Answering Objections to EIUL Presented by Ronald W. Norvell CLU.,CHFC Vice President, Sales Development Request a copy of this presentation to

Equity Indexed U.L.

Three Equity Indexed Universal Life Products Vista Advantage/Advantage Builder – low target Vista Select/Liberty Builder – mid target Vista Elite/Vision Builder – high target No variable licensing required to sell

“Before you Say” “It’s too hard to explain to clients! ” Let’s Make it simple

Let’s Make it Simple It is like all the traditional universal life plan you have ever sold. –Cost of insurance –Monthly expenses –Portfolio growth It’s the interest rate crediting that is different. - instead of a bond rate crediting - we credit the S&P 500 index rate of return

Keeping it simple, know these Concepts! Index & Index Earnings Participation Rate Cap Rate Segments The Six Guarantees Two Loan Capabilities

What is an Index ?

The S&P 500 Tracks 500 selected companies as an indicator of the growth in our economy S&P 500 Industry weightings How various industries were represented in the S&P 500 as of Jan. 22: Financials 18.2% Information technology 18.2% Health care 14.4% Consumer discretionary 12.9% Industrials 10.9% Consumer staples 8.4% Energy 6.1% Telecommunications 5.3% Utilities 3.1% Materials 2.5% Source: Standard & Poors

Index earnings The all time S&P 500 high was March 24, 2000 at The lowest drop since that date was October 9, 2002 at 777. How much money would your client have lost? What is the S&P 500 today?

Index earnings Here is an example on how to calculate an index earnings. On Feb 6, 2004 the S&P500 closed at One year later, the S&P500 closes at / = 12.41%

Participation rate 100% What you see is what you get!! All loads were taken out at the beginning of the portfolio period, therefore you have 100% guaranteed participation. The participation is guaranteed!

Cap Rates Today are 12% & 30% 100% participation rate guaranteed A 4% to 8% minimum annual cap guaranteed based on strategy Annual caps set in advance on segment anniversary Cap managed on a portfolio basis Cap rates will primarily raise and fall according to interest yield on bonds New premium and segment renewals move together.

Equity Indexed Strategy Illustrated Rate Basis 53 year look-back of historical S&P –January December 2003 Performance results : One Year cap 12% cap 7.90% Two Year cap 30% cap 8.30% Less volatility in illustrated rate 1% change in cap only effects illustration.4% Note: The actual credited rate can be higher or lower, and will be based on actual S&P 500 index movement. Unlike the illustrated rate, the actual credited rates are likely to vary from year to year.

$ Basic Interest Strategy at 4.75% Matured Value One Year Five Years 0ne-Year Fixed Term Strategy at 4.5% Five-Year Equity Indexed Strategy at 7.9% (NET OF SALES CHARGES and COI’S) SIX-Year Equity Indexed Strategy at 8.3% Matured Value SIX Years Segments for premium

“Before You Say” “It is too risky of a product for my Client” Let’s look at the Guarantees

The Six Value-Added Guarantees Policy values protection Annual lock-in of index gains Annual Reset Guaranteed credited rate Life Protector Rider No Lapse Guarantee Rider –Even with a guaranteed conditional pay period

Key Question To Ask To A Potential Fixed UL Buyer –Are you comfortable risking the 1-2% (a potential 3- 4% vs. 2% guaranteed) in exchange for the potential to earn up to 12% each year or 30% over two years? To A Potential Variable UL Buyer –Are you willing to give up the potential gains over 12% each year or 30% every two years in order to protect your principal, lock-in the gains every 12 or 24 months, and secure a 2% guarantee?

Two types of Loans Zero-Net cost loan (Preferred loan) Variable loan - This loan is from the company using your policy as collateral. Your policy earns at the index rate, while the company charges a variable loan.

“Before you say” “It doesn't fit the market I’m in.” Let’s look at the markets these products are being used in

Four Major Markets Accumulation plans 1.Provides living benefits 2. Retirement plans 3. College funding Guaranteed Death Benefit and Premium Sales Single Premium Sales Rescue sales

Seven Sales Ideas Single pay, better than an annuity? Start Cheap, Educate, Retire, leave a Legacy Be Your Own Banker!! Take it to the Max! A Grandparent’s Choice 1035 Rescue of a dying policy with a loan. Various Financial Alternatives

Single Pay, better than an Annuity? Situation –62 year old female, preferred non tobacco –Wants to convert a jumbo CD of $100,000 to an annuity. –However would consider a permanent, guaranteed death benefit until age 100 to pass on to her heirs. –May want to withdraw funds in the future

Guaranteed Death Benefit

Automatic Death Benefit Extension To 115.

Guaranteed Rate of Return

IRR stays high on a pre-tax basis

Guaranteed D.B. Life Protector Rider 95% of cash value taken out

Start Cheap, Educate and Retire, and leave a Legacy 30 yr old man with a 3 yr old son Needs $400,000 of life protection Wants to have money 15 years from now for college Want to have a retirement plan.

Low cost beginning $22,000 for 4 years No tax outlay

$65,000 tax free fo 20 years.

Total input Total outtake Death benefit In his nineties

Be your Own Banker There are several methods to achieve this goal This example shows how a 35yr. old man can buy two luxury cars, in his life time, pay himself back, and increases his retirement. You can design the same, with an understanding on how to create repayments, which most of your competition can’t.

Two car loans

$115,000 tax Free for 20 yrs.

Take it to the Max! Many sales scenarios look at minimum premium Let’s look at the benefits of taking that minimum premium and funding on a maximum basis Let’s look at a Female Age 35, $200,000 death benefit first paying minimum, then paying maximum Review Internal Rate of Return on the Premium Difference

Initial Outlay $1,289

Age 65 Cash Value $82,590

Initial Outlay $2,741

Age 65 Cash Value $285,445

Annual PremiumAge 65 Cash Value Maximum: $ 2,741 $ 285,445 Minimum: $1,290 $ 82,950 Differential: $ 1,452 $ 202,495 Let’s Look at the Numbers Internal Rate of Return: 9.1%

Taking it to the Max! Receive the entire 9.1% in a lump-sum, ($202,507) tax free! WOW!

A Grandparent’s Choice Grandparents are always looking to provide their grandchildren with unique gifts Why not insure the mother after birth with the grandparents annual gift exclusion. Provides protection for the child and a wonderful college fund.

A 1035 rescue of a dying policy with a loan We have a 60 yr. old male who has a $1,000,000 policy that has $200,000 of cash value, but also has a $100,000 loan against it. He would like to not pay any more premium, but is worried about the policy lapsing and owing tax. Could we help him with our new LPR?

A 1035 exchange for $1,000,000 of original coverage The cash value in the exchange is $200,000 with a loan of $100,000 The D.B. begins to decline under the weight of the loan and mounting interest

The policy will lapse under the current assumptions at age 85

However, by using the new LPR, we can rescue this 1035 exchange and guarantee the policy will never lapse!