For Producer or Broker/Dealer Use Only. Not for Public Distribution. Life Insurance Review A Sales Tool for Business Owners

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Special life insurance needs of business owners Why a Life Insurance Review? 6 questions to ask business owners Hypothetical classic client situations MetLife support Overview

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Small Business Firms 1 : 5.5 million U.S. family businesses 57% of the U.S. GDP ($8.3 trillion) 78% of all new job creation 1 Family Enterprise USA 2011 The Significance of Business Owners

For Producer or Broker/Dealer Use Only. Not for Public Distribution. 40% of U.S. businesses face a transfer of ownership issue at any given time. 1 47% of middle market business owners age 55 and older are interested in selling their business within 3 years, yet over 90% of owners have not initiated the planning process. 1 24% of owners said they have not planned their business exit. 1 2 The Exit Advisor, Exit Strategy and Compensation Planning, April LIMRA’s Marketfacts Quarterly-Spring The Reality

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Key Person Protection Business Succession/Continuation –Partnership issues –Sale at fair market value –“Fair” inheritance to children with differing levels of business involvement Executive Benefits and Compensation –Recruit, Retain, Reward, Retire –Help address reverse discrimination issues Role of Life Insurance: Business Owners

Why a Life Insurance Review?

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Portfolio review – Life Insurance Review What a review does –Reviews a client’s needs Examines original vs. current goals –Reviews existing life insurance to current goals Who needs to do a life insurance review? –Financial advisors –Trustees –Business Owners Why a Life Insurance Review?

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Family changes –Marriage, birth, divorce –Term to permanent –Term at a better price Policy insufficient for current needs Changing job and benefits Owning a business Education funding Changes in retirement income needs or savings options Buying a home Personal Changes

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Ownership –New partners –Retired partners Valuation Profitability Liquidity Estate tax potential Older children entering business Need for executive benefits Key person coverage needs Business Changes

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Underperforming policies Changing insurer ratings Some policies scheduled for a jump in premiums Newer products –More cost-efficient –Better guarantees. 5 New riders may offer improved options Improved underwriting 5 Guarantees refer to certain features or optional riders available on some insurance policies and are subject to product terms, exclusions and limitations and the insurer's claims-paying ability and financial strength. Life Insurance Changes

6 Questions to Ask Business Owners

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Do you have adequate funds to maintain your lifestyle at retirement? Distributions are generally treated first as tax free recovery of basis and then as taxable income, assuming the policy is not a Modified Endowment Contract (MEC). However, different rules apply in the first fifteen policy years, when distributions accompanied by benefit reductions may be taxable prior to basis recovery. Non-MEC loans are generally not subject to tax but may be taxable when the policy lapses, is surrendered, exchanged or otherwise terminated. In the case of a MEC, loans and withdrawals are taxable to the extent of policy gain and an additional 10% tax may apply if taken prior to age 59 1/2. Always confirm the status of a particular loan or withdrawal with a qualified tax advisor. Cash value accumulation may not be guaranteed depending on the type of product selected. Investments in variable life insurance are subject to market risk, including loss of principal #1 Retirement Planning

For Producer or Broker/Dealer Use Only. Not for Public Distribution. If you were to suffer a disability, would you be able to meet your financial obligations and/or continue to run your business? #2 Disability

For Producer or Broker/Dealer Use Only. Not for Public Distribution. If a key employee dies or resigns, would your business continue to be as successful? #3 Key Person

For Producer or Broker/Dealer Use Only. Not for Public Distribution. What steps have you taken to prepare for the future transfer of your business to others at a fair price? #4 Exit Planning

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Do you have benefit plans in place to recruit, reward and retain key employees? #5 Executive Benefits

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Can you successfully transfer the business assets you have worked a lifetime to accumulate? #6 Estate Planning

Hypothetical Classic Client Situations

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Bill & Ted Set up a cross-purchase when manufacturing business was worth $4,000,000 7 years ago Case Study Were 50:50 Owners Each bought a $2,000,000 Term Policy on the other Bill paid more for Ted’s Policy Smoker Balanced costs with salary increase For Illustration Purposes Only

For Producer or Broker/Dealer Use Only. Not for Public Distribution. 33% owner –$3,000,000 stake –No coverage Betty 33% owner –$3,000,000 stake –$2,000,000 coverage Ted 33% owner –$3,000,000 stake –$2,000,000 coverage Bill Where Do They Stand Today? For Illustration Purposes Only

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Existing Plan Ted and Bill each own a policy on the other Seven years ago –2 policies –$2,000,000 each Options Maintain cross-purchase –6 policies over 3 owners –$1,500,000 per policy –Bill & Ted’s policies over-insure (each = $2M) –Neither could buy out Betty Change agreement to redemption –Three $3,000,000 policies Structure of the Buy-Sell For Illustration Purposes Only

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Changing to permanent coverage –Policy cash values can build business assets –Can offer lifetime benefits –Can fund post-retirement benefit programs Underwriting changes –Ted no longer smokes Product changes –May want to weigh new policy designs Potential Benefits of changing coverage from term to permanent

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Lower Bill & Ted’s coverage to $1,500,000 each Obtain coverage on Betty Betty purchases coverage on Bill and Ted Evaluate cost of new coverage Or Drop term in favor of properly structured and funded cash value life insurance –Look to the cash value as a potential means of buy-out Option 1 – Continue Cross-Purchase For Illustration Purposes Only

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Fewer policies, paid for by the business Now $3,000,000 vs. $1,500,000 Use existing policies to help fund Or Replace existing term with permanent cash value Uses for cash value –Fund lifetime buyouts –Fund nonqualified benefit programs Certain transfers of policies may trigger adverse income tax consequences. Loans and withdrawals will decrease the cash value and the death benefit. If the policy has not performed as expected and to avoid a policy lapse, distributions may need to be reduced, stopped and/or premium payments may need to be resumed. Should the policy lapse or be surrendered prior to the death of the insured, there may be tax consequences. Option 2 – Establish Redemption Agreement

MetLife Support

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Dedicated life insurance sales desk Marketing materials ePresentations Advanced Sales Center assistance for complex situations Please note: This document is designed to provide introductory information on the subject matter. MetLife does not provide tax and legal advice. Clients should consult their attorney and/or tax advisor before making financial investment or planning decisions. MetLife Support

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Permanent insurance –In-force ledger –Copy of policy Term policy –Copy of policy Employer benefit –Benefit information What Information Will I Need?

For Producer or Broker/Dealer Use Only. Not for Public Distribution. The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance or other financial products and services. Clients should seek advice based on their particular circumstances from an independent tax advisor since any discussion of taxes is for general informational purposes only and does not purport to be complete or cover every situation. MetLife, its agents, and representatives may not give legal, tax or accounting advice and this document should not be construed as such. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. There is no guarantee that any of the variable investment options in this product will meet their stated goals or objectives. The account value is subject to market fluctuations so that, when withdrawn, it may be worth more or less than its original value. Guarantees are based on the claims-paying ability and financial strength of the issuing insurance company. Life insurance is medically underwritten. Clients should not cancel their current coverage until their new coverage is in force. Surrender charges may be due on an exchange of one contract for another. A change in policy may require a medical examination. Surrenders may be taxable. Clients should consult their own tax advisors regarding tax liability on surrenders. All guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. Insurance Products are: Not A Deposit Not FDIC-Insured Not Insured By Any Federal Government Agency Not Guaranteed By Any Bank Or Credit Union May Go Down In Value BDVL24031 L [0516]][© 2014 METLIFE, INC. PEANUTS © 2014 Peanuts Worldwide Legal Disclaimer