Types of Life Insurance And Their Uses

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1 LIFE INSURANCE Understanding Op.ons and Finding What s Right for Your Needs

2 This informa.on is in connec.on with the promo.on or marke.ng of the addressed in this material. The informa.on cannot be used or relied upon for the purpose of avoiding IRS penal.es. These materials are not intended to provide tax, accoun.ng or legal advice. As with all of a tax or legal nature, please consult their own tax or legal counsel for advice. This material intended for educa.on purposes only and is not intended to serve as the basis for any investment or purchasing decision. Guarantees are backed by the financial strength and claims- paying ability of issuing company. Although external indexes may affect policy values, a market downturn cannot reduce your credited interest or principal. The policy does not directly par.cipate in any stock, bond, or investments. You are not buying any bonds, shares of stocks, or shares of an index. The market index value does not include the dividends paid on the stocks underlying a stock index. These stock dividends are also not reflected in the interest credited to your cash value.

3 Types of Life Insurance Term Life Insurance Provides a death benefit for a specified period of.me such as 10 or 20 years. Serves sole purpose of providing a death benefit to beneficiaries when the insured dies. Does not have a cash accumula.on value. Permanent Life Insurance Provides a death benefit and has a cash accumula.on value. The cash accumula.on value is available to the policy owner through withdrawals or loans. Whole Life Insurance Universal Life Insurance

4 What Kind is Right for You Length of Coverage Term A specified term, typically 10, 20, 30 years Permanent UnJl age 100 or later, as long as premiums are paid Premiums Length of Coverage IniJally higher than term premiums, but olen level for life Cash Value None Accumulates over Jme on a tax- deferred basis Key Advantage Typically offers the highest death benefit for the lowest cost Offers lifelong protecjon and tax- deferred savings Source: The Life and Health Founda.on for Educa.on

5 Why Permanent Life Insurance Guaranteed Coverage* *Guarantees are backed by the Financial Strength and claims- paying ability of issuing company Premium Flexibility Tax Advantages A policy s cash value can be surrendered, in total or in part, for cash that can be put toward important uses like a child s educa.on, a business opportunity, or supplemental re.rement income. (Both loans and withdrawals from a permanent life insurance policy may be subject to penal.es and fees and, along with any accrued loan interest, will reduce the policy's account value and death benefit. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the extent that they exceed the policy owner's cost basis in the policy and usually loans are free from current federal taxa.on. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distribu.ons from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distribu.ons are subject to a 10% addi.onal tax prior to age 59½, with certain excep.ons.) If you need to stop paying premiums, the cash value can keep your insurance protec.on in force for a period of.me. (With Universal Life it is possible that coverage will expire when either no premiums are paid following the ini.al premium or subsequent premiums are insufficient to con.nue coverage. Changes in policy coverage amounts are subject to policy limits. Increases are subject to underwri.ng and may require addi.onal premium.) Cash value accumulates on a tax- deferred basis, similar to assets in most re.rement and savings plans. Death benefits paid to the beneficiary generally aren't subject to federal income tax. Source: The Life and Health Founda.on for Educa.on

6 Why Permanent Life Insurance Access to Cash Stable Premiums As long as you don t allow your policy to lapse, you ll have the coverage for life and won t need to worry about being unable to afford coverage if your health deteriorates. (Guarantees and benefits are based on the claims- paying ability of the issuing insurance company.) With many types of permanent insurance, premiums will remain constant or stable over your life.me. With term insurance, premiums ofen increase as you age. Source: The Life and Health Founda.on for Educa.on

7 Could help pay off debt such as mortgages, credit card balances, and/or loans. Provides & income for survivors whether it s a spouse, business, charity or survivors. Pays federal and state estate taxes. Death Benefit Could help fund a college educa.on for a child or grandchild. The amount of money paid by the insurance company to a designated beneficiary or beneficiaries upon the death of the insured. Funds commitment to a charity. Designed for Financial Professional Use with Consumers Funds the transfer of a business interest to ensure business con.nuity. - Received income tax free. - Protected from the claims of creditors.

8 Value and VersaJlity: Cash Value PotenJal uses for accumulated cash value 1 2 Supplement your re.rement income. Pay for a child s wedding. Make a down payment on a big-.cket purchase. Pay for your child or grandchild s college educa.on Cash Value - Your policy has the poten.al to accumulate cash value. - You can use this money for expected or unexpected life events.¹ Pay of credit card debt. Renovate your home. Start a Business. To pay for whatever needs or desires life brings!² Cover emergency expenses ¹Policy withdrawals and outstanding policy loans may result in a reduced death benefit. ²Policy loans from life insurance policies generally are not subject to income tax, provided the contract is not a Modified Endowment Contract, as defined by Sec.on 7702A of the Internal Revenue Code. A policy loan or withdrawal from a life insurance policy that is a Modified Endowment Contract is taxable upon receipt to the extent cash value of the contract exceeds premium paid. Policy loans and withdrawals will reduce cash value and death benefit. Policy loans are subject to interest charges. Please consult your a@orney or tax advisor in regards to your specific situa.on.

9 Types of Universal Life Insurance TradiJonal Universal Life Insurance (UL) A fixed rate of credit to the policy on a periodic basic as declared by the issuing insurance company. Indexed Universal Life Insurance (IUL) You have a choice of fixed rate strategies and/or indexed strategies. Indexed strategies are based on the movement of a stock market index or indices. The cash value of an IUL policy doesn t directly par.cipate in the stock market. IUL provides protec.on from market fluctua.ons, plus guarantees * a minimum interest rate. *Guarantees are backed by the Financial Strength and claims- paying ability of issuing company Variable Universal Life Insurance (VUL) With VUL, the cash value is usually invested in subaccounts that are linked directly to the stock market. The VUL policy value is suscep.ble to the markets ups and downs. More poten.al for interest growth. Usually no guarantees. Whole life insurance is another type of permanent life insurance. The scope of this presenta.on doesn t discuss the advantages and disadvantages of whole life insurance.

10 Indexed Universal Life Insurance Upside PotenJal and Downside Guarantees Upside Interest PotenJal Poten.al for greater interest credi.ng. Credited interest based on the upward movement of an index up to a cap. Premiums are not directly in the stock market. More poten.al for cash value, supplemental re.rement income, and/or total lower premiums. Downside Guarantees Protect against market downtowns. Minimum interest rate guarantee. IUL provides both in one tailored product

11 What Happens? When the Market Index Rises Your IUL Policy will receive interest credits based on the upward Movement of the index subject to an applicable caps and/or par.cipa.on rates. + - Informa.on provided here is general and educa.onal in nature, and is not intended to be, and should not be construed as legal, tax, and/or investment advice. Laws of specific states or laws relevant to a par.cular situa.on may affect the applicability, accuracy, or completeness of this informa.on. Federal and state laws and regula.ons are complex and subject to change. Please consult your tax professional and/or a@orney for specific tax and/or legal informa.on as it pertains to your individual situa.on.

12 What Happens? When the Market Index Declines Your IUL Policy is protected by contract guarantees. You may not receive any interest credits for that contract year, your contract does not lose value based on market downturns. + - When the index falls, your contract value remains level. IUL Policy The Market Index This document is designed to provide general informa.on on the subjects covered. It is not intended to provide specific legal or tax advice and cannot be used to avoid tax penal.es or to promote market, or recommend and tax plan or arrangement. Consult your tax advisor or a@orney for these needs.

13 Let me know how I may help [Company Name, an Insurance Agency, if required] [Agent Name, State Insurance License #, if required] [Address] [City, State XXXXX] [ , Phone, and/or Website] This is a solicita.on for an insurance product.