Annuity Maximization. Estate Planning and Deferred Annuities PRESENTED BY PREPARED FOR. Sam Malone & Maggie Malone

Transcription

1 Maximization Estate Planning and Deferred Annuities PRESENTED BY PREPARED FOR Advanced Markets John Hancock 197 Clarendon St. Boston, MA Tel.: , Option #3 Fax: Sam Malone & Maggie Malone Insurance products are issued by John Hancock Life Insurance Company Insurance products are issued by: John Hancock Life Insurance (U.S.A.), Boston, MA and securities offered through John Hancock Distributors LLC through other broker/dealers that have a selling Company agreement of New with York, John Hancock Valhalla Distributors NY Securities LLC, 197 Products Clarendon distributed Street, Boston, by John Insurance Hancock Distributors LLC through other broker/dealers appointed by John of New Hancock York, Distributors Valhalla NY LLC, Clarendon Street, Boston, MA January 29, 2016 MA 02116products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02116

2 Wealth Transfer Planning with Deferred Annuities The Concern You have a deferred annuity that you don't need for retirement income but which you want to leave to your heirs. However, you realize its value may be reduced by estate and income taxes and there may be more efficient ways to create an inheritance. The Solution You can use distributions from the annuity to fund a life insurance policy. The death benefit of a life insurance policy is generally income-tax free, and may increase the amount left to your heirs. Also, if purchased within an ILIT, the life insurance proceeds are generally estate tax free as well. How Does It Work? First, you can create an income stream from your deferred annuity either by converting it to a Single Premium Immediate (SPIA approach), or by taking withdrawals as permitted under your annuity contract (withdrawals approach). Then, you purchase a life insurance policy on your life which can be owned either by you, or an Irrevocable Life Insurance Trust (ILIT) created by you. In general, life insurance proceeds are income tax free, and if the policy is owned by an ILIT, the proceeds may avoid estate taxes as well. Benefits Potential Leverage Purchasing life insurance can potentially increase the amount left for your heirs. Income Tax Advantages In general, life insurance proceeds are received by your family income-tax free.¹ Estate Tax Advantages If the life insurance is purchased in a properly drafted Irrevocable Life Insurance Trust (ILIT), the proceeds are generally received by your family estate tax free.² Footnotes Considerations SPIA Approach The SPIA approach generally creates a larger, guaranteed income stream, which means a larger potential premium and death benefit for the heirs. However, converting to a SPIA is irrevocable and liquidates the annuity s principal. There can be potential limitations, terms, restrictions, costs fees and charges that may apply in converting a deferred annuity into a SPIA. Withdrawals Approach The withdrawals approach is sometimes preferred because you can retain access to the principal of the deferred annuity in case of an emergency. However, the income stream used with this approach is not guaranteed and is generally less than the SPIA, so less life insurance can be purchased. Also, withdrawals may be subject to surrender charges or penalty taxes if taken prior to age Additional Costs Life insurance policies have charges associated with them such as the cost of insurance and potential surrender charges. Please consult the attached basic illustration for more information. There may be costs associated with creating an ILIT. Long-Term Care Riders If you are considering creating a policy with a long-term care rider where the owner is not the insured, there may be adverse consequences - both tax and contractual in nature. You should review the particulars of your intended ownership arrangement with your legal and tax counsels in light of the income, gift, and estate tax provisions of the Internal Revenue Code. Planning Options The following pages graphically illustrate a projected net amount transferred to your heirs upon your death based on the following scenarios: 1. Your current situation in which you keep the annuity as is. 2. Using the annuity to fund the purchase of a life insurance policy. Please see the attached Glossary of Ledger Terms for a definition of key terms used in this proposal. 1. Life insurance death benefit proceeds are generally excludable from the beneficiary s gross income for income tax purposes. There are few exceptions such as when a life insurance policy has been transferred for valuable consideration. Consult your professional tax advisor for details. 2. Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation skipping transfer tax) Failure to do so could result in adverse tax treatment of trust proceeds Page 2 of 8 January 29, 2016

3 Benefit Summary Policy Details Prepared for Sam Malone & Maggie Malone Prepared by: Advanced Markets How it Works Product: Protection SUL 13 Initial Premium: $22,499 Insured(s): Sam Malone & Maggie Malone Initial Death Benefit: $1,522,499 Male Age 65, Preferred NonSmoker/Female Age 62, Preferred NonSmoker Income Stream from Annual Premium of $22,499 Comparison of Values in Year 30 Current Strategy Proposed Strategy Today 750, ,000 Cost Basis 200, ,000 Total Premiums Paid by Year ,970 After-Tax Remainder of $476,603 John Hancock Policy: Face Amount $1,522,499 Net To Heirs: $2,651,573 Proceeds at Death in Year 30 3,241, ,544 Income in Respect of a Decedent Taxes 1,064, ,940 Death Benefit in Year ,174,970 Other Assets in Trust in Year 30 + Net to Heirs in Year 30 = 2,176,947 2,651,573 Potential Gain Due from Planning 474,626 Notes Summary 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 NET TO HEIRS Joint Life Expectancy is 30 years All values are shown as of end of year, unless otherwise indicated. Life expectancy calculation based on the Valuation Basic Table (VBT) ,000, , Current Proposed This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. Benefits and values may not be guaranteed; the assumptions on which they are based are subject to change by the insurer. Actual results may be more or less favorable. Refer to the basic illustration for guaranteed elements and other important information. This illustration is not intended to be accounting, legal, or tax advice. Clients should consult their accounting, legal, and tax advisors about their particular circumstances before implementing any recommendations. Insurance policies and/or associated riders and features may not be available in all states. Page 3 of 8 January 29, 2016

4 Current Plan: Do Nothing vs. Proposed Plan: Take Withdrawals and Purchase Life Insurance KEEP ANNUITY TAKE WITHDRAWALS & PURCHASE LIFE INSURANCE (1) (2) (2) (3) (3) (4) (4) (5) (5) (6) Withdrawal (7) (7) (8) (8) (9) (9) (10) (11) (12) (13) Value Value Withdrawal from Growth on Difference Attained 5.00% 5.00% Net to to Heirs Value A/T Income Death Difference with Life with Year Age (BOY) (EOY) IRD Taxes from Value (BOY) (BOY) 5.00% (EOY) Value (EOY) from Premium Death Benefit Benefit IRD Taxes Net To To Heirs Life Insurance 2-3 (8+9) (EOY) (EOY) /63 750, , , , ,000 37,498 35, ,127 24,374 22,499 1,522, ,844 2,078,781 1,496, /64 787, , , , ,127 37,498 35, ,160 24,374 22,499 1,544, ,156 2,100,002 1,492, /65 826, , , , ,160 37,498 35, ,095 24,374 22,499 1,567, ,433 2,121,158 1,486, /66 868, , , , ,095 37,498 35, ,926 24,374 22,499 1,589, ,674 2,142,248 1,479, /67 911, , , , ,926 37,498 35, ,649 24,374 22,499 1,612, ,877 2,163,267 1,471, /68 957,211 1,005, , , ,649 37,498 35, ,258 24,374 22,499 1,634, ,040 2,184,212 1,460, /69 1,005,072 1,055, , , ,258 37,498 34, ,748 24,374 22,499 1,657, ,162 2,205,079 1,449, /70 1,055,325 1,108, , , ,748 37,498 34, ,112 24,374 22,499 1,679, ,239 2,225,865 1,435, /71 1,108,092 1,163, , , ,112 37,498 34, ,345 24,374 22,499 1,702, ,271 2,246,565 1,420, /72 1,163,496 1,221, , , ,345 37,498 34, ,439 24,374 22,499 1,724, ,253 2,267,175 1,403, /73 1,221,671 1,282, , , ,439 37,498 34, ,387 24,374 22,499 1,747, ,186 2,287,691 1,383, /74 1,282,755 1,346, , , ,387 37,498 34, ,183 24,374 22,499 1,769, ,064 2,308,107 1,362, /75 1,346,892 1,414, , , ,183 37,498 34, ,819 24,374 22,499 1,792, ,887 2,328,419 1,339, /76 1,414,237 1,484, ,732 1,035, ,819 37,498 33, ,287 24,374 22,499 1,814, ,650 2,348,623 1,313, /77 1,484,949 1,559, ,719 1,083, ,287 37,498 33, ,578 24,374 22,499 1,837, ,352 2,368,711 1,285, /78 1,559,196 1,637, ,005 1,134, ,578 37,498 33, ,684 24,374 22,499 1,859, ,989 2,388,678 1,254, /79 1,637,156 1,719, ,655 1,187, ,684 37,498 33, ,595 24,374 22,499 1,882, ,558 2,408,520 1,221, /80 1,719,014 1,804, ,738 1,243, ,595 37,498 33, ,301 24,374 22,499 1,904, ,055 2,428,228 1,185, /81 1,804,964 1,895, ,324 1,301, ,301 37,498 32, ,793 24,374 22,499 1,927, ,478 2,447,796 1,145, /82 1,895,213 1,989, ,491 1,363, ,793 37,498 32, ,059 24,374 22,499 1,949, ,821 2,467,219 1,103, /83 1,989,973 2,089, ,315 1,428, ,059 37,498 32, ,089 24,374 22,499 1,972, ,081 2,486,487 1,058, /84 2,089,472 2,193, ,881 1,496, ,089 37,498 32, ,870 24,374 22,499 1,994, ,255 2,505,594 1,009, ,193,946 2,303, ,275 1,567, ,870 37,498 32, ,391 24,374 22,499 2,017, ,337 2,524, , ,303,643 2,418, ,589 1,642, ,391 37,498 31, ,637 24,374 22,499 2,039, ,323 2,543, , ,418,825 2,539, ,918 1,720, ,637 37,498 31, ,595 24,374 22,499 2,062, ,208 2,561, , ,539,766 2,666, ,364 1,803, ,595 37,498 31, ,252 24,374 22,499 2,084, ,988 2,580, , ,666,755 2,800, ,032 1,890, ,252 37,498 30, ,591 24,374 22,499 2,107, ,657 2,598, , ,800,092 2,940, ,034 1,981, ,591 37,498 30, ,598 24,374 22,499 2,129, ,209 2,616, , ,940,097 3,087,102 1,010,486 2,076, ,598 37,498 30, ,254 24,374 22,499 2,152, ,639 2,634, , ,087,102 3,241,457 1,064,510 2,176, ,254 37,498 29, ,544 24,374 22,499 2,174, ,940 2,651, ,626 This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. Benefits and values may not be guaranteed; the assumptions on which they are based are subject to change by the insurer. Actual results may be more or less favorable. Refer to the basic illustration for guaranteed elements and other important information. This illustration is not intended to be accounting, legal, or tax advice. Clients should consult their accounting, legal, and tax advisors about their particular circumstances before implementing any recommendations. Insurance policies and/or associated riders and features may not be available in all states. Page 4 of 8 January 29, 2016

5 Current Plan: Do Nothing vs. Proposed Plan: Take Withdrawals and Purchase Life Insurance KEEP ANNUITY TAKE WITHDRAWALS & PURCHASE LIFE INSURANCE (1) (1) (2) (2) (3) (3) (4) (4) (5) (5) (6) Withdrawal (7) (7) (8) (8) (9) (9) (10) (10) (11) (12) (13) Value Value Withdrawal from Growth on Difference Attained 5.00% 5.00% Net Net to to Heirs Value A/T A/T Income Death Difference with Life with Year Age (BOY) (EOY) IRD Taxes from Value (BOY) (BOY) 5.00% (EOY) Value (EOY) from Premium Death Benefit IRD Taxes Net To To Heirs Life Insurance (8+9) (EOY) (EOY) ,241,457 3,403,530 1,121,235 2,282, ,544 37,498 29, ,448 24,374 22,499 2,197, ,107 2,668, , ,403,530 3,573,706 1,180,797 2,392, ,448 37,498 28, ,947 24,374 22,499 2,219, ,131 2,685, , ,573,706 3,752,391 1,243,337 2,509, ,947 37,498 28, ,021 24,374 22,499 2,242, ,007 2,702, , ,752,391 3,940,011 1,309,004 2,631, ,021 37,498 28, ,649 24,374 22,499 2,264, ,727 2,718,888 87, ,940,011 4,137,012 1,377,954 2,759, ,649 37,498 27, ,808 24,374 22,499 2,287, ,283 2,734,990 (24,067) ,137,012 4,343,862 1,450,352 2,893, ,808 37,498 27, ,475 24,374 22,499 2,309, ,666 2,750,773 (142,738) ,343,862 4,561,055 1,526,369 3,034, ,475 37,498 26, ,625 24,374 22,499 2,332, ,869 2,766,220 (268,466) ,561,055 4,789,108 1,606,188 3,182, ,625 37,498 26, ,233 24,374 22,499 2,354, ,882 2,781,314 (401,606) ,789,108 5,028,563 1,689,997 3,338, ,233 37,498 25, ,272 24,374 22,499 2,354, ,695 2,773,539 (565,027) ,028,563 5,279,992 1,777,997 3,501, ,272 37,498 24, ,712 24,374 22,499 2,354, ,299 2,765,375 (736,620) ,279,992 5,543,991 1,870,397 3,673, ,712 37,498 24, ,525 24,374 22,499 2,354, ,684 2,756,803 (916,791) ,543,991 5,821,191 1,967,417 3,853, ,525 37,498 23, ,678 24,374 22,499 2,354, ,837 2,747,802 (1,105,971) ,821,191 6,112,250 2,069,288 4,042, ,678 37,498 22, ,138 24,374 22,499 2,354,962 98,748 2,738,352 (1,304,611) ,112,250 6,417,863 2,176,252 4,241, ,138 37,498 22, ,872 24,374 22,499 2,354,962 93,405 2,728,429 (1,513,182) ,417,863 6,738,756 2,288,565 4,450, ,872 37,498 21, ,842 24,374 22,499 2,354,962 87,795 2,718,009 (1,732,182) ,738,756 7,075,694 2,406,493 4,669, ,842 37,498 20, ,011 24,374 22,499 2,354,962 81,904 2,707,069 (1,962,132) ,075,694 7,429,478 2,530,317 4,899, ,011 37,498 19, ,338 24,374 22,499 2,354,962 75,718 2,695,582 (2,203,579) ,429,478 7,800,952 2,660,333 5,140, ,338 37,498 18, ,782 24,374 22,499 2,354,962 69,224 2,683,520 (2,457,099) ,800,952 8,191,000 2,796,850 5,394, ,782 37,498 18, ,298 24,374 22,499 2,354,962 62,404 2,670,856 (2,723,294) ,191,000 8,600,550 2,940,192 5,660, ,298 37,498 17, ,840 24,374 22,499 2,354,962 55,244 2,657,558 (3,002,800) ,600,550 9,030,577 3,090,702 5,939, ,840 37,498 16, ,358 24,374 22,499 2,354,962 47,725 2,643,595 (3,296,280) ,030,577 9,482,106 3,248,737 6,233, ,358 37,498 14, ,803 24,374 22,499 2,354,962 39,831 2,628,934 (3,604,435) ,482,106 9,956,212 3,414,674 6,541, ,803 37,498 13, ,120 24,374 22,499 2,354,962 31,542 2,613,540 (3,927,998) ,956,212 10,454,022 3,588,908 6,865, ,120 37,498 12, ,253 24,374 22,499 2,354,962 22,838 2,597,376 (4,267,738) ,454,022 10,976,723 3,771,853 7,204, ,253 37,498 11, ,142 24,374 22,499 2,354,962 13,700 2,580,404 (4,624,466) ,976,723 11,525,559 3,963,946 7,561, ,142 37,498 10, ,726 24,374 22,499 2,354,962 4,104 2,562,584 (4,999,030) ,525,559 12,101,837 4,165,643 7,936, ,726 37,498 8, ,939 33,394 22,499 2,354,962 3,049 2,534,852 (5,401,342) ,101,837 12,706,929 4,377,425 8,329, ,939 37,498 7, ,713 34, ,354,962 2,545 2,505,129 (5,824,375) ,706,929 13,342,276 4,599,796 8,742, ,713 37,498 5, ,975 34, ,354,962 2,016 2,473,921 (6,268,558) This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. Benefits and values may not be guaranteed; the assumptions on which they are based are subject to change by the insurer. Actual results may be more or less favorable. Refer to the basic illustration for guaranteed elements and other important information. This illustration is not intended to be accounting, legal, or tax advice. Clients should consult their accounting, legal, and tax advisors about their particular circumstances before implementing any recommendations. Insurance policies and/or associated riders and features may not be available in all states. Page 5 of 8 January 29, 2016

6 Maximization Presented by Advanced Markets Assumptions CLIENT INFORMATION Value Explanation ANNUITY INFORMATION Family Name Malone Name of family Type of Withdrawals Scheduled Withdrawals Type of SPIA to be used Client Name Sam Given name of the first client Withdrawal Schedule 37,498 for 100 yrs. Age 65 Age of the first client Sex Male Sex of the first client Source to Pay Gift Taxes Paid From Source to fund gift taxes (if any) Smoking Status Preferred NonSmoker Underwriting class of the first client (required) Generic Quote Yes Do you want to calculate a generic annuity quote Income Payment Mode Monthly The Payment mode of the SPIA Spouse's Name Maggie Given name of the second client SPIA Gross Income $4,245 The pre-tax income from the SPIA Age 62 Age of the second client Exclusion Ratio 19.63% The exclusion ratio of the SPIA Sex Female Sex of the second client Premium equals net income SolveForPremID Should the premium equal the net SPIA income? Smoking Status Preferred NonSmoker Underwriting class of the second client Tax Bracket 35.00% Client's assumed current tax bracket LIFE INSURANCE Explanation CPI Rate 0.00% Consumer Price Index Rate Type of Policy Survivorship Survivorship or Single Life IRD Tax Rate 35.00% Income in respect of a decendant tax bracket Policy Name Protection SUL 13 ESTATE AND GIFT INFORMATION State Massachusetts Heirs' Names The Heirs Names of the heirs Initial Policy Death Benefit $1,522,499 Total death benefit Total Estate Value $0 Total estate value Policy Premium $22, Annual Premium After Tax Growth Rate of Estate Assets 3.00% After tax (income) growth rate for estate assets Years for Premiums 57 Number of years to pay premiums transferred to the ILIT Current Crediting Rate 5.05% Policy's crediting rate Estate Tax Option rrent Extended without Clawback Estate tax rates based on the selected option Post-76 Taxable Gifts $0 Amount of taxable gifts made after Gifts are assumed to be split equally between spouses. Gift Taxes Paid in Past Three Years PRESENTER INFORMATION Gift Taxes Paid in 2016 $0 Gift Taxes Paid in 2016 Presenter's Name Advanced Markets Name of presenter Gift Taxes Paid in 2015 $0 Gift Taxes Paid in 2015 Agency Name John Hancock Gift Taxes Paid in 2014 $0 Gift Taxes Paid in 2014 Address 197 Clarendon St. Number of Annual Exclusion Gifts 0 Number of annual exclusions per client City, State ZIP Boston, MA Gifting Option Equal To Premium Gifting option chosen Telephone , Option #3 Existing Assets in ILIT $0 Assets in the existing ILIT Fax After Tax Growth Rate of ILIT Assets Growth rate for the ILIT AdvancedMarkets@Jhancock.co 5.00% Address m ANNUITY INFORMATION RESULTS Current Value $750,000 Current value of deferred annuity Focus Year 1 30 Focus year Cost Basis $200,000 Cost basis of annuity Print Years 59 Net Rate of Return 5.00% Net rate of return to assume for annuity Proposal Type Withdrawals From Withdrawals or Annuitize Insurance Included in the Estate Yes Will the insurance be included in the estate? Excess Income Option Retained In Estate Keep excess income or gift to ILIT Excess Income in Estate Spent Save or consume excess income 1. The focus year refers to the year that has been chosen by you. The values in the focus year are highlighted, can be changed and are for your convenience only. The year may be life expectancy, a random year, or a year that coincides with your personal planning goals. This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. Benefits and values may not be guaranteed; the assumptions on which they are based are subject to change by the insurer. Actual results may be more or less favorable. Refer to the basic illustration for guaranteed elements and other important information. This illustration is not intended to be accounting, legal, or tax advice. Clients should consult their accounting, legal, and tax advisors about their particular circumstances before implementing any recommendations. Insurance policies and/or associated riders and features may not be available in all states. Page 6 of 8 January 29, 2016

7 Glossary The following terms and phrases may be helpful to you as you consider this presentation. Applicable Exclusion Amount The full amount of assets that at death can pass to heirs free of estate taxes. BOY Values at the beginning of the year. Credit Shelter Trust If you are married, at the death of the first spouse, a credit shelter trust can be funded with the applicable estate tax exemption that you may have available. This column illustrates the use of a Credit Shelter Trust to calculate estate taxes in an assumed year of the first death. SPIA Life-No Refund The annuity maximization approach in which an existing deferred annuity is converted to a single premium immediate annuity (SPIA), assumes that the annuity option chosen is a Life-Only annuity option with No Refund feature. This means that the deferred annuity is converted to an income stream for life only (single life or joint life with spouse), and that there will be no principal balance refunded at death, regardless of when death occurs. Therefore, there will be no remaining balance subject to estate or IRD taxes. The illustration assumes that only you (or you and a spouse) are the income beneficiaries. If other persons are assumed to be beneficiaries, there may be gift, estate and income taxes due on the value of the income stream you give away. EOY Values at the end of the year. Income Taxes (IRD) Deferred annuities have built-in income tax consequences, referred to as income in respect of a decedent (IRD), which are payable even after death, by the beneficiary of the annuity. This column indicates the potential IRD taxes on the annuity balance in any given year of death. Page 7 of 8 January 29, 2016

8 Disclosure Maximization is isa planning a tool tool designed designed to assist to assist you in you exploring exploring potential potential estate estate planning options through the use of oflife lifeinsurance. However, this this presentation is is not not intended as as your estate/gifting plan nor nor is it isa itspecific a specific recommendation for your for your estate/gifting estate/gifting plan. This plan. This presentation is is for for demonstrative purposes purposes only. This only. analysis This does analysis not constitute does not a constitute a recommendation of ofa aparticular option option over over any any other other planning planning alternative. alternative. Other Other alternatives alternatives may be bemore appropriate or or suitable for for your your particular situation and and should should be discussed be discussed with with your legal, tax, and accounting advisors prior to your making any gifting or purchase decisions. John Hancock does Newnot York guarantee does not the guarantee accuracy the of the accuracy ofmaximization the Maximization system or the system output. or the output. John Hancock John Hancock will not will be liable not befor liable any for damages any damages arising from arising the from use or themisuse orof misuse this of software this software or from or from any errors any errors omissions or omissions in the in same. the same. Comments Comments on taxation taxation are based areon based John on Hancock s John Hancock s understanding understanding of current of current tax law, tax which law, is which subject isto subject change. tojohn change. Hancock Johnassumes Hancock no assumes duty to no update dutythis to update software this or software to provide ornotice to provide of any notice errors in of the anysoftware errors inor the applicable software or changes applicable in the changes law. in the law. Figures used in inthis thisprogram illustrate various benefit/retirement planning planning concepts, concepts, which which are are based upon both assumptions and anddata dataprovided by byou, you, the the client. client. Your Your furnishing of accurate of accurate data will help enhance the thevalue of of this this analysis. However, all all assumed assumed growth growth rates rates for assets for assets are based upon information provided and andassumed by byou you and and are are not not a guarantee a of the of the future future performance of ofthe thelife lifeinsurance policy. policy. Please Please review review the the assumptions page page for accuracy for accuracy of of information. This supplemental illustration assumes that the currently illustrated non-guaranteed elements will continue for all allyears shown. This This is is not not likely likely to to occur occur and and actual actual results results may may be more be more less or less favorable than those shown. The The actual actual consequences of a of particular a particular planning planning alternative alternative will will depend on onmany variables, some of of which which may may not not be accounted be for forfully fully described described in this in this presentation. Unless otherwise indicated, the the income income tax, tax, estate estate tax, and tax, generation-skipping and transfer (GST) tax taximplications of of other other specific specific transactions are are not not reflected reflected in the inanalysis. the analysis. Before you make any investment, estate or tax planning decisions (or change title to toany assets or or change beneficiary designations), your legal and andtax tax advisors should should be be consulted to determine to determine (1) the thesuitability of of a particular a planning planning alternative alternative for you, for you, and (2) and the (2) precise the precise legal, tax, legal, tax, investment, and accounting consequences of that alternative. This material is authorized for distribution only when accompanied preceded or by accompanied the basic illustration by a current and prospectus the client guide for the forillustrated the relevant product. issued by John Hancock Life NewInsurance York, andcompany for John (U.S.A.), Hancock Variable and for John Insurance Hancock Trust. Variable The prospectus Insurance Trust. contains The complete prospectus details contains investment completeobjectives, details on risk, investment This fees, material charges objectives, does and not risk, constitute expenses fees, as charges tax, well legal as and or or other expenses accounting information as advice wellabout as and other neither information investment John Hancock about company New the nor which investment York any of nor should itsany agents, company of beits carefully employees agents, which employees considered. or should registered or beregistered Please carefully representatives read representatives considered. the prospectus are in are the Please carefully business the read business containing theoffering prospectus offering such this and carefully such advice. other advice. 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Anyone in all features states. interested Anyone may Ininterested addition nothese be available to transactions in these prospectus, transactions in or alltopics states. thisor should material In topics addition seek should must advice to beseek the accompanied based advice prospectus, on his based by orthis the her on material basic his particular orillustration hermust particular circumstances beand accompanied circumstances the client from independent guide byfrom the forindependent the basic professional relevant illustration professional product. advisors. and the advisors. client guide for the relevant product. Variable universal life insurance has annual fees and expenses associated with it in addition to life Variable insuranceuniversal related charges life insurance (whichhas differ annual withfees the product and expenses chosen), associated including with surrender it in addition charges to and life insurance investment related management charges fees. (which Variable differ with universal the product life insurance chosen), products includingare surrender long-term charges contracts and investment and are soldmanagement by prospectus. fees. They Variable are subject universal to market life insurance risk dueproducts to the underlying are long-term sub-accounts, contracts and are sold unsuitable by prospectus. as a short They term savings are subject vehicle. to market The primary risk duepurpose to the underlying of variablesub-accounts, universal life and insurance are unsuitable is to provide as a short lifetime termprotection savings vehicle. against The economic primary loss purpose due toof thevariable death of universal the insured life insurance person. Cash is tovalues provide arelifetime not guaranteed protection if the against clienteconomic is invested loss in the dueinvestment to the death accounts. of the insured There person. are riskscash associated valueswith are not eachguaranteed investment ifoption, the client andisthe invested policyin may thelose investment value. accounts. There are risks associated with each investment option, and the policy may lose value. This material does not constitute tax, legal or accounting advice and neither John Hancock nor This any of material its agents, does employees not constitute or tax, registered legal or representatives accounting advice are inand theneither business John ofhancock offering New such York advice. nor Itany wasof not itsintended agents, employees or written for registered use and cannot representatives be used byare any intaxpayer the business for the of offering purpose such of avoiding advice. any It was IRS not penalty. intended It was or writtento for support use and thecannot marketing be used of theby transactions any taxpayer or topics for the it purpose addresses. of Anyone avoidinginterested any IRS penalty. in theseit transactions was writtenor totopics support should the marketing seek advice ofbased the transactions his or her or topics particular it addresses. circumstances Anyone frominterested independent these professional transactions advisors. topics should seek advice based on his or her particular circumstances from independent professional advisors. Footnotes 1. Life insurance death benefit proceeds are generally excludable from the beneficiary s gross income for income tax purposes. There are few exceptions such as when a life insurance policy has been transferred for valuable consideration. Consult your professional tax advisor for details. 2. Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation-skipping transfer tax). Failure to do so could result in adverse tax treatment of trust proceeds. Internal Compliance Number: MLI Page 8 of 8 January 29, 2016