1. Life Insurance in Retirement Planning (LIRP)
Protection and Potential Income
[Life Insurance Sales Presentation]
PRESENTED BY:
[Joe Sample,][Designations per field stationery guidelines]
[Company Approved Title]
[FirmName]
[The Prudential Insurance Company of America]
[1234 Main Street, Suite 1, Floor 10]
[Anywhere], [ST] [12345]
[in required states] [<ST> Insurance License Number < >]
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NOTE TO LICENSED FINANCIAL PROFESSIONAL: The following paragraphs must be provided to all attendees. They must be delivered in your oral presentation.
My name is [Your name]. Financial Professional: I am a [approved title] with The Prudential Insurance Company of America.
This presentation is designed to help you understand a concept that we call “Life Insurance in Retirement Planning” and how insurance and financial products and services that I provide can be used to help supplement retirement income.
[FINANCIAL PLANNER: I am a Financial Planner. I offer financial planning and investment advisory services as an investor advisor representative of Prudential Financial Planning Services, a division of Pruco Securities, LLC.]
If presenting in TX: Prudential professionals are licensed agents who are appointed by The Prudential Insurance Company of America and its subsidiaries, including Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, to sell insurance and financial products.
The material presented in this sales presentation will be general in nature and should not be relied upon as the basis for action or inaction by you. Prudential Financial, its affiliates, and their sales professionals do not render tax or legal advice. Therefore, you should always consult with your own attorney, accountant, tax advisor, or other advisor for advice regarding your particular situation.
© 2017 Prudential Financial, Inc. and its related entities.
Ed. 09/

2. Important Information
[If a Financial Advisor
Offering investment advisory services through Pruco Securities, LLC (Pruco), doing business as Prudential Financial Planning Services (PFPS), pursuant to separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies ]
[If a Prudential Financial Planner
Offering financial planning and investment advisory services through Pruco Securities, LLC (Pruco), doing business as Prudential Financial Planning Services (PFPS), pursuant to separate client agreement. Offering insurance and securities products and services as a registered representative of
Pruco, and an agent of issuing insurance companies ]
[For DBAs:
[DBA agent’s name] offers securities as a registered representative of Pruco Securities, LLC, a Prudential Financial company. [DBA firm (if identified)] is an independent organization and is not an affiliate of Prudential Financial. [DBA agent’s name] sells life insurance products of Prudential Financial’s affiliated life insurance companies in addition to products of nonaffiliated insurance companies.]
[For use with an independent insurance producer who has a selling agreement with Prudential Financial*:
<XYZ> is an independent insurance producer. <XYZ> sells life insurance products of Prudential Financial’s affiliated life insurance companies in addition to other life insurance companies’ products. <XYZ> is authorized to sell and service certain life insurance products of Prudential Financial’s companies as well as use this material.]
Note: The bracketed text “financial planning and” is only required for financial planners or planners who choose to use the financial advisors title.
Financial advisors and IARs should not include “financial planning and.”
[*Important Note: <XYZ> should represent the individual or firm with whom we have a selling agreement.]

3. Important Information
[For use with an independent organization who has a selling agreement with Prudential Financial*:
<XYZ> is an independent organization and is not an affiliate of Prudential Financial. <XYZ> sells life insurance products of Prudential Financial’s affiliated life insurance companies in addition to other life insurance companies’ products. <XYZ> is authorized to sell and service certain life insurance products of Prudential Financial’s companies as well as use this material.]
[For use with an independent insurance producer who markets through an independent organization that has a selling agreement with Prudential Financial*:
<XYZ> is an independent organization and is not an affiliate of Prudential Financial. <XYZ>, through its insurance producers, sells life insurance products of Prudential Financial’s affiliated life insurance companies in addition to other life insurance companies’ products. <XYZ> is authorized to sell and service certain life insurance products of Prudential Financial’s companies as well as use this material.]
[*Important Note: <XYZ> should represent the individual or firm with whom we have a selling agreement.]

4. The Many Benefits of Life Insurance
Life insurance is a flexible tool that can help in many ways.
For your loved ones it can:
Maintain their current lifestyle
Pay off a mortgage
Defray state and federal estate taxes
Supplement your retirement income
Life insurance is a flexible tool that can protect your family, but it can also do much more, as you’ll learn during this session.
As you’re probably aware, life insurance provides a death benefit that can help your loved ones meet their obligations after your death. This can help them with the following:
Maintain their current lifestyle
Pay off a mortgage, and/or
Help offset state and federal taxes that may be due on your estate.
For you:
It can supplement your retirement income.
For you it may:

5. The Many Benefits of Life Insurance
While life insurance can provide for your family and/or business it can also be a source of supplemental income if your needs change.
But you may be thinking, “So how can life insurance help me in retirement?” Once you are retired, you may have less of a need for death benefit protection and a greater need for tax-advantaged retirement income.
Well, there are many benefits to owning life insurance. For example, as previously noted, life insurance can provide for your family in the event of your premature death and it can also facilitate a business continuation strategy. However, assuming your needs change in retirement, it can also be a source of supplemental income if properly structured.
Let’s take a look at three ways life insurance can help you.

6. High-Income Earners Retirement income sources:
Married > $119,000 income
Single > $72,000 income
Under age 55 and need death benefit protection
Additional monthly income to allocate towards savings
Desire for tax “diversification”
Retirement income sources:
Maxed-out contributions to a qualified retirement plan
Personal savings
Social Security
Let’s look at a scenario.
If you are like many high-income earners, you make an effort to maximize your retirement plan contributions and also save in other ways. Most likely, you will also rely on Social Security to partially supplement your retirement income.
But even if you do all of this, can you be certain you’ll have enough income to maintain your desired standard of living in retirement?
And ask yourself this: How much of your retirement income will you lose to taxes?
Ask yourself:
Will that be enough to maintain your standard of living?
How much will be lost to income tax?

7. Life Insurance in Retirement Planning
Can help in three distinct ways:
Income Tax-Free Death Benefit
Tax-Deferred Cash Value
Income Tax-Advantaged Distributions
A life insurance policy can be an important part of your financial strategy during your retirement years because it offers you the chance to put a portion of your assets in a product that features a number of tax-advantaged benefits. We call that our Life Insurance in Retirement Planning strategy.
Life insurance with tax-advantaged benefits can help you in three distinct ways:
A life insurance policy’s death benefit offers a generally income tax-free death benefit, per Internal Revenue Code Section 101(a).
Many life insurance policies also offer the potential to build tax-deferred cash values.
This cash value can then be taken from the policy through withdrawals and tax-advantaged loans. In general, loans are not currently taxable and withdrawals are taxable only when you take out more money than you’ve paid into the policy in premiums. Of course, loans and withdrawals may impact the ultimate death benefit payable to your beneficiaries.
Death benefit proceeds are generally received federal income tax-free as provided in Internal Revenue Code Section 101(a). TAX-ADVANTAGED ACCESS TO CASH VALUE: You can access your cash value through loans and withdrawals. In general, loans are not currently taxable and withdrawals are taxable only when you take out more money than you’ve paid into the policy in premiums. If the policy terminated prior to death of the insured the loan is immediately taxable to the extent of gain. Different tax rules apply to Modified Endowment Contracts. Loans and withdrawals may impact the ultimate death benefit payable to your beneficiaries.

8. Purchasing Universal Life Insurance
How Most Consumers Purchase Universal Life Insurance
More: Death Benefit
Less: Cash Value
Designing a universal life insurance policy may involve a trade-off between death benefit and cash value potential.
Generally speaking, when you design a UL, IUL, or VUL policy with more death benefit it will have less cash value growth potential.
The reason for this is that the monthly cost of insurance charges deducted from the cash value are calculated based on the “net amount at risk,” which is the difference between the account value and the death benefit.
With more death benefit, the cost of insurance charges will generally be higher, causing larger amounts to be deducted from the cash value over time, resulting in less growth potential.
Someone purchasing a policy with this design generally may be looking for as much death benefit protection as possible for the least out-of-pocket cost to them and may not be concerned about building significant amounts of cash value.
The graphic shown is hypothetical for illustrative and educational purposes only to describe the impact of possible premium and death benefit designs on cash value potential. It does not represent the cost or performance of any specific life insurance product. 8

9. Purchasing Universal Life Insurance
How the LIRP Strategy Works
Access Via:
More: Cash Value
Policy Loans
Less: Death Benefit
Conversely, if you minimize the death benefit for the same premium, or pay the maximum premium for the same death benefit, a couple of things occur: First, there is less “net amount at risk,” resulting in lower COI charges relative to premium amounts paid, meaning that more of the premium dollars contributed are allocated to the cash value earning a fixed or variable rate of return.
Both of these effects may result in more cash value growth potential over time, in addition to having valuable death benefit protection that can be accessed potentially income tax-free for lifetime needs, such as supplementing retirement income or whatever cash need may exist.
You may be wondering, how is it possible to take income from the policy income tax-free?
(click animation)…
Life insurance distributions are generally taxed on a First In First Out (FIFO) basis as long as the policy is not a Modified Endowment Contract (MEC). What this means is that distributions are first considered an income tax-free return of basis, with any gains “withdrawn” being taxable.
In order to get the gains out income tax-free, the policyowner must take a “loan” against the policy, which can be repaid out of the death benefit at death. As long as the policy remains in force until death, and the policy never becomes classified as a MEC, policy loans remain income tax-free, hence the potentially income tax-free nature of the policy distributions as long as they are managed properly. If the policy were to become a MEC, distributions would be subject to federal income taxation to the extent of gain in the policy.
Withdrawals
The graphic shown is hypothetical for illustrative and educational purposes only to describe the impact of possible premium and death benefit designs on cash value potential. It does not represent the cost or performance of any specific life insurance product. 9

10. Accumulated cash value grows tax deferred If you die before you retire
LIRP—The Mechanics
Pay premiums
Cover cost of policy
Accumulated cash value grows tax deferred
Excess over policy charges creates cash value
If you die before you retire
Death benefit for your beneficiaries
When you retire, access cash value for retirement income
Here are the steps of the Life Insurance in Retirement Planning strategy.
You pay the premiums to keep the policy in force. Part of these premiums will cover the costs associated with the policy, and part will go toward an account that creates cash value.
Once you reach retirement (although you don’t have to wait until then), you can access the cash value through withdrawals and loans (typically in that order* and free from federal income tax) to provide you with supplemental income when you need it. Taking loans and withdrawals will reduce the cash value amount as well as the death benefit.
At your death, any remaining death benefit amount will be paid to your beneficiaries.
Let’s take a look at some examples.
*When leveraging a life insurance policy’s cash value, withdrawals are generally taken first. This is because distributions from a life insurance policy are first considered a return of cost basis (premium). Once all of the cost basis has been recovered, gain will be the source of any continued distributions which would cause income taxation. Therefore at the point of gain the Life Insurance in Retirement Planning strategy calls for a switch over to loans in order to avoid income taxation. Loan interest will accumulate as a result.
Withdrawals
Tax-advantaged loans

11. Life Insurance in Retirement Planning
With this strategy, you can:
Access accumulated cash values.1
Add riders for greater protection and flexibility.
Possibly delay taking Social Security benefits— potentially increasing your monthly payout.
With our Life Insurance in Retirement Planning strategy, you can:
Access any accumulated cash value that has built up in your policy, for any reason, including retirement income.
Add riders for greater protection and flexibility.
Possibly delay taking Social Security benefits until later in life—potentially increasing your monthly payout.
Avoid tapping into your tax-deferred assets until you are in a lower tax bracket.
Note that accessing a life insurance policy’s cash value via either a withdrawal and/or a loan will reduce the death benefit available to your beneficiaries.
1Accessing a life insurance policy’s cash value will reduce the amount of death benefit available to your beneficiaries.

12. [Example using a Variable Universal Life Policy
8% hypothetical rate of return (7.36% net)
Age
Annual Premium for 20 Years
Annual Distributions Ages 65 – 84
Net Cash Value
Net Death Benefit 45
$50,000
$14,963
$2,025,162 54
$616,207
$2,602,025 64
$1,961,417
$4,138,589
Total
$1,000,000 65
$165,768
$1,931,718
$3,979,339 74
$1,520,474
$2,901,601 84
$465,789
$1,412,879
$3,315,360
Here is a hypothetical example using a Variable Universal Life policy. Assume that you pay $50,000 per year in premium for 20 years, then at age 65 you start taking withdrawals and loans from the policy. Hypothetically, you would be able to take annual distributions of approximately $165,768 for 20 years income tax-free. And you would have had substantial death benefit protection prior to retirement.
Of course, this is to show you how a VUL policy could work in this strategy. Your actual results will vary from these based on your individual circumstances. A personalized life insurance illustration that includes assumed rates of return you select and includes the impact of 0% investment performance and maximum guaranteed charges, as demonstrated on the next slide, should be reviewed before purchasing a life insurance policy in this strategy.
Female, age 45, preferred best, minimum non-MEC face amount, option B switch to A in year 21, solve to endow at age 121.
This information is hypothetical and not representative of any particular product.
The above values assume non-guaranteed policy charges. You should obtain a personalized illustration, which includes the impact of a 0% investment performance and maximum guaranteed charges before purchasing a variable life insurance product. The illustration can also be generated based on a return assumption you select (subject to a 12% maximum). This is not a complete illustration. The issuing company may have the right to contest the policy for misrepresentation or apply a suicide clause.
Hypothetical example, for illustrative purposes only. Actual results will vary.]

13. [Example using a Variable Universal Life Policy
0% hypothetical rate of return (-.99% net) and Maximum Charges
Age
Annual Premium for 20 Years
Annual Distributions Ages 65 – 85
Net Cash Value
Net Death Benefit 45
$50,000
$6,707
$2,016,907 49
$141,753
$2,151,953 54
$314,227
$2,300,046 59
$437,053
$2,418,569 64
$519,718
$2,501,234 65
$165,768
$318,504
$2,335,466 67
Lapse
Total
$1,000,000
$3,315,360
Here is the performance based on guaranteed charges and a 0% gross rate of return.
Values above are based on the previous slide’s non-guaranteed policy assumptions.
This information is hypothetical and not representative of any particular product.
Hypothetical example, for illustrative purposes only. Actual results will vary.]

14. [Example using a Variable Universal Life Policy
Cost-Benefit Analysis:
Total premiums paid ages by age 65
$1,000,000
Total disbursements ages 65 to 84
$3,315,360
Net death benefit at age 84
$1,412,879
Total family benefits at age 84
$3,728,239
On this slide is a cost-benefit summary.
(read benefits)
Values above are based on the previous slide’s assumptions.
[Some sub-accounts or underlying investment options may not be available through all broker-dealers. Please contact your financial professional for more information.]
Hypothetical example, for illustrative purposes only. Actual results will vary.]

15. [Example using an Index UL Product
6.29% hypothetical illustrated interest rate
Age
Annual Premium for 20 Years
Annual Distributions Ages 65 – 84
Net Cash Value
Net Death Benefit 45
50,000
8,728
1,833,574 54
527,892
2,332,524 64
1,584,334
3,375,661
Total
1,000,000 65
118,032
1,558,284
3,258,747 74
1,225,469
2,192,023 84
517,487
1,225,508
2,360,640
This client needs more death benefit protection, with the opportunity to accumulate cash value. Let’s now assume that this hypothetical client is more risk averse and wants an element of downside protection but with decent upside potential as it pertains to cash value accumulation. She is also comfortable having upside limits in exchange for the downside protection, therefore making her a prospect for IUL.
Here is a hypothetical example using an Index UL product. Assuming the owner pays $50,000 per year for 20 years then, to coincide with her planned retirement age, waits until age 65 to start taking withdrawals and loans from the policy, the owner could take annual distributions equal to $118,032 for 20 years income tax-free. And she has substantial death benefit protection prior to retirement.
It is important to note that if the life insurance does not perform under the assumed assumptions, the results could be less favorable. For example, based on guaranteed charges and guaranteed crediting rates (0% for the index account), the policy illustrated above would lapse at age 68 (year 24).
Female, age 45, preferred best, minimum non-MEC face amount, option B switch to A in year 21, solve for distributions to endow at age 121.
This information is hypothetical and not representative of any particular product. The above values assume non-guaranteed policy charges. This is not a complete policy illustration. You should obtain a personalized illustration that will show the impact of guaranteed interest rates and guaranteed charges before purchasing a universal life insurance policy. Based on guaranteed charges and guaranteed crediting rates (0% for the index account), the policy as illustrated above would lapse at age 68 (year 24).
Hypothetical example, for illustrative purposes only. Actual results will vary.]

16. [Example using an Index UL Product
Cost-Benefit Analysis:
Total premiums paid
ages by age 65
1,000,000
Total disbursements
ages 65 to 84
2,360,640
Net death benefit
at age 84
1,225,508
Total benefits assuming death at age 84
2,586,148
On this slide is a cost-benefit summary.
(read benefits)
Values above are based on the prior slide’s assumptions.
Hypothetical example, for illustrative purposes only. Actual results will vary.]

17. Important Considerations
Before moving forward with this strategy:
You should have sufficient liquid assets to support income and expenses before implementing this strategy.
Only use assets that will not be needed for living expenses during your lifetime.
If your financial or legacy strategy situation changes and you can no longer make premium payments, your desired results may not be achieved.
Your life insurance death benefit may terminate.
Consult your tax and legal advisors.
As with most financial strategies, there are a number of important considerations that may require attention before moving forward.
You should have sufficient liquid assets to support your current and future expenses before implementing this life insurance strategy. Equity in a home should not be considered a liquid asset.
This concept is only intended to be used with assets that will not be needed for living expenses for the lifetime of the insured. You will need to consider and estimate such needs as well as additional expenses. If you live longer than expected or these assets are exhausted, additional assets may be needed to pay the premiums to keep your policy in effect.
If your financial or legacy situation changes and you need to use assets or income for current or future income needs and can no longer make premium payments, your life insurance death benefit may terminate and your desired results may not be achieved. Loans taken will become taxable upon policy surrender or lapse.
Consult your tax and legal advisors when considering this strategy. 17

18. Any Questions? Q A
&
Does anyone have any questions about how the Life Insurance in Retirement Planning concept works? 18

19. Important Information
This material has been prepared by The Prudential Insurance Company of America. It is designed to provide general information about the subject matter covered. It should be used with the understanding that Prudential is not rendering legal, accounting, or tax advice. Such services should be provided by your own advisors.
Life insurance is issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (except in NY and/or NJ), and Pruco Life Insurance Company of New Jersey (in NY and/or NJ). All are Prudential Financial companies located in Newark, NJ.
Each is solely responsible for its own financial condition and contractual obligations. [Variable universal life insurance policies are offered through Pruco Securities LLC (member SIPC), Newark, NJ.
Our policies contain exclusions, limitations, reductions in benefits, and terms for keeping them in force. A financial professional can provide you with costs and complete details.
You should consider the investment objectives, risks, and charges and expenses carefully before investing in the contract, and/or underlying portfolios. The prospectus and, if available, the summary prospectus contain this information as well as other important information. A copy of the prospectus(es) may be obtained from prudential.com. Please read the prospectus carefully before investing.
It is possible to lose money by investing in securities.

20. Important Information
Only insert bracketed language above when this presentation will include the bracketed VUL hypothetical case example slides.
Investment and Insurance Products:
Not Insured by FDIC, NCUSIF, or Any Federal Government Agency.
May Lose Value. Not a Deposit of or Guaranteed by Any Bank,
Credit Union, Bank Affiliate, or Credit Union Affiliate.
© 2017 Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities.