Indexed Universal Life vs. Term Insurance and Side Fund

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1 Indexed Universal Life vs. Insurance and For: Jack Baker Presented By: [Licensed user's name appears here] a

2 Preface A decision to acquire additional life insurance can represent one of several significant phases in your overall financial planning. An important part of this decision will involve your selection of the appropriate life insurance policy. There are several important factors to consider which include: 1. The time frame for the insurance need; 2. Your available cash flow; 3. Your alternative uses for the cash flow; 4. The income tax considerations. An integrated analysis of these points creates useful information that helps guide your purchasing evaluation. The precision of the conclusions, however, is contingent upon the accuracy of the data utilized. You should be positive that all premises and conditions accurately reflect your goals and expectations. The accompanying analysis contrasts a cash value policy to a term insurance alternative. Any difference in premiums between the two choices has been evaluated regarding time/use of money. The study produces information which should form a basis from which you and your advisors can draw informed conclusions. Based upon the results of the analysis, we recommend funding your life insurance requirement with the cash value policy illustrated rather than a term life insurance policy. $2,400k 1,800k Cumulative Payments Cumulative Payments $2,400k 1,800k Cumulative and $2,250,000 1,200k 600k $400, ,200k $1,037, k 0 Insurance $2,400k $2,400k Cash Value 1,800k 1,800k 1,200k 600k 1,200k 600k $929,586 $868,580 0 $0 0 This graphic assumes the non-guaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. Page 1 of 12

3 Comparison of Values Interest Rate Initial 500,000 Payment Allocation 850,000 Scheduled Insurance Along with * Yr Male Age Cost of the Proposed Premium Alternative Premium Net to - from the Value Scheduled Death Benefit (7) Combined Death Benefit + Loan Proceeds (9) Accum Value** (10) Cash Value** (11) Death Benefit , , , , , ,925 3, , , , , , , ,071 22, , , , , , , ,478 43, , , , , , , ,338 65, , , , , , , ,824 89, , , , , , , , , , , , , ,000 1,023, , , , , , , ,000 1,054, , , , , , , ,000 1,086, , , , , , , ,000 1,121, , , , , , , ,000 1,157, , , , , , , ,000 1,196, , , , , , , ,000 1,237, , , , , , , ,000 1,280, , , , , , , ,000 1,326, , , , , , , ,000 1,374, , ,434 1,030, , , , ,000 1,425, , ,884 1,090, , , , ,000 1,479, , ,097 1,156, , , , ,000 1,536, , ,485 1,226, , , , ,000 1,597, , ,458 1,302, , , ,300 75, , , , , , ,693 75, , , , , , ,323 75,000 1,000, , , , , ,190 75,000 1,074, , , , , ,260 75,000 1,154, , , , , ,470 75,000 1,238, , , , , ,728 75,000 1,328, , , , , ,918 75,000 1,424, , , , , ,894 75,000 1,526, , , , , ,488 75,000 1,636, , , ,000 12, , , ,000 *See the accompanying reports entitled " Details" and "Portfolio Details" for year-by-year equity calculation and turnover details. **This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a basic illustration from the issuing life insurance company. Management fees reflected in column : 1.00% 30 Year Summary / Payments 400, , , ,000 Living Values 286, , , ,097 Page 2 of 12

4 Comparison of Values Interest Rate Initial 500,000 Payment Allocation 850,000 Scheduled Insurance Along with * Yr Male Age Cost of the Proposed Premium Alternative Premium Net to - from the Value Scheduled Death Benefit (7) Combined Death Benefit + Loan Proceeds (9) Accum Value** (10) Cash Value** (11) Death Benefit , , ,507 75,000 1,752, , , , , ,736 75,000 1,877, , , ,000 67, ,931 75,000 2,010, , , , ,000 2,151, , , ,000 2,302, , , ,000 2,462, , , ,000 2,633, , , ,000 2,814, , , ,000 3,007, , , ,000 3,212, , , ,000 3,430, , , ,000 3,661, , , ,000 3,905, , , ,000 4,163, , , ,000 4,435, , , ,000 4,721, , , ,000 5,027, , , ,000 5,356, , , ,000 5,712, , , ,000 6,100, , , ,000 12, ,000 1,037,000 2,250,000 *See the accompanying reports entitled " Details" and "Portfolio Details" for year-by-year equity calculation and turnover details. **This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a basic illustration from the issuing life insurance company. Management fees reflected in column : 1.00% 50 Year Summary / Payments 400, ,000 1,037,000 2,250,000 Living Values 0 868, ,586 Page 3 of 12

5 Matching Values at Age 94 (Year 50) Interest Rate Initial 500,000 Required on in Addition to the Illustrated to Match Indexed Universal Life Values over 50 Years After Applying the Payment Illustrated Required (Plus ) To match Cash Value of: $868, % To Match Cash Value $868, %* Required *Plus dividend. Tax Considerations 1. : Capital gains tax calculations are taxed based on a ratio of asset value to remaining cost basis in any given year. 2. Indexed Universal Life: a. including available cash value component is income tax free. b. Loans are income tax free as long as the policy is kept in force. c. Withdrawals and other non-loan policy cash flow up to cost basis (not in violation of IRC Section 7702(A)) are income tax free as a return of premium. d. Cash values shown assume most favorable combination of b and/or c. This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a basic illustration from the issuing life insurance company. Page 4 of 12

6 Comparison of Plan Composite Capital Gains 29.00% Portfolio 40.00% for 21 yrs 10.00% thereafter Interest Rate and * Year Male Age Premium Insurance Cost Mgmt Fee Taxes & & Cumulative (7) Cumulative , ,059 1,059 3,455 3, , ,616 2,675 3,648 7, , ,249 4,924 3,896 10, , ,440 2,945 7,869 4,055 15, , ,166 1,932 3,698 11,566 4,159 19, , ,442 2,461 4,503 16,069 4,225 23, , ,734 3,027 5,361 21,430 4,274 27, , ,042 3,629 6,271 27,701 4,324 32, , ,369 4,268 7,237 34,937 4,392 36, , ,714 4,944 8,258 43,195 3,667 40, , ,079 5,661 9,340 52,535 3,743 43, , ,465 6,419 10,484 63,019 3,823 47, , ,873 7,222 11,695 74,714 2,801 50, , ,305 8,071 12,976 87,690 2,848 53, , ,762 8,969 14, ,021 2,873 56, , ,245 9,918 15, ,784 2,990 59, , ,755 10,921 17, ,060 3,066 62, , ,295 11,984 18, ,939 3,098 65, , ,866 13,107 20, ,513 3,098 68, , ,470 14,294 22, ,877 3,098 71, ,103 15,178 22, , , ,787 7,038 13, , , ,433 8,230 14, ,646 1,107 74, ,042 9,129 15, ,817 1,262 75, ,613 9,766 15, ,196 1,438 77, ,145 10,168 15, ,508 1,624 78, ,637 10,357 14, ,503 1,672 80, ,089 10,353 14, ,945 1,682 82, ,499 10,169 13, ,613 1,633 83, ,865 9,823 12, ,301 1,511 85, ,000 12, , , ,302 85, Year Summary *This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a basic illustration from the issuing life insurance company. Page 5 of 12 Cumulative Living Death Plan Value Benefit & 349, , , ,488 85, , , ,097

7 Comparison of Plan Composite Capital Gains 29.00% Portfolio 40.00% for 21 yrs 10.00% thereafter Interest Rate and * Year Male Age Premium Insurance Cost Mgmt Fee Taxes & & Cumulative (7) Cumulative ,185 9,321 11, ,807 1,287 86, ,457 8,674 10, ,938 1,511 88, ,888 8, ,505 1,773 89, ,931 5, ,436 2,082 91, ,436 2,439 94, ,436 2,890 97, ,436 3, , ,436 4, , ,436 5, , ,436 6, , ,436 7, , ,436 9, , ,436 11, , ,436 14, , ,436 18, , ,436 23, , ,436 23, , ,436 21, , ,436 17, , ,436 10, , ,000 12, , , , , Year Summary *This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a basic illustration from the issuing life insurance company. Page 6 of 12 Cumulative Living Death Plan Value Benefit & 385,436 1,037, ,681 2,250, , ,586

8 50 Year Analysis of Cumulative Plan Cumulative Payments Plan * $0.50M Cumulative Payments $0.50M and 0.38M $400, M $385, M 0.25M $275, M 0.13M 0.00M 0.00M Insurance $2,100k $2,100k Cash Value 1,400k 1,400k 700k 700k $929,586 $868,580 0 $ k -700k *The Comparison of Plan graphic above compares the management fees and/or taxes of the investment alternative to the mortality charges, policy expenses and income taxes (if applicable) associated with the life insurance policy. Page 7 of 12

9 Taxation of With equity accounts, dividends are taxed and the after tax balance is either reinvested or used for scheduled cash flow. Capital gains tax calculations are based upon a ratio of asset value to remaining cost basis in any given year. With cash value life insurance policies, withdrawals (also known as partial surrenders) are income-tax free up to cost basis and taxable thereafter. loans are income-tax free so long as the policy stays in force until death. The source of the cash flow from the life insurance policy in this presentation is policy loans. Note: loans reduce policy cash values and death benefits, and the lapse of a loaned policy could result in severe tax ramifications to the policy owner. Be sure to consult a professional tax adviser if you have any questions about this issue. Page 8 of 12

10 Details Composite Capital Gains * 29.00% Assumption 40.00% for 21 yrs 10.00% thereafter Yr Age Beginning of Year Value + Deposit Sale of Equities + Capital + Reinvested s = Value of Before (7)** Value of After + (9) from Sales = (10) Combined , , ,030 20, ,666 19, , ,432 42, ,612 19, , ,221 65, ,875 19, ,884 1,279 92,438 90, ,511 19, ,584 1, , , ,585 19, ,383 2, , , ,171 19, ,286 2, , , ,352 19, ,300 2, , , ,215 19, ,429 3, , , ,856 19, ,682 3, , , ,377 19, ,064 4, , , ,886 19, ,583 4, , , ,495 19, ,247 5, , , ,325 19, ,064 6, , , ,504 19, ,043 6, , , ,168 19, ,194 7, , , ,458 19, ,526 8, , , ,526 19, ,050 8, , , ,532 19, ,776 9, , , ,644 19, ,717 10, , , , ,018 46, , ,300 10,215 64,785 75, , ,633 44, , ,693 9,655 65,345 75, , ,920 42, , ,323 9,162 65,838 75, , ,180 39, , ,190 8,612 66,388 75, , ,423 36, , ,260 8,007 66,993 75, , ,660 33, , ,470 7,344 67,656 75, , ,901 30, , ,728 6,624 68,376 75, , ,155 26, , ,918 5,844 69,156 75, , ,431 23, , ,894 5,002 69,998 75, , ,737 18, , ,488 4,097 70,903 75, , , ,178 91,783 74, , ,000 *The composite capital gains tax rate includes 40.00% short-term gains subject to ordinary income tax and 60.00% long-term gains subject to capital gains tax. The individual tax rates used to create the composite tax rate are: Capital Gains Tax: Tax: **Column (7) is reduced by a 1.00% management fee. (To review turnover calculations, see the Portfolio Details report.) Capital gains tax calculations are based upon a ratio of asset value to remaining cost basis in any given year. Page 9 of 12

11 Details Composite Capital Gains * 29.00% Assumption 40.00% for 21 yrs 10.00% thereafter Yr Age Beginning of Year Value + Deposit Sale of Equities + Capital + Reinvested s = Value of Before (7)** Value of After + (9) from Sales = (10) Combined , ,080 14, , ,507 3,126 71,874 75, , ,468 9, , ,736 2,086 72,914 75, , ,911 4, ,298 67, ,028 75, , , ,000 62, ,000 1,017, ,625 91,783 80, ,254 1,037,000 *The composite capital gains tax rate includes 40.00% short-term gains subject to ordinary income tax and 60.00% long-term gains subject to capital gains tax. The individual tax rates used to create the composite tax rate are: Capital Gains Tax: Tax: **Column (7) is reduced by a 1.00% management fee. (To review turnover calculations, see the Portfolio Details report.) Capital gains tax calculations are based upon a ratio of asset value to remaining cost basis in any given year. Page 10 of 12

12 Portfolio Details Composite Capital Gains * 29.00% Assumption 40.00% for 21 yrs 10.00% thereafter Yr Age Beginning of Year Cost Basis Deposit to the Sale of Equities to Fund Capital Reinvested s Value Before (7) Adjusted Cost Basis Sale of Equities Caused by (9) Cost Basis Used by (10) Reinvested (11)** Value of After , , ,030 19,691 8,412 7,876 8,257 20, ,071 19, , ,432 40,072 17,373 16,029 16,983 42, ,026 19, , ,221 61,357 26,888 24,543 26,208 65, ,022 19, ,884 1,279 92,438 83,701 36,975 33,480 35,962 90, ,182 19, ,584 1, , ,231 47,658 42,893 46, , ,615 19, ,383 2, , ,055 58,963 52,822 57, , ,415 19, ,286 2, , ,268 70,924 63,308 68, , ,677 19, ,300 2, , ,968 83,577 74,387 80, , ,493 19, ,429 3, , ,246 96,959 86,099 93, , ,958 19, ,682 3, , , ,113 98, , , ,171 19, ,064 4, , , , , , , ,233 19, ,583 4, , , , , , , ,253 19, ,247 5, , , , , , , ,344 19, ,064 6, , , , , , , ,626 19, ,043 6, , , , , , , ,224 19, ,194 7, , , , , , , ,274 19, ,526 8, , , , , , , ,913 19, ,050 8, , , , , , , ,294 19, ,776 9, , , , , , , ,572 19, ,717 10, , , , , , , , ,018 46, , , , , , , , ,633 44, , ,764 68,808 60,076 66, , , ,920 42, , ,222 65,292 54,622 62, , , ,180 39, , ,244 61,376 49,424 57, , , ,423 36, , ,133 57,060 44,413 53, , , ,660 33, , ,259 52,338 39,526 48, , , ,901 30, , ,059 47,204 34,706 43, , , ,155 26, , ,014 41,645 29,901 38, , , ,431 23, , ,658 35,650 25,066 32, , , ,737 18, , ,551 29,201 20,155 26, , ,000 *The composite capital gains tax rate includes 40.00% short-term gains subject to ordinary income tax and 60.00% long-term gains subject to capital gains tax. The individual tax rates used to create the composite tax rate are: Capital Gains Tax: Tax: **Column (11) is reduced by a 1.00% management fee. Capital gains tax calculations are based upon a ratio of asset value to remaining cost basis in any given year. Page 11 of 12

13 Portfolio Details Composite Capital Gains * 29.00% Assumption 40.00% for 21 yrs 10.00% thereafter Yr Age Beginning of Year Cost Basis Deposit to the Sale of Equities to Fund Capital Reinvested s Value Before (7) Adjusted Cost Basis Sale of Equities Caused by (9) Cost Basis Used by (10) Reinvested (11)** Value of After , ,080 14, , ,292 22,279 15,129 20, , , ,468 9, ,633 99,500 14,863 9,950 13, , , ,911 4, ,298 45,810 6,930 4,581 6,249 67, , , ,000 *The composite capital gains tax rate includes 40.00% short-term gains subject to ordinary income tax and 60.00% long-term gains subject to capital gains tax. The individual tax rates used to create the composite tax rate are: Capital Gains Tax: Tax: **Column (11) is reduced by a 1.00% management fee. Capital gains tax calculations are based upon a ratio of asset value to remaining cost basis in any given year. Page 12 of 12

Term Insurance and 401(k) vs. Indexed Universal Life

Term Insurance and 401(k) vs. Indexed Universal Life Insurance and vs. Indexed Universal Life For: Tom Graves Presented By: [Licensed user's name appears here] Insurance and vs. Indexed Universal Life Preface A decision to acquire additional life insurance