1. Plan comparison with accessing cash
Simplifying the planning and comparison process
Individual and corporate plan comparison tools for life insurance have been updated to include an accessing cash value component. This new feature gives you the option to easily promote life insurance products and strategies that best suit client needs. However, it is optional. You may still use the tool to simply compare up to four term or permanent life insurance policies.
How does this benefit you?
We’re simplifying the planning and comparison process.
This tool can help you navigate the sales process from start to finish – should you choose – [CLICK] as it connects the client’s needs to a life insurance product, possible cash-accessing methods and then ultimately a strategy and report for the client.
The tool also offers the advantage of being able to compare current products with new products once you have access to the new illustration software.
This presentation is for wholesaler use only and is not intended to be used with clients.

2. Agenda New tool – helps the sales process Identifying client needs
Comparing products
Accessing cash value
Strategies
Identifying client needs
Before we dive in, let’s break down today’s presentation.
Agenda
Identifying client needs
Comparing products
Accessing cash value
Strategies
Strategies
Comparing products
Accessing cash value

3. Identifying Client needs
What are your clients looking for?
As advisors, it’s our job to match client needs with the right product and strategy solution. Let’s begin with the first part of the sales process and first step in using the tool. The tool can be used in the order we’re going to present today – or in an order you or your client prefers.
Identifying Client needs

4. Clients’ needs Affluent clients Mid-market clients Business owners
May be concerned with a product’s rate of return
Mid-market clients
May be concerned with premium payments
Business owners
May be concerned with preserving their business and leaving heirs with a large death benefit
Depending on what you’ve learned from the client during the fact find process, you’ll have a better idea for the right options a client should consider. You’ll also know what considerations will be most relevant to the client.
Each client and their situation is unique, but generally:
Affluent clients may be concerned with a product’s rate of return
Mid-market clients may be concerned with premium payments
Business owners may be concerned with preserving their business and leaving heirs with a large death benefit
The Plan comparison with accessing cash tool will help you offer the right product for each client.

5. Comparing term and/or permanent life insurance policies
Once you understand what the client is looking for, you can use the tool to compare up to four term and/or permanent life insurance policies – providing you with a snapshot of what each product offers and how much they cost.
Product comparisons

6. Product comparisons Compare up to four life insurance policies
The tool can show you:
Projected cash surrender value and death benefit
Cost per dollar of insurance coverage and internal rate of return*
The initial premium costs and cumulative premiums between different products
The capital dividend account and adjusted cost basis at a future point in time (corporate only)
*Cumulate rate that equates the growth in assets (cash value/death benefit) to the premium paid.
The tool can show you:
Projected cash surrender value and death benefit
Cost per dollar and internal rate of return
The initial premium costs and cumulative premiums between different products
The capital dividend account and adjusted cost basis at a future point in time (corporate version only)
By breaking each product down to a side-by-side comparison, you can more easily compare and recommend products to your clients depending on their insurance need(s).

7. Benefits of using the tool
Helps you perform an objective assessment of insurance planning
Helps you tailor the conversation to the client’s current situation
Helps clients make decisions more quickly about what they want, which can accelerate the buying process
Due diligence
Helps you retain clients and build client relationships
By using the product comparison feature, you can:
Perform an objective assessment of insurance planning scenarios based on clients’ needs
Tailor the conversation to the client’s current situation
Help clients make decisions more quickly about what they want, which helps accelerate the buying process
Reinforce to the client that you have done your due diligence by comparing all of the relevant product options
Help retain clients and build client relationships

8. Partial surrenders, policy loans and collateral loans
Once you know which product fits the needs of your client, you can also compare accessing strategies.
Clients with permanent life insurance may not intend to withdraw the accumulated cash value within the policy today, but you may present the option as part of a client solution down the road. Some ways policyowners could use this money include business expansion, retirement, education or travel. 
Accessing cash value

9. Accessing cash value For more information about accessing cash value in a life insurance policy, refer to Accessing the cash values in a life insurance policy advisor guide (form )
Partial surrender/withdrawal
Contractually guaranteed with quick access
Impacts cash value and death benefit
Policy loan
Doesn’t impact cash value and capital dividend account credit
Collateral loan*
Requires agreement between the policyowner(s) and lender
Provides ability to maximize amount of accessed cash value
Should only be considered by sophisticated investors with high risk tolerance
Should have access to professional advice and lawyer
*Under Quebec law, the policy’s taken as security by way of a movable hypothec.
Cash value can grow tax-advantaged within a life insurance policy up to the maximum limit set by the terms of the policy and the current tax rules.
The policyowner can most commonly access the cash values within the policy in three ways:
Partial withdrawal
Policy loan
Collateral loan (movable hypothec in Quebec)
Accessing cash may result in taxable income and may reduce the death benefit.
When considering who may be the best fit for each accessing strategy, consider the following:
Consider this for clients who may:
Be debt averse
No longer need full death benefit
Require options in addition to bank loans
Collateral loan
Consider this for risk-tolerant clients who may:
Be high-net-worth with good credit rating
These methods and considerations are summarized in the tool in a document for advisors.

10. Accessing cash value
Compare partial surrender, policy loan and collateral loan to show:
Accessing period
Gross amount accessed
Net amount accessed
Cumulative tax payable
Net death benefit
Internal rate of return at death
Equivalent investment rate of return
This information has been added to the Plan comparison tools to show the numbers and what may look better for your client.
Now you can see just how much a client is taking out of their policy, for how long and how much it’s costing them, before and after tax. The report also indicates how much death benefit would remain.

11. Accessing methods – partial surrender
For visual clients, or clients wanting to know a little more about how an accessing method works, we’re also including diagrams that show how a policyowner may be able to access cash and where and on what they’re being taxed. These pictures are meant to walk the client through the process from buying a policy to accessing cash value, to what happens with the death benefit.
Again, what’s right for a client will depend on their needs and risk tolerance.
An individually owned policy’s cash value can be accessed by three different methods: partial surrender, policy loan and collateral loan.
Here we are showing partial surrender.

12. Accessing methods – policy loan
An individually owned policy’s cash value can be accessed by three different methods: partial surrender, policy loan and collateral loan.
Here we are showing policy loan.

13. Accessing methods – collateral loan
An individually owned policy’s cash value can be accessed by three different methods: partial surrender, policy loan and collateral loan.
Here we are showing collateral loan.

14. Related strategies Speaking to the client
When speaking to the product comparison and accessing reports, they are simplified and do not provide any client positioning. They’re not meant to be given to clients as a stand alone. The reports provide you with background information to best meet client needs.
The tool does provide a list of related strategies intended to be shared with clients, like Estate transfer and Asset efficiency. From the product-comparison page you can export a plan into one of these strategies for a full story.
Related strategies

15. Related strategies Individual Corporate Partial surrender
Estate transfer and cash withdrawals
Corporate estate transfer and cash withdrawals
Policy loan
Retirement income enhancer
Corporate collateral loan
Accessing your policy cash values
Collateral loan
Asset efficiency
Corporate asset efficiency
This list of related strategies is available in the tool and, as mentioned earlier, policies from the plan comparison can be exported.
This means you’ll be using relevant and specific products and accessing features – driven by your client’s needs – to get to this point in the sales process.
By providing your client with a report from one of the related strategies, it provides them with easy-to-understand positioning and visuals.

16. Case study Putting the tool into action
As a recap of today’s conversation and to see just how you might be able to use this with a client, let’s meet Blanche from Ontario.
Blanche is a 40-year-old woman, non-smoker, standard risk.
She’s a tech consultant who has seen considerable financial success in the last few years of work.
Blanche is insured with $1 million of term insurance, and it’s coming up for renewal. She is now looking for risk-planning options.
Due to some outstanding medical tests, Blanche is deemed to be uninsurable for the foreseeable future.
Case study

17. Client needs Maintain $1 million of insurance coverage
Investment opportunity for savings – with tax efficiencies
Flexibility for premium payments if she decides to reduce the number of years owing
Growth within her insurance solution
Retire at 65 and start spending accumulated assets
To determine Blanche’s insurance needs, let’s look at her situation:
Married with two children
Maxing out her RRSP and TFSA contribution
Saves $50,000 per year in non-registered fixed-income investments
Needs to maintain $1 million of insurance coverage
Wants to retire at 65 and start spending accumulated assets (for example, non-registered investments, RRSP, TFSA)
Discussion of permanent life insurance options:
Blanche’s interest in converting her term life insurance policy into a permanent one is fueled by her desire to move away from some of the limitations of her current policy – such as increasing premiums and an eventual expiry period.
She’s also interested in discussing how permanent life insurance could provide another source of income in the future, if needed.

18. Product comparisons Product Funding Plan 1
Universal life insurance (level cost of insurance)
Minimum funded
Plan 2
Universal life insurance (limited 20 pay)
Interest option 3% and match funding for Estate Achiever Max 20
Plan 3
Estate Achiever pay to age100 (premium offset year 20)
Funding matched for Estate Achiever Max 20, over contributions go to additional deposit option
Plan 4
Estate Achiever Max 20
No additional deposit option
Now that we know that Blanche is interested in a permanent life insurance policy – with the intention of accessing cash value at some time in the future – let’s use the Plan comparison with accessing cash tool to compare products, looking at both the cash value amounts and death benefit amounts.
These are ways we’re going to set up each policy:
Plan 1 – Universal life insurance (level cost of insurance), minimum-funded
Plan 2 – Universal life insurance (limited 20-pay), interest option three per cent and match funding for Estate Achiever Max 20
Plan 3 – Estate Achiever pay to 100, funding matched with Estate Achiever Max 20, any over contributions go to additional deposit option
Plan 4 – Estate Achiever Max 20, no additional deposit option

19. *Internal rate of return
Comparing cash value at age 70
IRR*: %
IRR*: 1.95%
IRR*: 4.63%
IRR*: 4.84%
Based on Blanche’s wants and her reluctance to taking on additional risk, the Estate Achiever Max 20, is the proper plan to address her cash value and death-benefit growth needs.
*Internal rate of return

20. Comparing death benefits at age 90
IRR*: 3.60%
IRR*: 3.41%
IRR*: 4.92%
IRR*: 5.08%
Based on Blanche’s wants and her reluctance take on additional risk, the Estate Achiever Max 20, is the proper plan to address her cash value and death benefit growth needs.
*Internal rate of return

21. Product comparisons – report output

22. Comparing accessing cash at age 90
IRR*: 4.02%
IRR*: 3.89%
IRR*: 4.90%
Although collateral loan and policy loan show a larger net amount accessed with a substantial net death benefit intact, based on Blanche’s aversion to risk and her need of at least $1 million insurance coverage, partial surrender is the recommended option.
*Internal rate of return

23. Accessing cash comparison

24. Estate transfer and cash withdrawals
Related strategies
Estate transfer and cash withdrawals
Comparing products and accessing methods have now led us to a point where we’re able to run a report for Blanche that’s specific to her needs.
In this case, all of the pre-work has led us to the Estate transfer and cash withdrawals strategy.
Using the supporting tool, you’re able to produce a client-friendly report that you can walk through with Blanche and leave with her. By exporting the illustration into this report, Blanche will have useful information that includes positioning as well as various tables and graphs that use the product of choice to compare to investments. With this report, you can now more easily speak to the benefit of using life insurance for tax-advantaged growth, income generation and to leave a legacy for her family.
Investment assumptions:
Marginal tax rate: per cent
Growth rate on alternative investment: four per cent (interest) fixed income non-registered investment
Now that we know we’re going to use the Estate transfer and cash withdrawals tool, we can now export the recommended product illustration, in this case Estate Achiever Max 20.
Let’s take a closer look at the report and what it’s showing us.
Investment assumptions: Marginal tax rate: 49.53%. Growth rate on alternative investment: 4% (interest) fixed income non-registered investment

26. Taxes can erode wealth
Unlike the growth in non-registered investments, which is subject to tax on an annual basis, the case value growth in a permanent life insurance policy is not taxed while the funds remain inside the policy.
Why is this important?
Clients could be paying a significant amount of unnecessary money to taxes if their money is held in non-registered investments.
Given Blanche’s situation, at age 85, pre-tax, Blanche’s investments are worth $2,131,256; however, after tax, she’s only left with $1,020,715. Over a period of 45 years, the growth lost to tax is $1,110,541.
In this example, money is invested in a fixed-income, interest-bearing portfolio based on the assumed rate of return and marginal tax rate.
Assumed rate of return: four per cent
Marginal tax rate: per cent
Assumed rate of return: 4%
Marginal tax rate: 49.53%

27. Summary of results, comparison age 85
Investments
Life insurance
Cumulative cash invested or premium paid
$516,300
Results when cash flow is taken
Cumulative net cash flow to owner
$763,207
Net value at death payable to beneficiary
$130,875
$1,000,005
Results when no cash flow is taken
Net value at death
$1,020,715
$3,528,685
Cost per dollar of net value at death
$0.51
$0.15

28. Did insurance meet Blanche’s needs?
Comparison age: 85
 Indicates yes, it met her need
Maintain $1 million of insurance coverage 
Maintains $1,000,005 if she accesses cash
Investment opportunity for savings – with tax efficiencies
Saves $1,110,541 in taxes
Flexibility for premium payments if she decides to reduce the number of years owing
Growth within her insurance solution
3.95% internal rate of return
Retire at 65 and start spending accumulated assets
Cumulative insurance amount accessed: $763,207
By producing a report for Blanche, she can better see how a life insurance policy can work for her and whether it meets her needs.
Need:
Maintain $1 million of insurance coverage
With insurance:
Blanche receives $1,000,005 if she accesses cash, and $3,528,685 if she doesn’t
Investment opportunity for savings – with tax efficiencies
Given Blanche’s situation, at age 85, pre-tax, Blanche’s investments are worth $2,131,256; however, after tax, she’s left with only $1,020,715. Over a period of 45 years, the growth lost to tax is $1,110,541.
Flexibility for premium payments if she decides to reduce the number of years owing
Since the policy has the ability to grow cash value, Blanche has the flexibility to reduce the number of years owing
Growth within her insurance solution
Internal rate of return, based on after-tax cash flows and net value at death is 3.95 per cent.
Her cost per dollar of cumulative net cash flow plus net value at death is $0.29
Retire at 65 and start spending accumulated assets
Beginning at age 65, ending at age 85, cumulative amount accessed $763,207