Why Buy Life Insurance

Discover the many benefits of life insurance Life insurance can be an important – and versatile – part of your overall financial strategy. Read slide.

Discover the many benefits of life insurance Why consider life insurance? First and foremost, life insurance can provide financial reassurance for those you care about. Life insurance provides a death benefit – and the knowledge that your loved ones or business will be able to carry on without you. Why consider life insurance? First and foremost, life insurance can provide financial reassurance for those you care about. Life insurance provides a death benefit – and the knowledge that your loved ones (or business) will be able to carry on without you.

Discover the many benefits of life insurance Why consider life insurance? Did you know that life insurance can provide “living benefits” too? Consider that some life insurance policies can help you: Supplement your income in retirement Fund a college education Cope with a financial emergency Create a succession plan for a small business And more . . . Did you know that life insurance can provide “living benefits,” too? Once you’ve determined that you need the death benefit, consider that some life insurance policies can also help you: Supplement your income in retirement Fund a college education Cope with a financial emergency Create a succession plan for a small business, and more. These are just a few of the additional reasons many people consider a life insurance policy to be an important part of an overall financial strategy.

What you need to know about life insurance Is life insurance right for you? Consider four important questions: Do you need life insurance? Which type of policy is a good fit for you? How much insurance do you need? Who are your beneficiaries? As you plan for your future, it’s natural to wonder whether you need life insurance – and if so, how much. Today I will provide some facts about life insurance that can help you make an informed decision. We’ll answer four important questions: Do you need life insurance? Which type of policy is a good fit for you? How much insurance do you need? Who are your beneficiaries? Then, we’ll look at some of the additional uses of life insurance. You may be surprised to discover how versatile and valuable life insurance can be.

What you need to know about life insurance Question #1: Do you need life insurance? If you have dependents, the answer is “yes.” Life insurance provides a death benefit for your loved ones if the unexpected should occur. The death benefit can cover one-time expenses such as: Funeral arrangements Medical bills Estate taxes Life insurance can also provide income to your dependents for years to come In some cases, you may consider purchasing extra life insurance, so the additional benefits can help: To fund a college education To pay for the special care of a loved one To leave a lasting legacy to your favorite charity The first question to ask is: Do you need life insurance? If you have dependents, then the answer is “yes.” Life insurance provides a death benefit for your loved ones, if the unexpected should occur. It can cover one-time expenses such as funeral arrangements, medical bills, and estate taxes. Life insurance can also provide income for your dependents for years to come. In some cases, you may consider purchasing extra life insurance, so the additional benefits can help: cover a college education, pay for the special care of a loved one, or leave the lasting legacy you envision. The more people who depend on your income – children, a spouse, or elderly parents – the more life insurance you’re likely to need.

Do you need life insurance? Even if you do not have dependents, you could still benefit from adding life insurance to your financial strategy. The death benefit can be used to cover your final expenses. Some types of life insurance can provide the potential for cash value accumulation. Under some circumstances, it can be accessed through loans and withdrawals to supplement your retirement income.1 If you are a business owner, life insurance can be used to reward and retain employees, reduce your tax liability, and protect the future of your business. Even if you don’t have dependents, you could still benefit from adding life insurance to your overall financial strategy. First, the death benefit can be used to cover your final expenses. Additionally, some types of life insurance can provide the potential for cash value accumulation, which you may be able to access under certain circumstances through loans or withdrawals.1 You can even use it as supplemental income in retirement. And if you own a business, you may be surprised to discover that life insurance can play a valuable role in helping you reward and retain employees, reduce your tax liability, and protect the future of your business. Ask your agent for more details about how life insurance can be part of your business continuity strategy. 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply.

What you need to know about life insurance The average person owns less life insurance (3.6 times their annual income) than they believe they should own (5.7 times their income). However, following the September 11 attacks, the Victim Compensation Fund valued the future earning potential of victims at nearly 16 times their annual income. Source: “The Facts of Life and Annuities,” LIMRA International, 2009. According to “The Facts of Life and Annuities,” LIMRA International, 2009: The average person owns less life insurance (3.6 times their annual income) than they believe they should own (5.7 times their income). However, following the September 11 attacks, the Victim Compensation Fund valued the future earning potential of victims at nearly 16 times their annual income.

What you need to know about life insurance Question #2: Which type of policy is a good fit for you? One of these may be a good fit for you: Term insurance Whole life Universal life Fixed index universal life (FIUL) The second question to consider is: Which type of policy is a good fit for you? Because no single type of life insurance is right for everyone, there are several options from which to choose. One of these may be a good fit for you: Term insurance Whole life Universal life Fixed index universal life (FIUL)

Which type of policy is a good fit for you? Term insurance Provides life insurance coverage for specified period of time 20-year term policy is for 20 years Some policies offer additional features and riders Term policies provide life insurance coverage for a specific period of time. If you buy a 20-year term policy and live to the end of the term, for example, the policy will terminate. Term policies offer the advantage of level premium. Some also offer options to renew at the end of the term, or special features such as a return-of-premium rider (these features may vary by product, and are available at an extra cost).

Which type of policy is a good fit for you? Whole life insurance Offers the predictability of level payments Provides coverage for your entire life Also has cash value that you may be able to access1 Whole life insurance is similar to a term policy, because it offers the predictability of level premium payments. But, unlike term insurance, whole life policies provide coverage for your entire life (instead of a set term). Whole life policies also have a cash value that you may be able to access under certain circumstances.1 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply.

Which type of policy is a good fit for you? Universal life insurance Also provides coverage for your entire lifetime Flexibility to pay your premiums at any time and in any amount Subject to limitations As long as policy expenses and cost of coverage are met Also has cash value that can grow at a declared interest rate Cash value can be accessed under certain circumstances1 Universal life insurance also provides coverage for your entire lifetime. Universal life offers you the flexibility to pay your premiums at any time and in any amount (subject to some limits), as long as the policy expenses and cost of coverage are met. Universal life policies also have a cash value that can grow at a declared interest rate, and which you may be able to access under certain circumstances.1 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply.

Which type of policy is a good fit for you? Fixed index universal life insurance (FIUL) Works like a universal life policy But with the addition of potential indexed interest. Indexed interest is credited based on changes in an external index or indexes You choose the index or indexes at the time you buy the policy Your policy’s cash value can grow tax-deferred Cash value can be accessed through loans and withdrawals1 Fixed index universal life (FIUL) insurance works the same way as a universal life policy, but with the addition of potential indexed interest. Indexed interest is credited based on changes in an external index or indexes, which you choose when you buy the policy. Your policy’s cash value can grow tax-deferred, and you can access this value through loans or withdrawals.1 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. 1 Please note that loans and withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply.

What you need to know about life insurance Question #3: How much life insurance do you need? It can be a simple equation, and a personal decision, too. To determine the amount you need, consider the following: One-time costs Living expenses Years of need Once you have established that you need life insurance, the next question is: How much do you need? There are several ways to calculate this amount. To help you arrive at an appropriate death benefit amount, consider: What one-time costs will you have? These may be paying off the mortgage, wedding costs, or education costs. But don’t forget such things as final expenses, like medical and funeral costs, and estate taxes if applicable. Next you should consider what your family’s living expenses are. Finally, you need to decide how many years your beneficiaries will need these living expenses At this point it should be clear to you that when you purchase life insurance, it is not something that you should put away in a desk drawer and never look at again. It is important to review your policy and your life insurance needs, at least once a year. In this way, the decision you make today will still be relevant in the future.

How much life insurance do you need? One-time costs include: Funeral expenses Medical bills Estate taxes Mortgage balance Debt payoff College fund And others If the unexpected were to happen, what unfinished business might your family face? One-time costs could include funeral expenses, medical bills, estate taxes, mortgage balance, debt payoff, a college fund, and other things.

How much life insurance do you need? Living expenses include: Rent Mortgage Groceries Prescriptions Health insurance Utilities Transportation Child care Entertainment Would your spouse’s income cover all of his or her living expenses? Living expenses include items like rent, mortgage, groceries, prescriptions, health insurance, utilities, transportation, child care, and even entertainment.

How much life insurance do you need? Years of need How many years would your spouse or family need income? Depending on your age, your family could need income for 30 or more years A needs analysis worksheet can walk you through this process Finally, for how many years would your spouse or family need income? Depending on your age, your spouse or children could potentially need income for 20 or 30 years, or more. [Your agent] [I] can walk you through a simple worksheet to estimate how much life insurance you need. But how much you choose to buy can be a matter of personal preference.

How much life insurance do you need? There are many reasons to buy more insurance than you actually need. You may want to provide extras for your family Perhaps you want to provide the capital to help your business expand Maybe you want your policy’s cash value to accumulate faster, to supplement your retirement income There are many reasons to buy more insurance than you actually need. Perhaps you’d like to provide some nice “extras” for your family. Perhaps you want to provide some capital to help your business expand. Or maybe you want your policy’s cash value to accumulate faster, so you can use it to supplement your retirement income. Whatever your goals, your agent can help find a policy – and death benefit – that meets your needs.

What you need to know about life insurance Question #4: Who are your beneficiaries? Naming your beneficiaries can be a very personal – and emotional – decision. Keep in mind a few things to reduce the risk of complications later on. Use a proper estate-planning strategy Name your beneficiaries with care Update your policy When considering whether life insurance is right for you, the fourth question to ask is: Who are your beneficiaries? Naming your beneficiaries can be a very personal – and emotional – decision. Although there is no “right” way to choose your beneficiaries, keeping a few things in mind can reduce the risk of complications down the road. These are: Use a proper estate-planning strategy Name your beneficiaries with care Update your policy

Who are your beneficiaries? Use a proper estate-planning strategy Leaving the proceeds of your life insurance policy to your estate will cause your policy to go through probate Select a specific beneficiary or beneficiaries Be sure to consult your attorney regarding your individual situation Although it may be tempting to leave the proceeds of your life insurance policy to your estate, doing so will cause your policy to go through probate. This could greatly delay the distribution of your life insurance benefits to your beneficiaries, and it could result in benefits being allocated in ways you had not expected. Instead, select a specific beneficiary (or beneficiaries). This not only makes it more likely that the death benefit will be paid immediately to your loved ones, but also that they’ll be distributed according to your wishes. Be sure to consult your attorney regarding your individual situation.

Who are your beneficiaries? Name your beneficiaries with care Naming “the wife of the insured” could result in an ex-spouse getting the proceeds Be sure to name a “contingent” or secondary beneficiary Consult your financial professional – work with an attorney who specializes in estate planning Name your beneficiaries with care. Be mindful of how you word your beneficiary designations. Naming “the wife of the insured,” for example, could result in an ex-spouse receiving the proceeds. Conversely, naming specific children may exclude those born later. Also, be sure to name a “contingent” (secondary) beneficiary, just in case you outlive your first beneficiary. To avoid unintended outcomes, consider consulting your financial professional – or working with an attorney who specializes in estate planning – before you name your beneficiaries.

Who are your beneficiaries? Update your policy Make sure that the beneficiary information stays up-to-date Consider scheduling regular policy reviews with your agent Make an annual review of your beneficiary designations part of your policy review When you first purchase a life insurance policy you take the time to make sure that beneficiary information is correct, but that is not the end of it. Life changes – i.e., birth, marriage, divorce. Be sure to update your policy if there are changes in your beneficiary designations. It’s critical to employ proper estate planning and to carefully name your beneficiaries, but it’s equally important to make sure that information stays up-to-date. One way to do this is to schedule regular life insurance policy reviews with your agent. Can you imagine purchasing another type of financial instrument, putting it in a drawer, and never looking at it again? As part of a policy review, your agent will make sure that your insurance is still adequate for your needs, and that your beneficiaries are designated according to your wishes.

What you need to know about life insurance What else can life insurance do for you? Some policies give you accumulation potential Life insurance can provide supplemental retirement income Consider the potential tax advantages What else can life insurance do for you? Some policies give you accumulation potential Life insurance can provide supplemental retirement income Finally, consider the potential tax advantages of life insurance

What else can life insurance do for you? Some policies give you accumulation potential A portion of the premium payment is applied to your policy’s cash value Potential to earn interest at the end of each policy year This interest earned can grow tax-deferred Cash value may be accessed through policy loans and withdrawals1 Some policies give you accumulation potential. Some types of life insurance apply a portion of your premium payment to your policy’s cash value, which accumulates as you make additional premium payments. You also have the potential to earn interest at the end of each policy year, and any interest you earn grows tax-deferred. After a period of time specified by the policy, you may be able access this cash value through policy loans or withdrawals.1 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.

Life insurance can provide supplemental retirement income What else can life insurance do for you? Life insurance can provide supplemental retirement income Retirement goal Gap Social Security 401(k), 403(b), IRA (Retirement plans) As the chart illustrates, many Americans will face a gap between their income and their expenses in retirement. The good news is that there are many ways to help bridge this gap between retirement income and expenses. One option may be to draw supplemental income from your life insurance policy’s cash value through policy loans and withdrawals. Savings

What else can life insurance do for you? Life insurance can provide supplemental retirement income Some people “over-fund” their policy for the best cash value accumulation potential At retirement, they draw supplemental retirement income from the policy’s cash value This is done through loans or withdrawals1 Some people “over-fund” their policy to help increase cash value accumulation potential. Then, after they retire, they draw income from their policy’s cash value through policy loans or withdrawals to supplement their retirement income.1 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.

What else can life insurance do for you? Consider the potential tax advantages Policy’s cash value grows tax-deferred You won’t pay taxes on the cash value accumulation unless you take a loan or withdrawal1 – in some cases not even then. You can access your policy’s cash value income-tax-free and penalty-free through loans and withdrawals if the policy is not a modified endowment contract (MEC)2 Death benefit is income-tax-free to your beneficiaries When thinking about cash value life insurance, consider the potential tax advantages. Your policy’s cash value can grow tax-deferred, which may help it accumulate faster. You won’t have to pay taxes on your policy’s cash value accumulation unless you take a loan or withdrawal from your policy1 – and in some cases, not even then. You can access your policy’s cash value income-tax-free and penalty-free through loans and withdrawals if the policy is not a modified endowment contract (MEC).2 A MEC could be created when trying to overfund the policy. Ask your agent for more information, if this applies to you. Your policy’s death benefit is also income-tax-free for your beneficiaries. Should they receive a death benefit down the road, they won’t have to pay income taxes on the proceeds from your policy. 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. 2 Please note that loans and withdrawals under an MEC are taxable to the extent there is a gain in the contract and, if taken prior to age 59½, a 10% federal tax penalty may apply. In any case, a gain in the contract is taxable if you surrender the policy. 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. 2 Please note that loans and withdrawals under an MEC are taxable to the extent there is a gain in the contract and, if taken prior to age 59½, a 10% federal tax penalty may apply. In any case, a gain in the contract is taxable if you surrender the policy.

What you need to know about life insurance Ask your agent to show you how life insurance can provide a death benefit – and be a valuable part of your overall financial strategy. Read the slide.