An Indexed Universal Life Plan AS AN ASSET BUILDER & AS A LEGACY… Property of Ebbert Insurance...
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Transcript of An Indexed Universal Life Plan AS AN ASSET BUILDER & AS A LEGACY… Property of Ebbert Insurance...
An Indexed Universal Life Plan
AS AN ASSET BUILDER &AS A LEGACY…
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“More than 40% of Americans say the reason they don’t have more life insurance is because of other financial priorities.”
Facts About Life 2010, LIMRA Study
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An Indexed Universal Life As An Asset Builder
Protecting Your Accumulation Potential. Your policy’s potential cash value can
accumulate tax deferred and never decrease due to market volatility.
Options can include a fixed account; index accounts like the S&P 500 or blended indexes.
Let’s take a look at how it can work for you.
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Traditional Ways To Build Assets
CD’s Current Rate .40% Mutual Funds Expense Cost 1.26% Annuities Expense Cost 3% Managed Money Expense Cost 2% 401K Qualified Expense Cost 3% Savings Current Rate .005%
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Expenses Of Your IULbased on a 45 year old standard smoker male, using an illustrated crediting rate of 8.50%. This rate is not guaranteed and is used as an example only of
what current policy costs could be under current assumptions paying in $1,000 per month.
Year 1; Death Benefit $220,892; Expenses $2,499; Account value $9,939 = 25.14%
Year 10; Death Benefit $355,979; Expenses $2,804; Account Value $145,026 = 1.93%
Year 11; Death Benefit $378,959; Expenses $1,816; Account Value $168,006 = 1.08%
Year 20; Death Benefit $687,226; Expenses $3,351; Account Value $476,273 = .70%
Year 30; Death Benefit $1,399,294; Expenses $7,097; Account Value $1,188,341 = .59%
Let’s compare: Your current situation (expenses):
401(K) = 3%
Mutual Funds = 1.26%
CD = .40% (Interest Rate) – 2.1% (CPI) = 1.7%
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Liquidity “When you lose your job, the bank is not going to loan
you money.” Qualified plan have 10% penalties by the government
if you withdraw your money before age 59 ½ plus many have surrendered penalties and fees on top of that!
Many CD’s have penalties forgoing your interest if you take them out early.
Non qualified and qualified annuities have 10% penalties for withdrawals before age 59 ½
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Take This Seriously
You can always figure out what percentage of money you would like to put in your savings plan… BUT… NO one can tell you how much you will have when you leave the office for the last time!
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Liquidity – Indexed Universal Life
Let’s take a look at YOUR plan… If something occurred in year five for instance, you
would be able to withdraw or take a loan of $_________ from your account.
Pay back as you can… “So, where do you think would be the BEST place to
put your money?”
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Are Taxes Going Up or Down?
“Today, After an era of very low taxes, we have enormous inequality and a huge deficit. Last time that happened the top tax rate soared!”
National Taxpayers Union
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Taxation If you were a farmer, would you rather
pay tax on the “seed” or the “harvest”? 25% on a pack of $5 seeds would cost
you $1.25. 25% on a $500 harvest… that would
be $125.
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Taxation at Retirement
Did you realize you can be taxed on your social security?
Distributions from your 401k or other qualified account is deemed as income so the amount will go “against” your total income for the year.
With tax free distributions through loans with your Indexed Universal Life Plan, it does NOT count as income!
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Taxation RMD’s – Required Minimum Distributions – Generally,
you have to begin taking withdrawals from your IRA or retirement accounts when you reach 70 ½
There are NO RMD’s associated with an Indexed universal Life Plan.
There are NO minimum or maximum contributions to an Indexed Universal Plan
Distributions can be tax free through loans. Indexed Universal Plans account values are tax deferred.
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Arbitrage Taking advantage of a price difference
between two or more markets. Example: participating Loan has a guaranteed
5% interest rate at purchase for the lifetime of the contract. In a year, where the plan was credited 10% in your strategy, you made 5%.
In a year where the market was down and you were credited zero, you lost 5%
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Arbitrage Here’s the thing… looking back over our
chart that we used earlier to see how a “14% cap” vs. the S&P fared, the market was actually up 12 out of the past 16 years! 3 out of 4. while historical figures are no guarantee tomorrow, it might make sense to look at the opportunity.
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An Indexed Universal Life Plan as a Legacy
The first law of Insurance states that you should insure first that which you can least afford to lose… your income, your health, and your life. Think about that for a minute.
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An Indexed Universal Life Plan as a Legacy
“Nearly 70% of American households with children under 18 would be in financial jeopardy if the primary breadwinner died.”
–Facts about life, 2010 LIMRA study
Life Insurance, if tragedy occurred, could provide: Income replacement
Supplemental or pay for college funding
Payments or pay off of mortgage and other debts
Business succession
Estate tax coverage
Even final expenses
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An Indexed Universal Life Plan as a Legacy
Legacy – a gift, something handed down or received
What is YOUR legacy? How do you wish to be remembered? Most people buy life insurance because they care deeply about someone of something (a favorite charity, etc.) or because they owe someone (death taxes, loans).
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An Indexed Universal Life Plan as a Legacy
Accelerated Death Benefit Rider – your policy would include a Chronic Illness rider. If you are unable to perform 2 of the 6 activities of daily living (bathing, continence, dressing, eating, toileting or transferring), your policy will pay (after a 90 day wait period) a portion not to exceed the death benefit.
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