Estate Protection using Life Insurance Beth Zervas Manager, Risk Selection Pacific Life Insurance Company 16-213 For Life Insurance Producer Use Only. Not for use with the public.

Disclosure Notice Pacific Life Insurance Company 45 Enterprise This presentation is designed to provide introductory information in regard to the subject matter covered. Neither Pacific Life Insurance Company, nor it’s representatives offer legal or tax advise. Your clients should consult their attorney or tax advisor for complete up-to-date information concerning federal and state tax laws in this area. Pacific Life Insurance Company is licensed to issue insurance products in all states except New York. Product availability and features may vary by state. Insurance products and their guarantees, including optional benefits and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Investment and insurance Products: Not a Deposit – Not FDIC Insured – Not Insured by any Federal Government Agency – No Bank Guarantee – May Lose Value This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, its affiliates, their distributors and respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor or attorney. Pacific Life Insurance Company 45 Enterprise Aliso Viejo, Ca 92656 For Life Insurance Producer Use Only. Not for use with the public.

Financial Underwriting Does it make sense? Insurable interest for the beneficiary Economic loss to the beneficiary Ultimate total line consistent with the need Affordability Persistency For Life Insurance Producer Use Only. Not for use with the public.

Estate Protection Replace the loss to the estate at the death of the insured due to reasonably expected estate settlement costs: Federal and state transfer taxes Generation skipping taxes Funeral and disposition expenses Debt payment and other settlement costs For Life Insurance Producer Use Only. Not for use with the public.

Financial Underwriting Tools Application Inspection Report Database Search: Prescriptions, Credit Check, and Criminal Court Records (No contact with the proposed insured) Cover Letter 3rd Party Financials by CPA or Attorney Tax Returns Internet For Life Insurance Producer Use Only. Not for use with the public.

Estate Protection Financial Underwriting Guidelines Nature of the assets and how their value has changed over time. Reasonable rate of growth, compounded up to 20 years, depending on the client’s age and risk class. 75% of the life expectancy Offset by the expected tax rate. Legacy Planning: Protecting, not Creating Wealth For Life Insurance Producer Use Only. Not for use with the public.

Estate Protection Financial Underwriting Guidelines Premiums can be paid from current earned or unearned income and, within limitation, liquidation or repositioning of assets. Generally no more than 20% of assets can be liquidated or repositioned to pay premium on policies purchased for estate protection. For Life Insurance Producer Use Only. Not for use with the public.

Generation 3 (G3) Case Study Female, Age 32 * Occupation: Yoga Instructor, Scuba Instructor Earned Income: $40,000 Male, Age 34 * Occupation: Teacher Earned Income: $47,000 *Each has a net worth of over $75,000,000 based on Inspection Report, 3rd party financials, and CPA documentation. For Life Insurance Producer Use Only. Not for use with the public.

Generation 3 (G3) Case Study Female, Age 30 * Occupation: Mother No Earned Income Male, Age 33 * Occupation: Sales Earned Income: $125,000 *Each has a net worth of over $75,000,000 based on Inspection Report, 3rd party financials, and CPA documentation. For Life Insurance Producer Use Only. Not for use with the public.

Cover Letter Individualized cover letter received with each member of current group of four individuals (G3) The goal is to purchase life insurance to conserve the estate and pass along as much as possible to the third (G3), fourth (G4), and fifth (G5) generations Each in their early 30’s & each has a Net Worth over $75,000,000 The plan is to purchase up to $50,000,000 of life insurance on each individual For Life Insurance Producer Use Only. Not for use with the public.

Letter from Estate Planning Attorney Letter goes into great depth about how the family fortune was made Reiterated relationship between family members Provided details of each member of G1, G2, G3 Included details about the value of each trust, their inheritance Purpose/need of life insurance consistent to previous correspondence For Life Insurance Producer Use Only. Not for use with the public.

Proactive Underwriting Case Study $16,000,000 Survivorship life insurance on a couple in their 50s Applying for $10,000,000 life insurance with another carrier Ultimate Total Line of life insurance = $30,000,000 Application states Income = $2,300,000 Application states Net Worth ~ $40,000,000 Premium Financing Deferred financial questions on the Inspection Report For Life Insurance Producer Use Only. Not for use with the public.

Proactive Underwriting Case Study CEO, Publicly Traded company on the NYSE. Quite a bit of financial information on the internet: 2015 compensation was $4,800,000 June 2016 form 4 SEC filing indicates he owns almost 600,000 shares either directly or via trust With a share price close to $46, stock alone would be valued at $27MM With the public financial information available on him, we had sufficient financial justification, waived Tax Returns and 3rd Party information, and issued life insurance coverage being requested. For Life Insurance Producer Use Only. Not for use with the public.

Enlist Your Underwriter ? ? ask ? ? For Life Insurance Producer Use Only. Not for use with the public.

Thank You For Life Insurance Producer Use Only. Not for use with the public. 16-213 PT-45099-[00] [8/16]