FOR GENERAL AGENT USE ONLY1 Capital Maximization Strategy (CMS) for Premium Financing Manulife Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation. Copyright The Manufacturers Life Insurance Company (U.S.A.). All rights reserved. MLI0_______. Expires 12/31/2002. THIS MATERIAL MAY NOT BE COPIED OR USED WITH THE PUBLIC.

FOR GENERAL AGENT USE ONLY2 CMS Program Summary Loan to purchase life insurance Non-amortizing loan (interest only) Leverages insurance assets Independent lender (A.I. Credit) with insurance expertise 10% of commission to CMS

FOR GENERAL AGENT USE ONLY3 CMS Client High net-worth with insurance needs Liquid assets Ability to pay for premiums Understands leveraging concepts Has alternative uses of cash

FOR GENERAL AGENT USE ONLY4 Standard CMS Loan Fund current insurance premium obligation Balloon structure/advanced interest Floating rate/fixed spread Indexed 1 year LIBOR plus spread – (175 to 300 basis points)

FOR GENERAL AGENT USE ONLY5 Standard CMS Loan Generally, no fees, points, or prepayment penalties Requires annual re-qualification and review of collateral Secured lending Collateral decided on a case by case basis A

FOR GENERAL AGENT USE ONLY6 CMS Loan Collateral In most instances, the insurance asset will secure the insurance loan over time Collateral types: –Policy cash surrender value –Policy death benefit –Liquid collateral Cash/cash equivalents Marketable securities (50% discount) Letters of credit Personal guaranty may be required

FOR GENERAL AGENT USE ONLY7 Interest Options Interest in advance Interest in arrears Deferred interest Interest rates and collateral requirements may vary

FOR GENERAL AGENT USE ONLY8 Capital Maximization Strategy Trust is the policy owner A.I. Credit Insured/Grantor of Trust Manulife Financial Life Insurance Policy Grantor’s Heirs Irrevocable Life Insurance Trust (ILIT)* Grantor makes gifts to trust to pay interest. Heirs receive trust proceeds. Trust receives death benefit free from estate and income taxes. Trust pays interest to A.I. Credit. A.I. Credit makes premium loan. *Trust should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws, including generation skipping tax. Failure to do so could result in adverse treatment of trust proceeds.

FOR GENERAL AGENT USE ONLY9 Limitations Borrowers/person of wealth should have minimum $5 million net worth, $100,000 annual premium Non-variable products Borrower must be an entity (Trust, Corporation or Partnership) Individuals can only borrow in CA or NY Prudential is the only approved wirehouse

FOR GENERAL AGENT USE ONLY10 Loan Submission Package to A.I. Credit Completed and signed credit application Signed insurance policy illustrations Estate plan flow chart Financial statements (personal & entity) Tax returns for last 3 years Brokerage and/or statements Organizational documents of borrower – trust agreement, partnership agreement, operating agreement etc. Split dollar agreement (if applicable)

FOR GENERAL AGENT USE ONLY11 Credit Review Requirements Borrower - Individual 1) Personal Financial Statements 3 consecutive years Signed & Dated Dated no more than 6 months old Brokerage and Bank Statements verifying personal financial statements 2) Personal Tax Returns 3 consecutive years Signed & Dated 3) Credit Report Debt on credit report should match liabilities on financial statement Borrower – Trust 1) Trust Financial Statements 3 consecutive years Signed & Dated 2) Trust Tax Returns 3 consecutive years Signed & Dated 3) See individual for guarantors on the loan Borrower – Corporation 1) Corporate Financial Statements 3 consecutive years Interim Statements if 6 or more months from Co.’s year end 2) Corporate Tax Returns 3 consecutive years Signed & Dated 3) Dun & Bradstreet Report 4) See individual for guarantors on the loan

FOR GENERAL AGENT USE ONLY12 A.I. Credit Corp. A member of AIG financial services group Largest premium finance company in North America Offices in N.Y.C. and L.A.

FOR GENERAL AGENT USE ONLY13 An Example Thomas and Erin Reagan

FOR GENERAL AGENT USE ONLY14 The Facts Thomas and Erin, both age 68, NSP Combined estate of $30 million Owners of a National Restaurant Chain, T.H. Reagan Need to get financial house in order Have liquid assets but not enough to cover annual premium on life insurance policy

FOR GENERAL AGENT USE ONLY15 The Solution: Premium Financing Establish an Irrevocable Life Insurance Trust (ILIT) The trust will take out a loan from A.I. Credit to fund a $10 million Survivorship UL life insurance policy. Trust must be drafted by an attorney familiar with such matters in order to take into account the income and estate tax laws (including generation-skipping tax.) Failure to do so could result in adverse tax treatment of trust proceeds. Survivorship UL is issued by The Manufacturers Life Insurance Company (U.S.A.), a stock company which is a member of the Manulife Financial group of companies, wholly owned subsidiaries of Manulife Financial Corporation. All product features may not be available or may vary by state. Product availability is subject to state approval.

FOR GENERAL AGENT USE ONLY16 Here is what it looks like Trust will take out a loan for annual premiums of $221,697 for a 15 pay on a Survivorship UL policy. Thomas and Erin will be paying interest in advance each year (4.5% interest rate). In Year 16, the loan principal will be paid off from a side fund.

FOR GENERAL AGENT USE ONLY17 The Numbers Yr Insurance Premium Cumulative Loan Loan Interest at 4.5% Side 10% Growth Death Benefit & Side Fund Non- Financed Death Benefit 1$221,697 $9,976 $232,893$10,011,196$10M 5$221,697$1,108,485 $49,882$1,300,560$10, 192,075$10M 10$221,697$2,216,970 $99,764$3,060,137$10,843,167$10M 15$221,697$3,325,455$149,645$5,558,967$12,233,512$10M 16$0 ($3,325,455)$12,456,863$10M

FOR GENERAL AGENT USE ONLY18 Summary By using premium financing, Thomas and Erin were able to obtain the life insurance protection they needed, without having to liquidate a lot of assets.

FOR GENERAL AGENT USE ONLY19 For more information on the CMS program, please contact the Advanced Markets Group at (888) , option 3.

FOR GENERAL AGENT USE ONLY20 Capital Maximization Strategy (CMS) for Premium Financing Manulife Financial and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation. This material is for informational purposes only. For more detailed information please contact your advisor. Manulife Financial or any of its agents, employees, or registered representatives do not give legal, tax, investment, or accounting advice. The information given here is merely a summary of our understanding of the current laws and regulations. Prospective purchasers should consult their tax advisor. The End