Needs Analysis Helping you protect the ones you love PRESENTED BY Sample Agent John Hancock Financial Services 197 Clarendon St. Boston, MA 02116 Tel.: (617) 572-6000 Fax: 123-456-7890 Email: hansel@jhancock.com PREPARED FOR Brad Majors & Janet Majors Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), of New York, Boston, Valhalla MA and NY securities 10595. Securities offered through Products John distributed Hancock by John Distributors Hancock Distributors LLC through LLCother through broker/dealers other broker/dealers that have a that selling have agreement a selling agreement with John with Hancock John Distributors Hancock Distributors LLC, 197 Clarendon LLC, 197 Clarendon Street, Boston, Street, January 27, 2016 MA Boston, Insurance 02116 MA products 02116 issued are issued by: John by: John Hancock Hancock Life Life Insurance Insurance Company Company (U.S.A.), of New Boston, York, Valhalla MA 02116. NY 10595.
Introduction Introduction Everyday, you and your spouse take steps to take care of and protect the ones you love. How can you make sure they will still be protected when you are gone? Life insurance is a way to offer your loved ones a degree of protection that continues beyond your lifetime. A comprehensive Needs Analysis can help determine how much life insurance might meet your needs. Benefit Flexibility The ability to choose from available death benefit payment options can offer a surviving family flexibility suitable for their situation. For instance, if a steady flow of income over a given period is needed, beneficiaries can select a stream of guaranteed payments, perhaps in the form of an annuity.¹ For other families, a single lump sum payment of the life insurance proceeds might be more suitable. How it Works A Needs Analysis is simply a way of determining how much money your family would need to meet the necessities of life if you or your spouse were not there to provide for them. Among other items, a comprehensive analysis should consider salary replacement needs, estate settlement costs, outstanding debt, college funding, and any existing life insurance. After performing the analysis, you may find that you do not have enough cash on hand to meet all your family s needs should something happen to you. Life insurance is one of the best ways to provide necessary liquidity for your family in the event of your untimely death. Life Insurance can offer protection The original purpose served by life insurance is still the most compelling reason for life insurance; in the event of the premature death of an incomeearner, life insurance will provide asset and income protection for surviving family members. This can be of special importance to a young, growing family. Life insurance protection means that cash is available to your family at exactly the time they may need it, regardless of market or economic conditions. Life insurance provides funds to help address a surviving family s immediate, often urgent needs. This may allow a family to maintain its economic position after a death. Moreover, the death benefit is generally not subject to income taxation. Life Insurance can provide "self-completion" You invest wisely and put away money to protect your family in the future. However, even the best investments need time for ongoing contributions and earnings growth. If something were to happen to you along the way, your original plans may not come to fruition. The life insurance policy death benefit can facilitate self-completion for your financial plans by providing the cash to compensate for the loss of planned contributions and earnings. Page 2 of 7 January 27, 2016
Introduction Benefits The life insurance death benefit provides cash to fund your family s income needs, your survivor s retirement needs, to satisfy debt obligations, or to establish an education fund. Liquidity from a death benefit can help meet estate taxes and administrative expenses. The beneficiary, such as your survivor, will generally receive life insurance proceeds income tax free (exceptions may include when a life insurance policy has been transferred for valuable consideration). If the policy is owned by an Irrevocable Life Insurance Trust (ILIT), the proceeds will not be included in your taxable estate with proper planning. The ILIT could be structured so that amounts not used by your survivor may pass free of estate tax at your survivor s death. The policy's death benefit and/or cash values are potentially protected from the claims of creditors, depending on your state.² The cash values of a life insurance policy grows tax-deferred, and tax-free loans and withdrawals are permitted when structured properly. By using your available gift tax annual exclusions (ie the amount of money you may give away tax-free to any other individual on an annual basis) to fund premiums on the policy, you may reduce your taxable estate at the same time. The purchase of life insurance has costs and risks associated with it, including the cost of insurance. If the design of the life insurance policy does not meet the requirements of life insurance in the Internal Revenue Code, it will be classified as a modified endowment contract (MEC). Withdrawals and loans from a MEC may be subject to tax at the time the withdrawal or loan is made. A federal tax penalty may also apply if the withdrawal or loan is taken from a MEC prior to age 59 ½. Please consult your tax advisor. Considerations The life insurance amount calculated is a projection based on the information you have provided. The amount of life insurance protection you qualify for will be subject to medical and financial underwriting requirements and may be more or less than the amount calculated here. Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws, including generation-skipping tax applicable to beneficiaries who are more than one generation removed from you. Failure to do so could result in adverse tax treatment of trust proceeds. Based on assumptions you have provided, the following pages illustrate the income and asset replacement needs of you and your family. Page 3 of 7 January 27, 2016
Summary of Life Insurance Needs Summary for Brad Majors Prepared for Brad Majors & Janet Majors Prepared by: Sample Agent Summary for Janet Majors Product: Protection UL 15 Initial Premium: $4,354 Product: Protection UL 15 Initial Premium: $4,354 Insured(s): Brad Majors Initial Death Benefit$732,692 Insured(s): Janet Majors Initial Death Benefit: $900,615 Male Age 45, Preferred NonSmoker Female Age 42, Preferred NonSmoker Analysis of Needs Present Value Analysis of Needs Present Value Expenses To Replace Expenses To Replace Income Replacement Needs $1,225,904 Income Replacement Needs $1,388,827 Salary of $80,000 replaced for 20 years, Salary of $82,000 replaced for 23 years, indexed for inflation at 0.00% indexed for inflation at 0.00% Child Support Needs Child Support Needs Child Care Needs 65,073 Child Care Needs 65,073 College Fund Needs 0 College Fund Needs 0 Debt Clearance Needs 270,000 Debt Clearance Needs 270,000 Estate Administration Costs 25,000 Estate Administration Costs 25,000 Other Expenses 0 Other Expenses 5,000 (Emergency funds, charitable gifts, etc.) (Emergency funds, charitable gifts, etc.) Total Death Benefit Needed $1,585,976 Total Death Benefit Needed $1,753,900 Less Existing Insurance and Assets Set Aside for Death Needs 1,000,000 Less Existing Insurance and Assets Set Aside for Death Needs 1,000,000 New Life Insurance Need $585,976 New Life Insurance Need $753,900 Notes See Assumptions Page for a detailed breakdown of the factors involved in computing the Expenses to Replace. Present Values are based on a rate of 3.0% The life insurance protection amount calculated using the Needs Analysis software is a projection based on the assumptions provided. The amount of life insurance protection you qualify for may be more or less than the projections calculated by this analysis. 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. Insurance policies and/or associated riders and features may not be available in all states. Page 4 of 7
Needs Analysis Assumptions CLIENT INFORMATION Client 1 Client 2 Explanation LIFE INSURANCE CLIENT 1 Value Explanation Client's Name Brad Majors Janet Majors Type of Policy Single Life Age 45 42 Age of the first client Policy Name Protection UL 15 Sex Male Female Sex of the first client State California Smoking Status Preferred NonSmoker Preferred NonSmoker Underwriting class of the client Initial Policy Death Benefit $732,692 Total death benefit Retirement Age 65 65 Underwriting class of the client Policy Premium $4,354.00 Annual Premium Tax Bracket 35.00% 35.00% Years for Premiums 58 Number of years to pay premiums Inflation Rate 0.00% 0.00% The rate at which income streams (salary, Current Crediting Rate 5.05% Policy's crediting rate social security, etc) will be inflated annually Vitality Status Gold Gold Life Track Billing Yes INCOME REPLACEMENT INFORMATION Client 1 Client 2 Explanation After-Tax Insurance Investment Rate 3.00% 3.00% The after-tax rate at which insurance proceeds will be invested (present value rate) Salary to Replace 80,000 82,000 LIFE INSURANCE CLIENT 2 Years to replace salary 20 23 Type of Policy Single Life Total Defined Benefit Pension Plan Income 0 0 The total projected income from all employer Policy Name Protection UL 15 sponsored defined benefit plans. State California Years to Replace Income 30 30 Initial Policy Death Benefit $900,615 Total death benefit Index for inflation? Yes Yes Policy Premium $4,354.00 Annual Premium Social Security 0 0 Projected Social Security benefit Years for Premiums 58 Number of years to pay premiums Years to replace Social Security 30 30 Current Crediting Rate 5.05% Policy's crediting rate Defined Contribution Plans 0 0 Total balance of all defined contribution retirement plans (401k, 403B, IRAs) Life Track Billing Yes Growth Rate 6.00% 6.00% Growth rate of defined contribution plans ESTATE INFORMATION Client 1 Client 2 Explanation Estate Administration Costs PRESENTER INFORMATION Funeral/Burial Needs 10,000 10,000 Estimated burial costs Presenter's Name Sample Agent Name of presenter Probate 15,000 15,000 Estimated probate costs Agency Name Other Expenses 0 0 Other estimated administrative costs Address Existing Insurance 500,000 500,000 Total of all existing life insurance City, State ZIP Assets Set Aside for Death Needs 500,000 500,000 Other assets earmarked to cover death needs Telephone Inheritance for children from prior relationship 0 0 Additional inheritance for children Fax Is Existing Insurance in the Estate? Yes Yes E-Mail Address Investments/Liquid Assets 0 0 Value of liquid investments (cash, stock, etc.) RESULTS John Hancock Financial Services 197 Clarendon St. Boston, MA 02116 (617) 572-6000 123-456-7890 hansel@jhancock.com Growth Rate 3.00% 3.00% Growth rate of liquid investments Focus Year* 20 Focus year Real Estate Value 500,000 0 Value of real estate Print Years 76 Growth Rate 2.00% 2.00% Growth rate of real estate Business/Illiquid Assets Value 0 0 Value of business and other illiquid assets Growth Rate 3.00% 3.00% Growth rate of business/illiquid assets Estate Tax Law to Use Current Extended Current Extended The tax law basis for estate tax calculations OTHER NEEDS INFORMATION Client 1 Client 2 Explanation Child Care Costs 9,000 9,000 Estimated cost to replace child care services Years to Replace 8 8 Short Term Debt (credit card, car loans, etc) 20,000 20,000 Debt for credit cards, car loans, etc. Other Debt (mortgage, home equity loans, etc) 250,000 250,000 Mortgages, home equity loans, etc. Other Expenses 0 5,000 Emergency Funds, charitable gifts, etc. College Fund Amount See Assumptions Page 2 for college costs 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. Insurance policies and/or associated riders and features may not be available in all states. Page 5 of 7 January 27, 2016
Needs Analysis Assumptions Page 2 Year Tuition Year Tuition Year Tuition Year Tuition Year Tuition 2016 0 2041 0 2066 0 2091 0 2116 0 2017 0 2042 0 2067 0 2092 0 2117 0 2018 0 2043 0 2068 0 2093 0 2118 0 2019 0 2044 0 2069 0 2094 0 2119 0 2020 0 2045 0 2070 0 2095 0 2120 0 2021 0 2046 0 2071 0 2096 0 2121 0 2022 0 2047 0 2072 0 2097 0 2122 0 2023 0 2048 0 2073 0 2098 0 2123 0 2024 0 2049 0 2074 0 2099 0 2124 0 2025 0 2050 0 2075 0 2100 0 2125 0 2026 0 2051 0 2076 0 2101 0 2027 0 2052 0 2077 0 2102 0 2028 0 2053 0 2078 0 2103 0 2029 0 2054 0 2079 0 2104 0 2030 0 2055 0 2080 0 2105 0 2031 0 2056 0 2081 0 2106 0 2032 0 2057 0 2082 0 2107 0 2033 0 2058 0 2083 0 2108 0 2034 0 2059 0 2084 0 2109 0 2035 0 2060 0 2085 0 2110 0 2036 0 2061 0 2086 0 2111 0 2037 0 2062 0 2087 0 2112 0 2038 0 2063 0 2088 0 2113 0 2039 0 2064 0 2089 0 2114 0 2040 0 2065 0 2090 0 2115 0 Present value of college costs at 3.00%: $ Brad is assumed to pay 50.0% of the college costs and Janet is assumed to pay 50.0% of the college costs. The assumptions shown are taken from information provided by you, the client; are subject to change over time; and are for discussion purposes only. Please review the assumption pages for accuracy. Page 6 of 7 January 27, 2016
Disclosures This presentation is a planning tool designed to assist you in exploring the advantages of life insurance. However, this presentation is not intended to be a retirement/benefit or estate plan nor is it a specific recommendation for a retirement/benefit or estate plan. This material is for informational purposes only. As you explore your planning needs with your legal and tax advisors, we hope that you find this analysis useful. John Hancock New does York not guarantee does not guarantee the accuracy the accuracy of the "Needs of the Analysis" "Needs Analysis" system or system the output. or the John output. Hancock John Hancock will not be New liable York for will any damages not be liable arising forfrom any damages the use orarising misusefrom of this thesoftware use or or misuse fromof anythis errors software or omissions or fromin any therrors same. orcomments omissions on in the taxation same. arecomments based on John on taxation Hancock s are understanding based on Johnof Hancock s current taxunderstanding law, which isof subject current totax change. law, which John Hancock is subject assumes to change. no duty John to update Hancock this New software York or assumes to provide no duty notice to update of any this errors software in the software or to provide or applicable notice ofchanges any errors in the in law. the software or applicable changes in the law. This supplemental illustration assumes that the currently illustrated non-guaranteed elements will continue for all years shown. However, it is not likely that the non-guaranteed elements will perform exactly as shown in the illustration. In addition, the actual consequences of a particular planning alternative will depend on many variables, some of which may not be fully accounted for or described in this presentation. This program assumes that the life insurance policy meets the definition of life insurance per Internal Revenue Code Section 7702(a) and is not taxed as a modified endowment contract. Withdrawals and loans from life insurance policies have the effect of reducing the death benefit and cash surrender value and may cause the policy to lapse. Surrender or lapse of the policy can cause loss of death benefit and adverse income tax consequences. Cash value available for loans and withdrawals may be more or less than originally invested. Variable This material universal is authorized life insurance for distribution has annual fees onlyand when expenses accompanied associated by the with basic it in illustration addition to life and insurance the client related guide for charges the relevant (which product. differ with the product chosen), including surrender charges and investment management fees. Variable universal life insurance products are long-term contracts and Thisare material sold by does prospectus. not constitute They tax, are subject legal orto accounting market risk advice due to and the neither underlying Johnsub-accounts, Hancock nor and any are of unsuitable its agents, as employees a short term or registered savings vehicle. representatives The primary are purpose in the business of variable of universal offering such life insurance advice. 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Inthis addition material to the must prospectus, be accompanied this material by the must basicbe illustration accompanied and the by client the basic guide illustration for the relevant and theproduct. client guide for the relevant product. This material does not constitute tax, legal or accounting advice and neither John Hancock nor any of its agents, employees or registered representatives are in the business of offering such advice. It was not intended or written for use and cannot be used by any taxpayer for the purpose of avoiding any IRS penalty. It was written to support the marketing of the transactions or topics it addresses. Anyone interested in these transactions or topics should seek advice based on his or her particular circumstances from independent professional advisors. Figures used in this program illustrate various benefit/retirement planning concepts which are based upon both assumptions and data provided by you, the client. Your furnishing of accurate data will help enhance the value of this analysis. However, all assumed growth rates for assets are based upon information provided and assumed by you are not a guarantee of the future performance of the life insurance policy. Please review the assumptions page for accuracy of information. Footnotes 1) All guarantees are subject to the claims paying ability of the issuing insurance company. 2) Portions of life insurance death benefit and/or cash values may be exempt from the claims of creditors in some states in certain circumstances. Limits on the amount of protection may reduce the effectiveness of this feature. Creditor protection is not available where a life insurance policy is purchased when the owner/insured is insolvent or contemplating filing for bankruptcy. Internal Compliance Number: MLI06071216900 Policy Form Numbers: 0 & 0 Page 7 of 7 January 27, 2016