1. Life Insurance As An Asset Class

2. ING Neither ING nor its affiliated companies or its representatives give tax or legal advice. The strategies suggested may not be suitable for everyone and you should consult with your own tax advisor and legal counsel before implementing any of the strategies suggested here. These materials are not intended to be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matter addressed in this document. The taxpayer should seek advice from an independent tax advisor. Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Variable universal life insurance products are distributed by ING America Equities, Inc. Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and its products issued. All are members of the ING family of companies. ING Guaranteed Death Benefit Universal Life II, policy form series #1174 (may vary by state and may not be available in all states), is issued by Security Life of Denver Insurance Company, a member of the ING family of companies. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company who is solely responsible for all obligations under its policies. Life insurance products are designed to provide death benefit and they are not short term investment vehicles. Disclosures

3. ING Most of us have a “Patchwork of Assets” we’ve acquired one at a time over many years We acquired them to make our own lives better without worrying about passing them on at death

4. ING Someday, however, we will die and our assets will be transferred to other family members As they are transferred, these assets will be subjected to different taxes and costs; part of their value may be lost

5. ING Wealth Transfer Planning: Intentionally passing on our assets An effective plan avoids losses and maximizes what we pass on to our loved ones

6. ING Wealth Transfer Planning Isn’t Something We Do for Ourselves; It’s An Act of Love for Those We Care About It is also one of the responsibilities of being a family leader

7. ING Deciding Which Assets To Pass On Can Be Difficult Each Asset Is Different—Each Has Different Strengths and Weaknesses

8. ING Transferring Assets Efficiently Is Difficult Some assets are more efficient in transferring their value than others Some assets lose value because transferring them triggers additional taxes, costs, commissions and fees Other assets may not have a stable value; their values may fluctuate over time with market performance

9. ING Good Wealth Transfer Plans Consider All Your Assets Decide which to keep, which to consume and which to reposition into more efficient assets

10. ING The Goal Is To Pass On Your Wealth As Efficiently As Possible Maximize Value & Minimize Loss

11. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value—Asset value at death is known in advance with relative certainty

12. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance

13. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance Liquid—Asset is easily converted into cash at death and is not reduced by commissions, taxes, transfer cost or fees

14. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance Liquid Growth / Leverage—Asset’s date of death value will likely exceed the costs of acquiring and maintaining it

15. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance Liquid Growth / Leverage Growth Is Income Tax Free—Asset growth is income tax free when distributed at death

16. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance Liquid Growth / Leverage Growth Is Income Tax Free May Avoid Estate Taxes–Asset can be owned to avoid estate taxes

17. ING What Are Some Of The Features “Efficient” Assets Have? Predictable Value Value Not Directly Linked to Market Performance Liquid Growth / Leverage Growth Is Income Tax Free May Avoid Estate Taxes Avoids Probate–Asset can be immediately delivered to those entitled to receive it without the costs and delays of probate

18. ING What Are Some Of The Features “Efficient” Assets Have? They complement other assets to create an integrated, workable plan They are flexible and may help accomplish multiple objectives

19. ING How Many Of Your Assets Have These Features? Review your assets to see if some of them need to be repositioned

20. ING One Asset That Delivers Many Of These Features Is Often Overlooked

21. ING One Asset That Delivers Many Of These Features Is Often Overlooked Life Insurance

22. ING Life Insurance Has These Wealth Transfer Features Predictable Value—Policy can be structured to pay a known death benefit amount when the insured dies

23. ING Predictable Value Value Not Directly Linked to Market Performance–Policy may be structured so that the death benefit may not directly depend on market performance Life Insurance Has These Wealth Transfer Features

24. ING Predictable Value Value Not Directly Linked to Market Performance Liquidity—Death benefits are paid in cash when the insured dies; generally no taxes, costs, commissions or fees are subtracted Life Insurance Has These Wealth Transfer Features

25. ING Predictable Value Value Not Directly Linked to Market Performance Liquidity Growth / Leverage—Premiums paid for death benefit protection may provide a competitive rate of return through life expectancy Life Insurance Has These Wealth Transfer Features

26. ING Predictable Value Value Not Directly Linked to Market Performance Liquidity Growth / Leverage Income Tax Free Payment—Policy death benefits (including amount in excess of premiums) are generally income tax free under IRC 101 Life Insurance Has These Wealth Transfer Features

27. ING Predictable Value Value Not Directly Linked to Market Performance Liquidity Growth / Leverage Income Tax Free Payment May Avoid Estate Taxes—Ownership of the policy may be structured to avoid federal estate taxes Life Insurance Has These Wealth Transfer Features

28. ING Predictable Value Value Not Directly Linked to Market Performance Liquidity Growth / Leverage Income Tax Free Payment May Avoid Estate Taxes Avoids Probate —Death benefits may be structured to be paid directly to the beneficiaries without the costs and delays that often impact assets distributed through probate Life Insurance Has These Wealth Transfer Features

29. ING Life Insurance Has Many Uses Improve a surviving spouse’s financial security Create funds to retire debts / loans or pay the estate’s tax liabilities Equalize the inheritances of different family members Provide educational funds for children and grandchildren

30. ING Does Life Insurance Make Financial Sense? Is paying premiums a good use of your funds? Is it financially efficient?

31. ING Internal Rate Of Return On Death Benefits One way commonly used to measure financial efficiency is to calculate the policy’s Internal Rate of Return (IRR) IRR is the interest rate the premiums paid into the policy would have to earn in order to grow into the death benefit

32. ING Internal Rate Of Return On Death Benefits Income Tax-Adjusted IRR is the annual rate the premium outlay would need to compound each year after income taxes at a stated percentage tax rate to generate the death benefit shown; it assumes the life insurance death benefits are received income tax free

33. ING Internal Rate Of Return Depends On Several Factors Amount of the policy death benefit Number of years before the insured’s death Total premium payments made before the insured’s death Number of years over which premiums are paid

34. ING Internal Rate Of Return On Death Benefits The insured’s date of death is uncertain, so IRR should be calculated annually: IRRs are generally high early in the early years and decrease over time Key Question: What are the IRR and Income Tax- Adjusted IRR near the insured’s life expectancy?

35. ING Hypothetical Example James Smith (age 65) $1,000,000 of Coverage

36. ING Internal Rate of Return Analysis James Smith (age 65, standard health) is considering a $1,000,000 ING GDBUL II policy issued by Security Life of Denver Insurance Company (policy form # 1174-12/07) The annual premium is $28,616 * Assuming premiums are paid and the policy stays in force, what would be the internal rate of return on the death benefit in a given year? * The Lifetime Guarantee Annual Premium is the minimum amount required to maintain a level death benefit guarantee for the lifetime of the insured. If this premium is paid on the first day of each policy year until the attained age 121, the policy is guaranteed not to lapse for the lifetime of the insured, assuming no loans, partial withdrawals and, if applicable, scheduled or unscheduled increases or decreases and Death Benefit Option changes are made.

37. ING Internal Rate of Return Analysis James Smith (age 65, standard health) is considering a $1,000,000 ING GDBUL II policy issued by Security Life of Denver Insurance Company (policy form # 1174-12/07); $28,616 annual premium IRRs at five year intervals: Age 70 73.74% Age 75 21.99% Age 80 10.00% Age 85 5.06% Age 90 2.49%

38. ING Internal Rate of Return Analysis James Smith (age 65, standard health) is considering a $1,000,000 ING GDBUL II policy issued by Security Life of Denver Insurance Company (policy form # 1174-12/07); $28,616 annual premium IRRs And Tax-Adjusted IRRs at five year intervals, assuming a 28% income tax bracket: IRR Tax-Adjusted IRR Age 7073.74% 102.42% Age 7521.99%30.54% Age 80 10.0%13.89% Age 85 5.06% 7.02% Age 90 2.49% 3.45%

39. ING James Smith’s Life Expectancy is 85 IRR is 5.06%; Income Tax Adjusted IRR is 7.02%

40. ING Is Life Insurance Financially Efficient? The answer depends on the policy, the premiums paid and how long the insured lives

41. ING There may be another way to evaluate a policy’s financial efficiency Compare it to a different asset

42. ING Suppose the funds for premiums were invested in a mutual fund The mutual fund would grow in value each year with annual contributions and after-tax earnings

43. ING Compare the after-tax value of the fund with the life insurance death benefit Eventually the fund’s after-tax value will exceed the life insurance death benefit

44. ING Is the cross-over year before or after the insured’s life expectancy? If the cross-over year occurs after life expectancy, then life insurance might be the more efficient alternative

45. ING The James Smith Case Suppose James Smith wants to compare the projected life insurance death benefit with the value that could build up in a mutual $1,000,0000 life insurance death benefit vs. a mutual fund contribution of $28,616 annually Smith is in the 28% income tax bracket The mutual fund grows at 6% gross (4.32% net after taxes) Smith’s life expectancy is age 85

46. ING The James Smith Case

47. ING Life insurance offers a potentially powerful combination of benefits, protections and advantages It may help you pass on more of your hard- earned assets to people you care about

48. ING You Want The Best For Those You Love Ask Your Financial Professional If Life Insurance Could Improve Your Wealth Transfer Plan