Product Niches and Resources Keith A. Miller, MBA, CLU®, ChFC® – VP, Advanced Sales Michael J. Sapyta, CFP ®, CLU® – VP, Advanced Markets

GUL Stress Testing

GUL Stress Testing Which Product Solutions Provide Flexibility? Minimal impact for skipped premium CSVs on GUL Policy Return of Premium (Premium Refund) options What information can help out with competitive situations?

Flexibility & Face Reductions

Future Wealth Changes Which Product Solutions Provide Flexibility? Decreasing Net Worth Ability to Stop Premium Payments Tax Law Changes Survivorship Scenarios for Different Age Ranges

Age 80+ Survivorship with Limited Guarantees 10 Pay with High IRRs

IUL and Participating Loans

AG 49 Actuarial guideline that determines maximum illustration rates for IUL products and establishes the maximum spread between crediting rates and participating loan rates When Did They Take Effect? September 1, 2015 – Maximum Illustration Rates March 1, 2016 – Interest credited to borrowed funds will be limited to 1% above the illustrated loan rate.

Participating Loans Participating/Index Loans allow for more potential arbitrage than withdrawals and standard/fixed loan. Inherently more risky From John Hancock Illustration: The choice of a Standard or an Index Loan can have a significant effect on future Policy Values…. Index Loans can have the effect of amplifying – both positively and negatively – the impact that Index Appreciation Account performance has on the policy. Therefore, the risk of policy lapse with an Index Loan is greater than it would be with a Standard Loan.

Overly Aggressive Premium Financing Large Participating Loan to Exit Premium Financing Arrangement Trading one loan for another 90% Loan to Value Ratio 7% IUL Crediting Rate for all years (potentially too high) If Policy Lapses year 11, $1,285,211 taxable income Assumed Positive Loan Arbitrage Between Crediting Rate and Participating Loan Interest Rate for All Years

Premium Financing Understand and Manage Risks Appropriately Interest Rate Risk Loan Renewal Risk Crediting Rate Risk Collateral Requirements Exit Strategy and Related Risks

Older Age Term

Older Age Term Most current policies are not convertible after age 75 or at most 5 years in some cases At the end of the term period, premiums generally rise to 10x the original premium For clients age 70+, in 10 years, you are beyond the conversion period and have no options to extend coverage How can you recover “lost value”?

Mr. 73 – Standard Non-Smoker

Mr. 75 – Standard Non-Smoker

Return of Premium (Guaranteed Refund) Options

Carriers with Guaranteed Refund Options AIG Mutual of Omaha Symetra

Die Too Soon Live Too Long Get Sick Along the Way

Questions?