $65,825 $6,687,429 $5,000,000 $11,687, $7,764,847 $7,764,847 $65,825 $6,919,577 $5,000,000 $11,919, $8,114,265 $8,114,265 $65,825 $7,162,170 $5,000,000 $12,162, $8,479,407 $8,479,407 $65,825 $7,415,681 $5,000,000 $12,415, $8,860,980 $8,860,980 $65,825 $7,680,599 $5,000,000 $12,680, $9,259,725 $9,259,725 $65,825 $7,957,439 $5,000,000 $12,957, $9,676,412 $9,676,412 $65,825 $8,246,737 $5,000,000 $13,246, $10,111,851 $10,111,851 $65,825 $8,549,053 $5,000,000 $13,549, $10,566,884 $10,566,884 $65,825 $8,864,973 $5,000,000 $13,864, $11,042,394 $11,042,394 $65,825 $9,195,110 $5,000,000 $14,195, $11,539,302 $11,539,302 $65,825 $9,540,103 $5,000,000 $14,540, $12,058,570 $12,058,570 $65,825 $9,900,620 $5,000,000 $14,900, $12,601,206 $12,601,206 $65,825 $10,277,361 $5,000,000 $15,277, $13,168,260 $13,168,260 $65,825 $10,671,055 $5,000,000 $15,671, $13,760,832 $13,760,832 $65,825 $11,082,465 $5,000,000 $16,082, $14,380,069 $14,380,069 $65,825 $11,512,389 $5,000,000 $16,512, $15,027,172 $15,027,172 $65,825 $11,961,660 $5,000,000 $16,961, $15,703,395 $15,703,395 $65,825 $12,431,147 $5,000,000 $17,431, $16,410,048 $16,410,048 $65,825 $12,921,762 $5,000,000 $17,921, $17,148,500 $17,148,500 $65,825 $13,434,454 $5,000,000 $18,434, $17,920,182 $17,920,182 $65,825 $13,970,217 $5,000,000 $18,970, $18,726,591 $18,726,591 $65,825 $14,530,090 $5,000,000 $19,530,090 Beneficiaries receive an additional $1,285,954 end of year 28 1 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. 2 The End of Year Trust Balance assumes annual life insurance premiums are withdrawn from the trust balance at the beginning of each specified year. 3 The Net to Beneficiaries is equal to the end of year trust balance plus the life insurance death benefit in the specified year. Page 4 of 11

5 Benefit of Leveraging Alternative Assets Initial Trust Asset Balance of $5,000,000 Assumes federal income tax rate of 25.00% Life Expectancy 1 Plan A Current Plan Plan B Proposed Plan using Life Insurance End of Year End of Year Trust Annual Trust Balance Net to Life Insurance Balance 2 Life Insurance Net to Year Age 6.00% (Net 4.50%) Beneficiaries Premium 6.00% (Net 4.50%) Death Benefit Beneficiaries $19,569,287 $19,569,287 $65,825 $15,115,157 $5,000,000 $20,115, $20,449,905 $20,449,905 $65,825 $15,726,552 $5,000,000 $20,726, $21,370,151 $21,370,151 $65,825 $16,365,459 $5,000,000 $21,365, $22,331,808 $22,331,808 $65,825 $17,033,118 $5,000,000 $22,033, $23,336,739 $23,336,739 $65,825 $17,730,821 $5,000,000 $22,730, $24,386,892 $24,386,892 $65,825 $18,459,921 $5,000,000 $23,459, $25,484,302 $25,484,302 $65,825 $19,221,830 $5,000,000 $24,221, $26,631,096 $26,631,096 $65,825 $20,018,025 $5,000,000 $25,018, $27,829,495 $27,829,495 $65,825 $20,850,049 $5,000,000 $25,850, $29,081,823 $29,081,823 $65,825 $21,719,514 $5,000,000 $26,719, $30,390,505 $30,390,505 $65,825 $22,628,106 $5,000,000 $27,628, $31,758,077 $31,758,077 $65,825 $23,577,583 $5,000,000 $28,577, $33,187,191 $33,187,191 $65,825 $24,569,787 $5,000,000 $29,569, $34,680,614 $34,680,614 $65,825 $25,606,641 $5,000,000 $30,606, $36,241,242 $36,241,242 $65,825 $26,690,152 $5,000,000 $31,690, $37,872,098 $37,872,098 $65,825 $27,822,422 $5,000,000 $32,822, $39,576,342 $39,576,342 $65,825 $29,005,644 $5,000,000 $34,005, $41,357,278 $41,357,278 $65,825 $30,242,111 $5,000,000 $35,242, $43,218,355 $43,218,355 $65,825 $31,534,219 $5,000,000 $36,534, $45,163,181 $45,163,181 $65,825 $32,884,471 $5,000,000 $37,884, $47,195,525 $47,195,525 $65,825 $34,295,485 $5,000,000 $39,295, $49,319,323 $49,319,323 $65,825 $35,769,995 $5,000,000 $40,769, $51,538,693 $51,538,693 $65,825 $37,310,858 $5,000,000 $42,310, $53,857,934 $53,857,934 $65,825 $38,921,059 $5,000,000 $43,921, $56,281,541 $56,281,541 $65,825 $40,603,720 $5,000,000 $45,603, $58,814,210 $58,814,210 $65,825 $42,362,100 $5,000,000 $47,362, $61,460,850 $61,460,850 $65,825 $44,199,607 $5,000,000 $49,199, $64,226,588 $64,226,588 $65,825 $46,119,803 $5,000,000 $51,119, $67,116,784 $67,116,784 $65,825 $48,126,407 $5,000,000 $53,126, $70,137,040 $70,137,040 $65,825 $50,223,308 $5,000,000 $55,223,308 1 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. 2 The End of Year Trust Balance assumes annual life insurance premiums are withdrawn from the trust balance at the beginning of each specified year. 3 The Net to Beneficiaries is equal to the end of year trust balance plus the life insurance death benefit in the specified year. Page 5 of 11

6 Using Life Insurance to Add Predictability Summary Year 28 Age at Life Expectancy (LE): 1 87 Probability of Death: 45.00% Annual Premium: $65,825 Death Benefit: $5,000,000 IRR at LE: 6.26% Pre-Tax IRR (32%): 9.21% Rates of Return The Internal Rate of Return (IRR) is the annual effective after tax interest rate at which the premiums must accumulate in order to match the value of the death benefit at the end of the referenced year. By life expectancy (LE), age 87, the probability of death occuring is 45%. An investment must have earned an average annual interest rate of 6.26% after federal income taxes (9.21% before taxes) to equal the life insurance policy's net death benefit of $5,000, % 8.60% 6.26% 5.85% 8.04% 5.47% 7.53% 5.12% 7.05% 4.79% 6.61% 4.50% 6.20% 4.22% 5.82% 3.96% 5.47% 5.14% 4.83% 3.72% 3.50% 3.29% Life Expectancy Age at Which Death Occurs Internal Rate of Return (IRR) Pre Tax IRR 1 Life Expectancy (LE) is based on the average age of death based on current age, as well as the average probability of death by a certain year. The table used is 2008 Valuation Baisc Tables (VBT) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities to. This is not a recommendation to forecast or predict the future. Page 6 of 11

7 Life Insurance Adds Predictability Based on current assumptions, not guaranteed IRR Pre-Tax Annual Net on IRR on Probability Premium Death Net Death Net Death of Death Year Age Outlay Benefit Benefit 1 Benefit 2 (End of Year) $65,825 $5,000, % % 0.07% 2 61 $65,825 $5,000, % % 0.19% 3 62 $65,825 $5,000, % % 0.36% 4 63 $65,825 $5,000, % % 0.59% 5 64 $65,825 $5,000, % % 0.88% 6 65 $65,825 $5,000, % % 1.22% 7 66 $65,825 $5,000, % 92.34% 1.62% 8 67 $65,825 $5,000, % 74.50% 2.08% 9 68 $65,825 $5,000, % 61.75% 2.60% $65,825 $5,000, % 52.25% 3.19% $65,825 $5,000, % 44.93% 3.86% $65,825 $5,000, % 39.13% 4.62% $65,825 $5,000, % 34.44% 5.48% $65,825 $5,000, % 30.57% 6.46% $65,825 $5,000, % 27.34% 7.58% $65,825 $5,000, % 24.61% 8.86% $65,825 $5,000, % 22.27% 10.34% $65,825 $5,000, % 20.24% 12.02% $65,825 $5,000, % 18.48% 13.95% $65,825 $5,000, % 16.93% 16.13% $65,825 $5,000, % 15.56% 18.61% $65,825 $5,000, % 14.35% 21.41% $65,825 $5,000, % 13.26% 24.55% $65,825 $5,000, % 12.28% 28.07% $65,825 $5,000, % 11.40% 31.98% $65,825 $5,000, % 10.60% 36.12% $65,825 $5,000, % 9.87% 40.48% $65,825 $5,000, % 9.21% 45.00% $65,825 $5,000, % 8.60% 49.66% $65,825 $5,000, % 8.04% 54.40% 1 The Internal Rate of Return (IRR) on the death benefit is the effective after-tax annual rate at which an amount equal to the illustrated premium must be accumulated in order to generate the net death benefit at the end of a referenced policy year. 2 The Internal Rate of Return (IRR) on the death benefit is the effective pre-tax annual rate at which an amount equal to the illustrated premium must be accumulated in order to generate the net death benefit at the end of a referenced policy year. Assumes a federal income tax rate of 32.00%. 3 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. Page 7 of 11

8 Life Insurance Adds Predictability Based on current assumptions, not guaranteed IRR Pre-Tax Annual Net on IRR on Probability Premium Death Net Death Net Death of Death Year Age Outlay Benefit Benefit 1 Benefit 2 (EOY) $65,825 $5,000, % 7.53% 59.15% $65,825 $5,000, % 7.05% 63.81% $65,825 $5,000, % 6.61% 68.30% $65,825 $5,000, % 6.20% 72.59% $65,825 $5,000, % 5.82% 76.62% $65,825 $5,000, % 5.47% 80.35% $65,825 $5,000, % 5.14% 83.74% $65,825 $5,000, % 4.83% 86.78% $65,825 $5,000, % 4.54% 89.60% $65,825 $5,000, % 4.27% 92.09% $65,825 $5,000, % 4.02% 94.21% $65,825 $5,000, % 3.78% 95.92% $65,825 $5,000, % 3.55% 97.23% $65,825 $5,000, % 3.34% 98.19% $65,825 $5,000, % 3.14% 98.86% $65,825 $5,000, % 2.95% 99.31% $65,825 $5,000, % 2.77% 99.59% $65,825 $5,000, % 2.60% 99.76% $65,825 $5,000, % 2.60% 99.86% $65,825 $5,000, % 2.29% 99.92% $65,825 $5,000, % 2.14% 99.96% $65,825 $5,000, % 2.00% 99.98% $65,825 $5,000, % 1.87% 99.99% $65,825 $5,000, % 1.74% 99.99% $65,825 $5,000, % 1.62% % $65,825 $5,000, % 1.51% % $65,825 $5,000, % 1.40% % $65,825 $5,000, % 1.30% % $65,825 $5,000, % 1.20% % $65,825 $5,000, % 1.10% % 1 The Internal Rate of Return (IRR) on the death benefit is the effective after-tax annual rate at which an amount equal to the illustrated premium must be accumulated in order to generate the net death benefit at the end of a referenced policy year. 2 The Internal Rate of Return (IRR) on the death benefit is the effective pre-tax annual rate at which an amount equal to the illustrated premium must be accumulated in order to generate the net death benefit at the end of a referenced policy year. Assumes a federal income tax rate of 32.00%. 3 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. Page 8 of 11

9 Alternative Asset Summary (Understanding the big picture) Leveraging alternative assets using life insurance may not only yield a more competitive rate of return compared to other alternative non-insurance assets, it may also provide more wealth to future generations. The chart below compares what legacy beneficiaries would receive, if starting at age 60, the policyowner placed the same life insurance premiums each year into a hypothetical taxable account earning one of the average annual rates below. Summary Year 28 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 Age at Life Expectancy (LE): 87 Death Benefit: $5,000,000 End of year balance available at death to beneficiaries Alternative Non-Insurance Assets: 4.00% (3.00% Net): $2,910,706 $5,000, % (3.75% Net): $3,284, % (4.50% Net): $3,714, % (5.25% Net): $4,209,697 $3,714,046 $3,284,064 $2,910,706 $4,209,697 $1,000,000 $0 Death Benefit 4.00% (3.00%) 5.00% (3.75%) 6.00% (4.50%) 7.00% (5.25%) Life Insurance Alternative Non Insurance Assets 1 Where's the crossover point? Alternative Non Insurance Assets 1 Additional years for non insurance assets to match death benefit 7.00% (5.25%) % (4.50%) % (3.75%) % (3.00%) Years 1Assumes federal income tax rate of 25.00%. Page 9 of 11

10 Rate of Return Analysis (Alternative Asset Summary) Non-Insurance Assets Life Expectancy 1 Assumes federal income tax rate of 25.00% Crossover point 2 Hypothetical Values (End of Year) Annual 4.00% Gross 5.00% Gross 6.00% Gross 7.00% Gross Year Age Contributions 3.00% Net 3.75% Net 4.50% Net 5.25% Net 1 60 $65,825 $67,800 $68,293 $68,787 $69, $65,825 $137,633 $139,148 $140,670 $142, $65,825 $209,562 $212,659 $215,787 $218, $65,825 $283,649 $288,928 $294,284 $299, $65,825 $359,958 $368,056 $376,314 $384, $65,825 $438,557 $450,151 $462,036 $474, $65,825 $519,513 $535,325 $551,614 $568, $65,825 $602,898 $623,694 $645,224 $667, $65,825 $688,785 $715,375 $743,046 $771, $65,825 $777,248 $810,495 $845,271 $881, $65,825 $868,365 $909,183 $952,095 $997, $65,825 $962,216 $1,011,570 $1,063,726 $1,118, $65,825 $1,058,882 $1,117,798 $1,180,381 $1,246, $65,825 $1,158,449 $1,228,008 $1,302,285 $1,381, $65,825 $1,261,002 $1,342,352 $1,429,675 $1,523, $65,825 $1,366,632 $1,460,984 $1,562,798 $1,672, $65,825 $1,475,430 $1,584,064 $1,701,911 $1,829, $65,825 $1,587,493 $1,711,760 $1,847,284 $1,995, $65,825 $1,702,917 $1,844,244 $1,999,199 $2,169, $65,825 $1,821,805 $1,981,697 $2,157,950 $2,352, $65,825 $1,944,259 $2,124,304 $2,323,845 $2,545, $65,825 $2,070,386 $2,272,259 $2,497,205 $2,747, $65,825 $2,200,297 $2,425,762 $2,678,366 $2,961, $65,825 $2,334,106 $2,585,022 $2,867,680 $3,186, $65,825 $2,471,929 $2,750,253 $3,065,513 $3,422, $65,825 $2,613,887 $2,921,681 $3,272,248 $3,671, $65,825 $2,760,103 $3,099,538 $3,488,286 $3,933, $65,825 $2,910,706 $3,284,064 $3,714,046 $4,209, $65,825 $3,065,827 $3,475,510 $3,949,965 $4,499, $65,825 $3,225,601 $3,674,135 $4,196,501 $4,805,517 1 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint and survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. 2 The crossover point highlights the end of a year when each of the specified hypothetical values equal or exceed the speciifed death benefit. The purpose of this supplemental illustration is to show how the performance of the underlying investments could effect its value. This illustration is hypothetical and is not not intended to serve as a projection. Investment fees, including potential redemption charges, are not reflected in this illustration. Page 10 of 11

11 Rate of Return Analysis (Alternative Asset Summary) Non-Insurance Assets Life Expectancy 1 Assumes federal income tax rate of 25.00% Crossover Point 2 Hypothetical Values (End of Year) Annual 4.00% Gross 5.00% Gross 6.00% Gross 7.00% Gross Year Age Contributions 3.00% Net 3.75% Net 4.50% Net 5.25% Net $65,825 $3,390,169 $3,880,208 $4,454,131 $5,127, $65,825 $3,559,674 $4,094,010 $4,723,354 $5,465, $65,825 $3,734,264 $4,315,828 $5,004,692 $5,821, $65,825 $3,914,092 $4,545,965 $5,298,690 $6,196, $65,825 $4,099,314 $4,784,733 $5,605,918 $6,591, $65,825 $4,290,093 $5,032,453 $5,926,971 $7,006, $65,825 $4,486,596 $5,289,464 $6,262,472 $7,443, $65,825 $4,688,993 $5,556,112 $6,613,071 $7,903, $65,825 $4,897,463 $5,832,760 $6,979,446 $8,388, $65,825 $5,112,187 $6,119,782 $7,362,308 $8,897, $65,825 $5,333,352 $6,417,567 $7,762,399 $9,434, $65,825 $5,561,152 $6,726,519 $8,180,494 $9,998, $65,825 $5,795,787 $7,047,057 $8,617,404 $10,592, $65,825 $6,037,460 $7,379,615 $9,073,974 $11,218, $65,825 $6,286,383 $7,724,644 $9,551,090 $11,876, $65,825 $6,542,775 $8,082,612 $10,049,676 $12,569, $65,825 $6,806,858 $8,454,003 $10,570,699 $13,298, $65,825 $7,078,863 $8,839,322 $11,115,167 $14,065, $65,825 $7,359,029 $9,239,090 $11,684,137 $14,873, $65,825 $7,647,599 $9,653,849 $12,278,710 $15,723, $65,825 $7,944,827 $10,084,162 $12,900,039 $16,618, $65,825 $8,250,972 $10,530,611 $13,549,328 $17,560, $65,825 $8,566,301 $10,993,803 $14,227,835 $18,551, $65,825 $8,891,089 $11,474,364 $14,936,875 $19,594, $65,825 $9,225,622 $11,972,946 $15,677,821 $20,692, $65,825 $9,570,190 $12,490,225 $16,452,110 $21,848, $65,825 $9,925,096 $13,026,902 $17,261,242 $23,064, $65,825 $10,290,648 $13,583,704 $18,106,785 $24,345, $65,825 $10,667,167 $14,161,386 $18,990,378 $25,692, $65,825 $11,054,982 $14,760,732 $19,913,732 $27,110,567 1 Life Expectancy (LE) is based on the average age at death based on current age, as well as the average probability of death by a certain year. The table used is 2008 VBT (Valuation Basic Tables) produced by the NAIC (National Association of Insurance Commissioners) and the SOA (Society of Actuaries). This table is based on the most recent mortality experience for a single life and is intended to provide a minimum standard for the valuation of standard ordinary life insurance. Joint ans survivorship life will produce different outcomes. It is important to note that this table should not be used to predict life expectancies and should only be used as a reference. There are many tables available in addition to 2008 VBT to calculate life expectancies and other probabilities. This is not a recommendation to forecast or predict the future. 2 The crossover point highlights the end of a year when each of the specified hypothetical values equal or exceed the speciifed death benefit. The purpose of this supplemental illustration is to show how the performance of the underlying investments could effect its value. This illustration is hypothetical and is not not intended to serve as a projection. Investment fees, including potential redemption charges, are not reflected in this illustration. Page 11 of 11