Welcome to the Estate Planning Council of Greater Miami Due Diligence in Recommending the Correct Life Insurance Policy Presented by Michael W. Halloran, AEP, CLU ®, ChFC ®, CFP ® November 11, 2009

Establishing the Need for Coverage

Need Temporary need – term insurance Temporary need – term insurance Permanent – Continuing need Permanent – Continuing need

Term Coverage Annual Renewable Annual Renewable Year Level Year Level Renewable Renewable Convertible Convertible Waiver of Premium Waiver of Premium

Permanent or Continuing Need Whole Life Whole Life –Participating  Portfolio  New Money Variable Life Variable Life –Mortality and Expense Cost Universal Life Universal Life –No guarantees –Secondary guarantees  Mortality Table  Company Financial Ratings  Guarantees and Problems  Purpose of Cash Variable Universal Life Variable Universal Life –Investment Risk

Amount of Coverage Amount of Coverage  Estate  Business  Charitable

Understanding the Policy Illustration – –Pro forma – –Product Illustration   NAIC Illustration   Product enhancements (non-guaranteed)   Current experience   Past history   Current scale vs. portfolio method   Third party references

Professional Liability and Disclosure  Who are you liable to? –Policyowner –Insured –Beneficiaries  What happens if your recommendations are wrong?  How can you limit your liability?

Rating Agencies  A. M. Best  Fitch  Standard & Poor’s  Moody’s

Standard & Poor’s A.M. Best Superior AAA 13 AAApi 0 Exceptional Aaa 13 Highest AAA 9 Superior A++ 28 A+ 82 Excellent AA+ 11 AA 50 AApi 2 AA- 32 Excellent Aa1 13 Aa2 20 Aa3 37 Very High AA+ 27 AA 40 AA- 19 Excellent A 49 A- 34 Good A+ 8 A 14 Api 17 A- 10 Good A1 9 A2 8 A3 8 High A+ 15 A 9 A- 4 Very Good B++ 4 B+ 8 Adequate BBB+ 7 BBB 0 BBBpi 2 BBB- 1 Adequate Baa1 5 Baa2 0 Baa3 2 Adequate BBB+ 1 BBB 1 BBB- 1 Vulnerable/Fair B 0 B- 0 Vulnerable BB+ to R 5 Not Rated 56 Weak Ba1 to C 1 Not Rated 116 Non-investment grade BB+ to CCC- 0 Not Rated 97 Vulnerable C++ to F 0 Not Rated 18

Rates  Mortality  Expenses charges  Interest –Investing long –Investing short

Thank You! Questions? Questions?