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9669134

The ONLY Solution to Give Your Affluent Clients

NON-Reportable Income

Agenda

Why now?

What is better than tax-free income?

Review the four options available

Who does this fit best? A client profile

Talking points, introductions, objections

CORE Group support to bring this to a successful

conclusion!

Top rate on Federal Income tax 39.6% for $400,000 S (single) / $450,000 J (joint)

Medicare payroll added above $200K S / $250K J of 0.9%

Unearned Income (Medicare Contribution) 3.8%

No Personal exemption ($3,800) at $372,501 S / $422,501 J

Itemized deduction limitations – up to 80% are being phased out

Pease Act – possible phase out of 100% of the mortgage interest deduction for some of

your high-wage earning clients.

Current Roth Income limits = $131,000 S / $193,000 J

State income taxes on top of this – CA top bracket is 13% added on!

Clients looking for and want RELIEF!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

If you asked most clients – will taxes stay same, decrease or go higher?!?!??!

Current Taxation

Why Now?

Your affluent clients are looking for tax relief Change the conversation – offer something

different – just paid their tax bill. When will it improve?

This provides the most tax efficient solution available to them today!

After tax dollars that will provideTax free growthTax free income

A tax optimized accumulation and distribution solution!

Tax Deferred Growth and Tax Free Income – Non-Reportable Income! a Roth for those who don’t qualify – with NO IRS guidelines to follow!

Non-reportable income IRC Section 7702 / RR 74-500 / IRC Sec. 72(e)(s) / IRC Sec 72(v)

Tax-Exempt (muni bonds) income is listed on form 1040 line 8B – effects MAGI

No impact to Medicare, Social security benefits, AGI and deduction limitations

Asset protection in most states

Self completing plan in the event of premature death

Numerous options for varying risk tolerances

Why Insurance Accumulation Solutions

How is This Better Than Tax Free

Non-Reportable Income Do not have to disclose to the IRS – off the radar! Black & White letter tax law – well within the box Flexibility in managing future tax burden Creates additional tax benefits – not effecting AGI

Reduce taxation on social security Reduce taxation on other taxable income Increase deductions Minimize Medicare Part B premiums Maximizes total net after tax dollars to spend

Typical Structure

Focus is on accumulation - so we start with the contribution (premium)

Must be a need for life insurance

Solve for the minimum DB

Goal is to build cash value

Fund to age +65

Income/distributions typically 15 years 65-80 – can be longer

Asset that can be accessed as needed

Supplemental Income Solution

Increasing Death Benefit

Income – withdrawal of basis and then borrowing from

cash value

All distributions reduce death benefit

Must retain some cash value

Wash loans

Over loan protection rider

A Few Design Elements

VUL vs EIUL vs WL

In order of riskVUL – Popular solution, full impact of market performance, opportunity for greatest return, investment diversification, flexible and transparent.

EIUL – New product, market participation up to cap, currently in 11% range, worst year is 0%, back-testing reveals 7% expectation, risk of future cap rates, withdrawals protected, flexible, a little complicated.

WL – Most conservative and most predictable, less flexibility, floating rate loans, not transparent – 10 pay is best! – Offers non-correlation alternative.

Financial Comparison

Account Value age 65

VUL, 7% return $971,208

EIUL, 6% return $975,068

WL, with dividends $773,537

Male, age 40 preferred rate class$20,000 year premiums for 20 years

Equity Strategy

Bond Strategy

Equity Account Comparison

Comparing two investmentsMale 38 pref. NS,

Invests $12,000 yr. to age 65, Income for 20 yrs. starting at 66

7% return, 30% tax rate, 1% fee equity account

Equity Account Comparison

Comparing two investmentsMale 38 pref. NS,

Invests $12,000 yr. to age 65, Income for 20 yrs. starting at 66

7% return, 30% tax rate, 1% fee equity account

After Tax Income Investment Option A Investment Option B $61,598 $49,907

Which option would you recommend?

Equity Account Comparison

Comparing two investmentsMale 38 pref. NS,

Invests $12,000 yr. to age 65, Income for 20 yrs. starting at 66

7% return, 30% tax rate, 1% fee equity account

After Tax Income Investment Option A Investment Option B $61,598 $49,907 Life Insurance Wrap Account

Still Have a Tax FreeDeath Benefit

Account is $0 at age 86

Client Profile

Age 35 to 55, high income >$250K Doesn’t qualify for ROTH

At least 10 years deferral Already maximizing their QP contributions Minimum investment of $500/mo, $6k/yr

Large lump sums don’t work well

Healthy, or spouse is healthy Asset protection Business Owner

With no QP or one with limitations for owners and key executives

Medical professionals key demographic

Talking Points

Non-reportable incomeProvides income & tax diversificationInvestment is designed per risk profileEliminates uncertainty of future tax code increasesDB is secondary objective and it makes the plan

self-fulfilling for the insured’s family Investment strategy, not just a life insurance

solutionAsset ProtectionNon-reportable income

Introduction Conversation

John, I know how you feel about income taxes, and with the recent tax changes your load is now heavier. With that in mind I want to share a strategy with you that gives you the opportunity to set money aside each year, earn market type returns without taxes on that growth and then when you are ready to spend it – it gets distributed to you income tax-free. So the money you put into this – when designed properly - will NEVER be taxed again – in its growth or the distributions. This could have a very positive impact on your ability to have the type of lifestyle you want during your retirement. We need to get together and review this in person. What is the best day this week or next to visit for an hour?

Client Objection

I have always heard that mixing investing and life insurance doesn’t work. Why not just do term and invest the difference? I already have all the life insurance I need.

Response: John, that is a good question. The reason for bringing this up is that I am more concerned about the results and not so much on how a solution is packaged. And what I mean by that is, for any solution I recommend for you, I focus primarily on what it does, not so much on what it is. What this “does” is that this gives you a way to maximize you future spendable dollars by making that money bullet proof from the IRS. It also compliments the other things you have in place to give you diversity of your future tax obligations – just like we diversify your investments. Buy the difference doesn’t take taxes into consideration – I have and this does and the net result is more spendable dollars for you. It’s not what you make – its what you keep that matters most. I can even show you the math to confirm this works. Let me ask you … when you are depending on your assets to provide your lifestyle instead of a paycheck – what would be the benefit of you having tax-free non-reportable income to spend and to have flexibility and diversity with your future income tax obligations?

Recap the Benefits

Benefits Life Insurance Stock or Mutual Fund Wrap

Account

Tax Free Income

Non reportable income

Known tax rate

Creditor Protection

No impact to SS, AGI

Tax Free Death Benefit

Key Factors to Success

You gotta believe in it! Connect to the value, what it does is much more important than

what it is.

Understand what is most important to your client Eliminating taxes, flexibility, guarantees, risk profile …

accomplished through good discovery.

The initial discussion MUST be about the benefit and not what it is. Doing this will prevent the clients’ own unchecked biases and misinformation to get in the way of what could be best for them. If they are existing clients we can do the math ahead of time to confirm it does make sense for them before you even engage them.

CORE can provide analytics to define the value of the strategy

Next Steps

Client List

Contact your Relationship Manager to prepare for your client engagement.

Main number … 800-991-6695

Questions