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For agent or broker use only. Not for use with the public.©2009 Lincoln National Corporation

LCN0903-2027145 LIF-GEN-08-0850_LIF-PPT104 3/09

Find a better fit for your clients

Life Insurance Professional Analysis and Review



Two separate companies issue Lincoln life insurance policies. New York policies are issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. For all other states, policies are issued by The Lincoln National Life Insurance Company Fort Wayne, IN. These companies are separately responsible for satisfying their own financial and contractual obligations.

Paramount principle

Is your clients’ insurance up to PAR?

What is the paramount principle of Professional Analysis and Review (PAR)?



Why offer PAR?

How you can benefit How clients can benefit

Deepen relationships → Reassurance

Perform due diligence → Insurance matching their needs

Build your business → More loyalty for their advisor



Agenda

What is PAR?

What issues may be uncovered?

Review PAR tools available at Lincoln

Sample case solutions

Questions



What is PAR?

Who should receive a review?• Anyone who owns life insurance, every 3 to 5 years



What is PAR?

A life insurance needs analysis is appropriate for clients who• Have changing needs for insurance• Had a positive change in health status• Own policies with loans, withdrawals, or other policy changes



What is PAR?

A life insurance needs analysis is also appropriate for policyowners who • Own term policies that may become expensive

with age • Own term policies and now have a need for

permanent insurance• Own policies in trusts that haven’t been reviewed

in several years



The PAR process

Review Analyze Evaluate

Review the client’s current needs and purpose for life insurance.

• Interview the client

• Gather information using a Policy Evaluation Form

Request in-force ledger for existing policies.

• Analyze premium and death benefit

• Compare in-force ledgers, policy provisions, guarantees, and other features

Based on the data compiled:

• Evaluate the situation using the PAR software

• Determine if the existing amount and type of insurance meets the client’s needs

1 2 3



Possible outcomes of PAR

A Policy performing

If existing policy is performing as expected or better, and needs have not changed.

• You are finished for now, and

• Continue to review periodically to be sure policy is on course.

B Policy not performing

If existing policy is not performing as expected, or if needs have changed:

• Determine a premium increase or decrease required to reach the goal.

• Work with the client to correct the situation.

C Consider alternatives

If appropriate, consider other solutions.

• Review additional insurance coverage options with your client.

• Explain why additional coverage may be suitable. Share illustrations with the client to help them make the decision.



1. Review: PAR interview

Why do you own this amount of insurance?

Why did you buy this type of insurance?

What was the primary purpose for buying this insurance? • supplementing retirement• family security• college funding• estate tax planning• another purpose

How much insurance will be in-force when needed?



1. Review: PAR interview

Do you have the appropriate type and amount of insurance to meet your primary goal?• Cash accumulation vehicle • Death benefit — maximum death benefit



1. Review: what about term?

Retaining term beyond conversion period• Does this make good economic sense?• What happens if your underwriting status changes?• Can you requalify for the lower rates?• Is the need for coverage temporary or longer term?



2. Analyze: issues you may uncover

Amount no longer appropriate for clients’ needs

Change in clients’ needs or objectives• Family situation has changed• Client may have new goals• Business need has changed• Changes in lifestyle




Clients own life insurance policies that

Don’t have desired features• Secondary guarantees• Preferred Plus underwriting• Extended maturity

Aren’t meeting clients’ current needs




Some policies in danger of lapsing• Taking multiple policy loans• Making excessive withdrawals• Not making premium payments• Changing the face amount or death benefit

More premium may be needed to fulfill the original goal



3. Evaluate

Reasons to keep current policy• New surrender period• Existing loans• New acquisition costs• Health issues• Legislative benefits



3. Evaluate

Reasons to consider exchange or replacement• Secondary guarantees• Lower mortality expenses• Improved underwriting class offering• Need to access more living benefits



3. Evaluate

Clients own life insurance policies that• Need no changes, reassuring clients• Need beneficiary designations updated• Could be more efficiently consolidated into a single policy• Are underfunded



3. Evaluate: if underfunded

Possible solutions• Increase the future premiums to make up for the shortfall• Improve underwriting class if eligible• Drop unnecessary riders• Reduce face amount if need has decreased



3. Evaluate: if underfunded

Potential problems with these solutions• If policy has an existing loan and the client is making further

loans to make premium and interest payments, problem only becomes worse• Need for current level of insurance remains• Desired changes may neither be available nor meet

planning objectives



3. Evaluate: a possible solution

A new policy — but be cautious• Ensure that every client has the best possible life insurance

solution based on the client’s needs and objectives — whether it is keeping and adjusting the client’s current policy or replacing it with a more appropriate one.



You must be a registered representative to review or recommend a variable insurance product.

For all recommendations

Always put the client first

Highest ethical standards

Gather all the facts

Abide by the golden rule — provide the same service and recommendations to clients, which under the same circumstances, you would apply to yourself

Presenter Name (Edit on Slide Master)Title (Edit on Slide Master)Company Name (Edit on Slide Master)April 19, 2023 (Edit in View: Header and Footer)



What PAR tools are available?

Overview of PAR marketing tools



Client kit (Order code: PAR-CLT-KIT)

PAR client piece

10 common life insurance mistakes

Client process overview flier

5 reasons why Lincoln life

PAR evaluation data-gathering form



Advisor kit(Order code: PAR-ADV-KIT)

PAR advisor guide

Book of business prospecting piece

Advisor talking points to use with client

PAR process and forms guide

PAR authorization form



Preapproach fillable letters

Printable sample version

Fillable versions



Some material highlights



Lincoln DesignIt SM software tool



What if a 1035 Exchange is an option?

58-year-old male

Complete financial needs analysis

Qualifies for standard nonsmoker

Increased need for life insurance

Needs help analyzing options



What if a 1035 Exchange is an option?

Keep current insurance

Keep current insurance and supplement term

Surrender current insurance and purchase only term

Make 1035 exchange on current insurance



Option 1 Option 2 Option 3 Option 4

Total cost Increase $23,470 Increase $23,470 plus Term $10,053

Surrender current insurance at surrender charge of $2,046

annual premium $18,820

1035 exchange

current CSV

$18,528 annual premium

Current death benefit

$550,000

Lapses at 80

$550,000

Lapses at 80

$1,000,000

Term expires in 25 years

$1,000,000

no expiration

Guaranteed death benefit*

$550,000

Lapses at 80

$550,000

Lapses at 80

$450,000 Term 20 year

$1,000,000


$1,000,000

no expiration

Decision Not a viable option — even with increasing the monthly premium by over $2,000 per month, lapse at age 80

Not a viable option — even with increasing the monthly premium by over $2,000 per month, lapse at age 80


Not a viable option — coverage expires in 25 years

Meets all stated goals

Options

*Guarantees are backed by the claims-paying ability of the issuing company.


LCN0903-2027145 LIF-GEN-08-0850_LIF-PPT104 3/0932 *Guarantees are backed by the claims-paying ability of the issuing company.



PAR with loan 1035 Exchange

Male, age 70, $500,000 face existing policy

Cash surrender value (net of loan): $247,320

Outstanding loan: $110,576

In-force reprojection: lapse in 7 years at age 77 on current factors



Goals

Goals: Avoid “phantom income” and maintain net level death benefit of $500,000

1035 Exchange into newer UL contract with secondary guarantees*




What if 1035 Exchange is an option?

Keep current insurance and increase payment

Surrender current insurance and eliminate loan, then purchase new insurance

Make 1035 exchange on current insurance without the loan (eliminate loan) and purchase new policy

Make 1035 exchange, carry over the loan to new insurance, and pay annual loan interest



Options

Option 1 Option 2 Option 3 Option 4

Total cost Increase $26,592

(Partial loan repayment)

Surrender current insurance

Use proceeds to purchase new insurance coverage without loan

Make 1035 exchange on current Insurance

Do not carryover the loan

Purchase new insurance

Make 1035 exchange and carryover loan

Annual premium

Pay loan interest $7,187

Current death benefit

$500,000

lapses at 77

$500,000

Lifetime

$500,000

lifetime

$560,000 (net) increasing

Guaranteed death benefit*

Lapses at 72 $500,000

lifetime

$500,000

lifetime

$560,000 (net) age 100

Decision Not a viable option – even with increasing the policy lapse age 77

Possible option

Potential reportable gain income taxable:

$132,896

Potential issue “boot” income at elimination of loan. Recognize income equal to loan

Meets all stated goals




PAR with loan 1035 Exchange

Result • Loan is carried over to the new policy

under 1035 exchange• Loan interest paid annually to maintain death benefit• $560,000 net death benefit• Even with loan outstanding, policy stays

in-force on a guaranteed basis*




Male, age 56, $400,000 face amount

Preferred plus rating in 2002: good health, low cholesterol

At present: overweight, high cholesterol

Change in health



Result of PAR analysis

Current policy year — would receive standard rating

Existing policy retained

However, opportunity to review and update beneficiary designations and ownership

Plan to review again in two to three years

Reassures the client




Is term insurance the best answer?

Ages 49, male and female, preferred nonsmokers

Insurance need: $1,000,000

Primary goal: cover survivor and estate tax needs

Clients convinced term insurance is the best and least expensive approach



Temporary term vs. permanent

Is term life insurance coverage the least expensive and the right answer in all situations?

Use PAR to demonstrate the advantage of the secondary guarantee universal life insurance solution for survivor’s needs or other appropriate situations versus term life insurance.



Is term insurance the best answer?

30-year term

Return of Premium Rider

Qualifies for best class

Premium of $8,790/year

Primary purpose for survivor needs and estate taxes

Is term coverage the best solution in this case?



Life Insurance Professional Analysis and Review



Why offer PAR?

How you can benefit How clients can benefit

Deepen relationships → Reassurance

Perform due diligence → Insurance matching their needs

Build your business → More loyalty for their advisor



Questions?

[insert contact information]



Important disclosures

Lincoln life insurance is issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company.

Policies sold in New York are issued by Lincoln Life and Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker/dealer. The contractual obligations are backed by the claims-paying ability of Lincoln Life and Annuity Company of New York.

Products and features are subject to state availability.This material was prepared to support the promotion and marketing of an insurance company product. Lincoln Financial Group® affiliates, its distributors, or their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent Financial Advisor as to any tax, accounting, or legal statements made herein.

Lincoln variable universal life insurance is sold by prospectus. Carefully consider the investment objectives, risks, and charges and expenses of the policy and its underlying investment options. This and other important information can be found in the prospectus for the variable universal life policy and the prospectus for the underlying investment options. Prospectuses are available upon request and should be read carefully before investing or sending money. For a current prospectus, please call 800 444-2363 or go to www.LincolnFinancial.com.www.LFD.comLincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.

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