For intermediary use only – not for use with your clients Whole of Life…. Is there life after IHT? Presenter name Job title Zurich Intermediary Group

For intermediary use only – not for use with your clients 2 Important information This presentation is provided to you by Zurich Intermediary Group in your capacity as a financial services industry professional. It must not be made available or copied or otherwise quoted or referred to in whole or in part in any way, including orally, to any person without our express written permission, which we may, at our absolute discretion, grant or withhold or grant subject to conditions, including conditions as to our responsibility. We accept no duty or responsibility, and we disclaim all liability whether in contract, tort (including negligence) in respect of this material but this sentence does not exclude any liability which by law cannot be excluded.

For intermediary use only – not for use with your clients Learning synopsis This Zurich presentation will provide an overview of the Whole of Life market and the different choices available. Whole of Life has traditionally been used as a vehicle to protect against inheritance tax as well as funeral planning, but Zurich will demonstrate how it can be used for alternative protection solutions such as business protection, pension protection needs, and wealth gap fill, before looking at the ways in which Zurich can support you and your business.

For intermediary use only – not for use with your clients Agenda The whole of life market Whole of life policy choices IHT planning Other uses for whole of life - funeral expenses - wealth gap fill - income drawdown - business protection Zurich underwriting and support

For intermediary use only – not for use with your clients The whole of life market Source: *Swiss Re Term and Health Watch 2014 New whole of life sales down 20.5% in 2013

For intermediary use only – not for use with your clients The whole of life market Sales of guaranteed acceptance plans fell by almost 22% Unit linked whole of life plans account for less than 0.25% of the market Sales of non linked whole of life plans remained static Source: *Swiss Re Term and Health Watch 2014

For intermediary use only – not for use with your clients Whole of life policy choices Unit linked WOL - premiums guaranteed for 5/10 years - premiums reviewed based on mortality and fund performance - funds need to achieve 6-8% pa net of taxes and charges Maxi-cover WOL - premiums guaranteed for first 10 years - minimum investment / maximum cover - premiums will increase / sum assured will reduce Guaranteed WOL - premiums guaranteed for whole of life - no reviews / no worries

For intermediary use only – not for use with your clients IHT planning Roy Jenkins MP Commons debate 1986 “Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue”

For intermediary use only – not for use with your clients 9 Inheritance tax receipts Source: HMRC - HMRC Tax & NIC receipts – May 2013 (Estimated for 2013/14 based on Jan-Apr 2013 actual to date)

For intermediary use only – not for use with your clients IHT planning IHT is payable at 40% on all chargeable assets that exceed the nil rate band of £325,000 Married couples can use the joint nil rate band of £650,000 21,000 estates paid £3.15 billion paid in IHT in * Average IHT bill per estate was £148,500* Can’t be avoided but can be negated through planning Source:

For intermediary use only – not for use with your clients IHT planning - case study Bill (64) and Jean (61) have wills which, when they die, pass their estate to each other and then on to their children. They don’t want the value of the estate reduced by IHT on the second death. Their estate is valued at £1,000,000 and the IHT bill would be £140,000. Use Zurich’s Adaptable Life Plan, on a Joint Life Second Death (JLSD) basis, written into an absolute or discretionary trust for the children to cover the IHT liability. £140,000 of cover costs £ pm with initial commission of £2,239 Add indexation to protect the sum assured against the effects of inflation Quote based on male aged 65 next, female aged 62 next, both non-smokers, £140,000 sum assured, JLSD with guaranteed premiums,

For intermediary use only – not for use with your clients

Input the current value of the estate subject to tax…… the calculator will work out the liability

For intermediary use only – not for use with your clients Input clients’ ages…… the calculator will tell you their life expectancy

For intermediary use only – not for use with your clients Input the monthly premium…… the calculator will show total premiums to normal life expectancy and the age at which premiums paid = sum assured

For intermediary use only – not for use with your clients And the compound annual growth rate required, net of taxes and charges, to achieve the sum assured by investing the monthly premium.

For intermediary use only – not for use with your clients

IHT planning - case study It’s one year later. They did nothing. Bill is now 65 and uninsurable due to a heart attack. Whilst he is likely to predecease his wife, they don’t want to take out a single life policy on Jean, now 62, as the proceeds would be paid to the trust at the wrong time should she predecease Bill. Use Zurich’s Adaptable Life Plan, written as a JLSD policy, but using single life rates on Jean’s life, into an absolute or discretionary trust for the children to cover the IHT liability. £140,000 of cover costs £ pm with initial commission of £3,375 Add indexation to protect the sum assured against the effects of inflation Quote based on female aged 63 next, non-smoker, £140,000 sum assured with guaranteed premiums,

For intermediary use only – not for use with your clients IHT Calculator Bill age 65, normal life expectancy 83 Jean age 62, normal life expectancy 85 Premium (Joint Life Second Death policy using single life rates) £264 per month Premiums to normal life expectancy £72,864 Ages at which premiums paid will equal the sum assured Bill 109 Jean 106 Growth rate required 5.2% Saving over doing nothing £67,136 or 48%

For intermediary use only – not for use with your clients IHT planning - case study It’s 2 years later and Bill and Jean did nothing. Sadly, Bill has died and Jean, now 64, realises she should do something about the IHT liability but can’t afford the whole of life premiums which would now be £ per month. Use Zurich’s Convertible Term Assurance with a 20 year term, written into an absolute or discretionary trust for the children, to cover the IHT liability. £140,000 of cover costs £ pm with initial commission of £3835 Add indexation to protect the sum assured against the effects of inflation Quotes based on female aged 65 next, non-smoker, £140,000 sum assured CTA, 20 year term with guaranteed premiums and guaranteed WOL,

For intermediary use only – not for use with your clients The Zurich IHT Tool

For intermediary use only – not for use with your clients Funeral plans Average cost of a funeral is now £3,284* 121,000 lump sum funeral plans taken out in 2012* Almost 275,000 guaranteed acceptance whole of life plans taken out in 2013** Both are good for clients in poor health, but offer less value for those in good health Sources: * Financial Mail on Sunday 17/03/2013 ** Swiss Re term and Health Watch 2014

For intermediary use only – not for use with your clients Supporting literature

For intermediary use only – not for use with your clients Funeral plans - case study George is a widower, aged 70 years and lives alone. He is in good health and would like to ensure that there is sufficient money available to his children on his death to pay for his funeral. Use Zurich’s Adaptable Life Plan, written under an absolute or discretionary trust, to provide the funds to pay for George’s funeral. £5,000 of cover costs £19.66 pm with initial commission of £170 Add indexation to protect the sum assured against the effects of inflation Quote based on male aged 71 next, non-smoker, sum assured £5000, with guaranteed premiums, Zurich quotes

For intermediary use only – not for use with your clients It’s a good deal for George…… Current age 70 Normal life expectancy 83 Premium £20 per month Total premiums to normal life expectancy £3,360 Age at which premiums paid equals sum assured 91 Growth rate required 5.2%

For intermediary use only – not for use with your clients Wealth clients don’t need protection Typical wealth client - kids left home - mortgage free - no other debts - substantial assets - excess income Future plans - retire early - bucket list - £500k liquid assets? What happens to those plans if one of them dies?

For intermediary use only – not for use with your clients Wealth gap fill - case study Steve and Gill (both 46) have a house with no mortgage outstanding and other savings and investments of £180,000. They want to ensure that should either of them die, the survivor has at least £300,000 of liquid assets. Use Zurich’s Adaptable Life Plan on a Joint Life First Death basis with a sum assured of £120,000. £120,000 of cover costs £ pm with commission of £2,419 Review the policy regularly to ensure the sum assured fills the gap. Quote based on male and female both aged 47 next, non-smokers, JLFD, £120,000 sum assured, guaranteed premiums, Zurich quotes

For intermediary use only – not for use with your clients Income drawdown More flexible way of taking pension benefits No requirement to use full fund to purchase annuity Wait until older and fund has grown / annuity rates are higher For deaths after 5 th April 2011, the tax charge on lump sum death benefits will be 55%

For intermediary use only – not for use with your clients Income drawdown – case study Richard (aged 58) currently has £300,000 in drawdown and he is concerned that on death his pension fund, if paid as a lump sum to his family, will be taxed at 55%. Use Zurich’s Adaptable Life Plan, written in trust, to compensate the family for the tax charge on death whilst in drawdown. Review the sum assured regularly to ensure it matches the potential liability. £165,000 of cover costs £ pm with initial commission of £3388 Quote based on male aged 59 next, non-smoker, £165,000 sum assured with guaranteed premiums, Zurich quotes

For intermediary use only – not for use with your clients Business Succession Planning Business owners want their families to benefit from the value of their shares in a business Co shareholders want to buy the shares of a deceased shareholder but don’t have the means to do so Family of a deceased shareholder may have to sell to a third party for a reduced sum Problems for surviving shareholders who may have a new business partner with different ideas

For intermediary use only – not for use with your clients Business succession - case study John (aged 45) and Peter (aged 40) run a successful business worth £500,000. They plan to build the business and sell at some stage in the future. However, if either of them died they would want their families to receive a fair price for the shares and the surviving shareholder to retain control of the business. Use Zurich’s Adaptable Life Plan, written under the flexible business trust with a double option agreement to provide the funds for John and Peter to buy each other’s shares in the event of death. Should they sell the business, the policies could be used for personal IHT planning. £250,000 of cover costs: £201.07pm for John with commission of £3278 £ pm for Peter with commission of £2889 Quote based on males aged 46 next and 41 next, non-smokers, £250,000 sum assured with guaranteed premiums,

For intermediary use only – not for use with your clients Underwriting Competitive medical underwriting limits JLSD cases sum assured is halved for medical underwriting JLSD on single life rates where one life is uninsurable No financial underwriting below £1.5m life per person No aggregation of sums assured for business protection No 25% loadings No questions about other provider decisions Own Doctor medicals Underwriting helpline

For intermediary use only – not for use with your clients Support from your Zurich consultant Access to the Protection Specialists Technical and product support help-lines Large case helpline Adviser tools Service and support For intermediary use only – not for use with clients For intermediary use only - not for use with your clients

For intermediary use only – not for use with your clients

For intermediary use only – not for use with your clients Learning outcomes An understanding of the Whole of Life Market An awareness of Whole of Life policy choices An awareness of current IHT legislation An understanding of how and why Whole of Life can be used to mitigate inheritance tax An awareness of the tax charge on death in Drawdown, and how this can be mitigated through utilising a Whole of Life contract An understanding of the use of Whole of Life as an alternative to term policies for business succession planning An understanding of how Whole of Life compares to automatic acceptance plans for funeral planning and which clients could benefit

For intermediary use only – not for use with your clients QUESTIONS

For intermediary use only – not for use with your clients Thank you for listening. Zurich Intermediary Group Limited. Registered in England and Wales under company number Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX. Telephone no We may monitor or record calls to improve service. For use by professional financial advisers only. No other person should rely on, or act on any information in this advertisement when making an investment decision. This advertisement has not been approved for use with clients. Important information Any tax and legislation information is based on Zurich’s current understanding and may change in the future Life assurance and pensions are provided by Zurich Assurance Ltd. Registered in England and Wales under company number Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.