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Conference Presentation - Slide 1

VIEWS: 99 PAGES: 20

  • pg 1
									    HOW TO POSITION LIFE
    INSURANCE AS AN ASSET CLASS




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
    A new look at life

    • James Hahn
           – National Sales Manager
           – With LBL since 2002

    • Bob Jurgensmeier
           – Senior Vice President & Actuary
           – With LBL since 2001
           – Inventor of LBL’s Legacy Series




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
    In today’s economy…

    • Where to spend money is a big consideration
    • Customers know they need life insurance
    • Customers want the best value
    • You are their primary source of information




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
    Advantages of universal life

    • Death benefit
    • Potential tax advantages
    • Attractive internal rates of return
    • Cash value build-up
    • Flexibility




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
      UL product solutions

         Legacy Secure UL                                       Ultra Plus                                              GenBuilder
         Legacy Choice UL                                       Ultra Index                                             Echelon Index UL
         Legacy Secure SL



       Ideal for those seeking                          Ideal for sales based on long-term                                  Niche markets:
     flexibility and affordability                    projected values, or lowest premiums                                GenBuilder – SPUL
                                                      for the projected cash value to equal                             Echelon Index UL – BOLI
                                                       the death benefit at a specified age




*Life products are issued by Lincoln Benefit Life Company, Lincoln, NE, a wholly-owned subsidiary of Allstate Life Insurance
Company, Northbrook, IL.

LBL7996 9/09       For Broker/Dealer or Agent Use Only.
    Life insurance as an asset class

    • Stocks, bonds, real estate,
      mutual funds, etc.
    • Today’s customers want
      more stability in their
      portfolio
    • Life insurance is generally
      not tied to market
      performance




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
     The death benefit

     • Provides a predictable value
     • Legacy Series even offers guaranteed death benefits
              – Period they choose
              – Up to lifetime
              – Catch-up provision to achieve longer guarantees




Guarantees are based on the claims-paying ability of Lincoln Benefit Life Company.

LBL7996 9/09       For Broker/Dealer or Agent Use Only.
    Liquidity for the beneficiary

    • Provides immediate liquidity at death
    • For beneficiaries to use for items such as final expenses
      or for the estate to pay estate taxes
    • Important feature – especially when the majority of an
      estate includes real estate or business assets




LBL7996 9/09   For Broker/Dealer or Agent Use Only.
      Tax-advantaged

      • Income tax-free death benefit
      • Estate tax-free death benefit1
             (when properly structured)

      • Tax-deferred cash values




1 The death benefit of life insurance policies that are transferred for value may be subject to ordinary income taxes.
Estate taxes may apply. Consult your tax advisor for additional information.
Please note that Lincoln Benefit Life Company or its agents and representatives cannot give legal or tax advice. For
complete details, your customers should consult an attorney or tax advisor.

LBL7996 9/09        For Broker/Dealer or Agent Use Only.
      Internal rate of return

      • Earn highest possible returns for the level of risk the
        customer is willing to take
      • IRR is an effective way to position returns
             Assumptions: Legacy Secure SL policy, male/female, both age 60, both preferred nonsmoker, DBO1

                                              Annual           Cumulative               Death              IRR on Death
               Year                          Premium            Premium                 Benefit              Benefit*


               10                             $18,203            $182,030             $2,000,000                42.09%

               15                             $18,203            $273,045             $2,000,000                22.60%
               Life Expectancy
               (Year 26)**                    $18,203            $473,278             $2,000,000                 9.47%


The above chart is a hypothetical example and for illustrative purposes only. Past performance is no guarantee of future res ults.
*The Rate of Return on Death Benefit is the interest rate, at which premiums less distributions would need to accrue to equal the
end-of-year death benefit, if such premiums were invested elsewhere.
**The life expectancy used in this illustration is the longer of the two insureds’ life expectancies and is based on the age, gender
and smoking status. The assumptions are based on the 2001 Valuation Basic Table (Age Last Birthday). This table was developed
using historical industry experience.

LBL7996 9/09        For Broker/Dealer or Agent Use Only.
      Showing customers the IRR
                   Use Another Side of Life                                                        Include IRR on Illustrations




                • Easy-to understand charts
                • Highlights IRR at life expectancy
                • Available on Legacy Secure UL,
                  Legacy Choice UL, Ultra Plus &
                  Ultra Index


The above chart is a hypothetical example and for illustrative purposes only. Past performance is no guarantee of future res ults.

LBL7996 9/09       For Broker/Dealer or Agent Use Only.
      Internal rate of return
      • Compare to a taxable investment
            (example assumes 40% combined federal and state)

                     80%
                                   70.15%
                     70%

                     60%

                     50%
                                    42.09%
                                                         37.66%
                     40%

                     30%                                22.60%

                                                                            15.78%
                     20%
                                                                                               Pre-Tax Equivalent IRR
                     10%
                                                                            9.47%              IRR on Death Benefit
                       0%
                                       10                  15           Life Expectancy
                                                                            (Year 26)
                                                       Policy Year


The taxable investment in this hypothetical example is taxed annually at ordinary income tax rates
The above chart is a hypothetical example and for illustrative purposes only. Past performance is no guarantee of future res ults.
LBL7996 9/09       For Broker/Dealer or Agent Use Only.
     Financial efficiency of life insurance

     • Compare the death benefit to a taxable investment
            (example assumes 40% combined federal and state)

                                                                                      Life Expectancy: Age 85                    Crossover: Age 88
                   $1,200,000


                   $1,000,000


                     $800,000

                                                                                                                                             Death Benefit
                     $600,000
                                                                                                                                             Investment Value

                     $400,000


                     $200,000


                             $0
                                  60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89




Life Insurance Assumptions: Legacy Secure SL, $1 million death benefit, male/female, both age 60, both preferred nonsmoker, $ 18,203 annual premiums
Taxable Investment Assumptions: $18,203 annual investment earning 6% gross; 4.32% after taxes, all earnings reinvested
The taxable investment in this hypothetical example is taxed annually at ordinary income tax rates
The above chart is a hypothetical example and for illustrative purposes only. Past performance is no guarantee of future res ults.

LBL7996 9/09      For Broker/Dealer or Agent Use Only.
     Options to access cash value1
     •      Withdrawals1,2
     •      Loans1
              – Preferred: Available at 0% net cost 3
              – Standard: Available at 1% - 2% net cost3
     •      Life insurance is an asset. Customers are able to access their cash value. 1
     •      Accelerated death benefit riders1,4


  1 Partial withdrawals and surrenders from life policies are generally taxed as ordinary income to the extent the surrender proceeds exceed your investment in the
  contract, which is also called the “basis.” In some situations, partial withdrawals during the first 15 policy years may result in taxable income prior to recovery of
  the investment in the contract. Loans are generally not taxable if taken from a life insurance policy that is not a modified endowment contract. However, when
  cash values are used to repay a loan, the transaction is treated like a withdrawal and taxed accordingly. Unpaid interest on loans is added to the loan principal,
  thereby increasing the total debt on the policy. The combination of an increasing loan balance, and deductions for contract charges and fees, may cause the
  policy to lapse, triggering ordinary income tax on the outstanding loan balance to the extent it exceeds the cost basis in the policy. If a policy is a modified
  endowment contract, loans are treated as taxable distributions to the extent of the policy gain. Loans, withdrawals and surrenders are treated first as distributions
  of the policy gain subject to ordinary income taxation, and may also be subject to an additional 10% penalty tax if made prior to age 59 1/2. Loans, if not repaid,
  and withdrawals reduce the policy’s death benefit and cash surrender value.
  2 Withdrawals are assessed a $25 fee per withdrawal.
  3 Preferred loan availability and standard loan rate vary based on product.
  4 Terms, conditions and limitations apply. Subject to state availability.

LBL7996 9/09       For Broker/Dealer or Agent Use Only.
       An exit strategy

       • Surrender the policy for the
         cash value
       • Estate Liquidity Rider*
       • Liquidity Guarantee Rider*
       • Exclusive to LBL




*Refer to the follow ing tw o slides for details on the riders, including terms, limitations, conditions and tax consequences.


LBL7996 9/09           For Broker/Dealer or Agent Use Only.
      Estate Liquidity Rider*

      • 90% of the premium after 10 years*
      • 100% of the premium after 15 years*
      • Can be exercised for ANY reason, not just changes in
        estate tax laws
      • Available at no additional cost on qualifying Legacy
        Secure SL policies
*Please see rider for terms, conditions and restrictions. The Estate Liquidity Rider is attached at no cost to all Legacy Sec ure SL policies in w hich the youngest insured is age 75 or younger
and neither insured is classified as uninsurable.

Partial w ithdrawals and surrenders from life policies are generally taxed as ordinary income to the extent the surrender proc eeds exceed your investment in the contract, w hich is also called
the “basis.” In some situations, partial w ithdrawals during the first 15 policy years may result in taxable income prior to r ecovery of the investment in the contract. Loans are generally not
taxable if taken from a life insurance policy that is not a modified endow ment contract. How ever, when cash values are used to repay a loan, the transaction is treated like a w ithdrawal and
taxed accordingly. Unpaid interest on loans is added to the loan principal, thereby increasing the total debt on the policy. The combination of an increasing loan balance, and deductions for
contract charges and fees, may cause the policy to lapse, triggering ordinary income tax on the outstanding loan balance to the extent it exceeds the cost basis in the policy. If a policy is a
modified endow ment contract, loans are treated as taxable distributions to the extent of the policy gain. Loans, w ithdrawals and surrenders are treated first as distributions of the policy gain
subject to ordinary income taxation, and may also be subject to an additional 10% penalty tax if made prior to age 59 1/2. Loans, if not repaid, and w ithdrawals reduce the policy’s death
benefit and cash surrender value.



LBL7996 9/09          For Broker/Dealer or Agent Use Only.
      Liquidity Guarantee Rider*

      • Up to 100% of the premium back after the surrender
        charge period
      • Available at no additional cost on qualifying Legacy
        Secure UL policies



 *Legacy Secure UL’s Liquidity Guarantee Rider is subject to state availability and the terms and conditions of the rider. Not available at all issue ages and all classes. Percentage of premium
 available varies by issue age, class, and face amount. The amount is capped at 50% of the policy face amount and is reduced by w ithdrawals, policy debt, and charges incurred for other
 riders on the policy.

 Partial w ithdrawals and surrenders from life policies are generally taxed as ordinary income to the extent the surrender proc eeds exceed your investment in the contract, w hich is also called
 the “basis.” In some situations, partial w ithdrawals during the first 15 policy years may result in taxable income prior to r ecovery of the investment in the contract. Loans are generally not
 taxable if taken from a life insurance policy that is not a modified endow ment contract. How ever, when cash values are used to repay a loan, the transaction is treated like a w ithdrawal and
 taxed accordingly. Unpaid interest on loans is added to the loan principal, thereby increasing the total debt on the policy. The combination of an increasing loan balance, and deductions for
 contract charges and fees, may cause the policy to lapse, triggering ordinary income tax on the outstanding loan balance to the extent it exceeds the cost basis in the policy. If a policy is a
 modified endow ment contract, loans are treated as taxable distributions to the extent of the policy gain. Loans, w ithdrawals and surrenders are treated first as distributions of the policy gain
 subject to ordinary income taxation, and may also be subject to an additional 10% penalty tax if made prior to age 59 1/2. Loans, if not repaid, and w ithdrawals reduce the policy’s death
 benefit and cash surrender value.



LBL7996 9/09         For Broker/Dealer or Agent Use Only.
    More to come…

    2                                                   3                                  4

        Conducting successful                                 Selling the story:                 Getting the best
         (and profitable) life                               Another Side of Life              underwriting results
          insurance reviews
          Speaker: Lou Shuntich                             Speaker: Bob Jurgensmeier          Speaker: A Panel of LBL
           Sr. Vice President –                             Sr. Vice President – Actuary            Underwriters
           Advanced Markets

               Tuesday, Oct. 6                                 Tuesday, Oct. 27                 Tuesday, Nov. 17
                 1:00 CST                                         1:00 CST                         1:00 CST




                       Go to accessallstate.com/life to add
                   these upcoming meetings to your calendar.


LBL7996 9/09     For Broker/Dealer or Agent Use Only.
    Important Disclosures
     Accelerated death benefits may or may not qualify for favorable tax treatment under the Internal Revenue Code of 1986. This d epends on
     factors such as a customer’s life expectancy at the time benefits are accelerated or whether he or she uses the benefits to p ay for required,
     qualified long-term care expenses. If the accelerated death benefit qualifies, the benefit will not be subject to federal income taxation. Tax laws
     relating to the accelerated death benefits are complex. A customer should consult with a tax advisor about how he or she can receive the
     accelerated death benefit excludable from income under federal law. In addition, receipt of the accelerated death benefit may affect a
     customer’s or customer’s family’s eligibility or public assistance programs such as medical assistance (Medicaid), Aid to Fam ilies with
     Dependent Children (AFDC), supplementary Social Security income (SSI), and drug assistance programs. A customer should consul t with
     social service agencies concerning how receipt of such a payment will affect eligibility for public assistance.
     Legacy Secure UL (contract series UL0610), Legacy Choice UL (contract series UL0620), Ultra Plus (contract series UL0700), Ul tra Index
     (contract series UL0730), and Echelon Index UL (contract series UL0820) are flexible premium universal life products. GenBuil der (contract
     series UL081) is a single premium universal life product. Legacy Secure SL (contract series UL0760) is a flexible premium sec ond-to-die
     universal life product. All products are issued by Lincoln Benefit Life Company, Lincoln, NE, a wholly owned subsidiary of Al lstate Life Insurance
     Company, Northbrook, IL.
     Guarantees are based on the claims-paying ability of Lincoln Benefit Life Company
     This information is intended for general educational purposes and is not intended to provide legal, tax or investment advice.
     Not FDIC, NCUA/NCUSIF Insured. Not a deposit. No bank or credit union guarantee. Not insured by any federal government agency . May lose
     value.




LBL7996 9/09    For Broker/Dealer or Agent Use Only.
                                                Questions?




LBL7996 9/09   For Broker/Dealer or Agent Use Only.

								
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