The Case for Whole Life Insurance Living the Legacy

Transcription

1 The Case for Whole Life Insurance Living the Legacy Whole Life and the Legacy Portfolio For Producer Use Only. Not For Use With the Public CRN

2 Agenda Today s Agenda What is Participating Whole Life The Advantages Policy Features Whole Life Legacy Product Suite 3 3 Important Information Distributions under a life insurance policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty. Access to cash values through borrowing or partial surrenders will reduce the policy s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. 4 2

3 What is Participating Whole Life Here are some basics Permanent life insurance Provides lifetime coverage Increasing guaranteed cash value designed to equal the policy face amount at age 100 Participating means policyholders are eligible to receive policy dividends, which are not guaranteed 5 The Advantages Jorge and Maria are 40 years old. They have two children and just bought a new house. Why would they be interested in whole life insurance? Guaranteed Premiums Guaranteed Policy Death Benefit Living Benefits: Tax-deferred cash value accumulation Tax advantaged access to policy cash values (non-mec) Policy Dividends (Not Guaranteed) 6 3

4 Policy Features Let s review Whole life offers three guarantees. Circle the three features that are guaranteed in a whole life policy. Premiums Dividends WHOLE LIFE Death Benefit Cash Value 7 Policy Features Guaranteed Level Premiums Premium is guaranteed and level Premium based on face amount of the policy, insured s issue age, gender and underwriting issue class Policy riders can have a separate, additional premiums Contractual requirement to pay premium Premiums may be paid via non-guaranteed policy dividends, surrenders of paid-up additions or loans, if there is sufficient value in the policy to do so. No base policy premiums due after policy is paid up but rider premiums may continue 8 4

5 Policy Features Guaranteed Death Benefit The policy death benefit is level and contractually guaranteed Once the policy is paid-up the death benefit will remain in-force until death or surrender, assuming no policy loans are taken. The policy death benefit is net of any policy loans and accrued loan interest. For example Rick has a $500,000 face value whole life policy with $85,000 of cash value and an outstanding loan of $20,000, plus $5,000 of accrued loan interest. If Rick were to die today his widow would receive $475,000 of net death benefit. 9 Policy Features Guaranteed Cash Value Guaranteed Face Amount Guaranteed cash value is unique feature of whole life $0 Age at Issue Guaranteed Cash Value Age 100 Policy contains a schedule of tabular annual guaranteed cash values Guaranteed cash values are based on a guaranteed interest rate and a guaranteed mortality table 10 5

6 Policy Features Dividends Sources of divisible surplus : Participating policyholders are eligible to receive an equitable share of divisible surplus each year as a policy dividend Investment Earnings Mortality Savings Expense Savings Dividends are NOT guaranteed. Divisible surplus is determined by Board of Directors each year Divisible surplus sources: Mortality savings Investment earnings Expense savings 11 Policy Features The Contribution Principle Divisible surplus returned to participating policyholders in the same proportion as contributed Treats all participating policyholders equitably Policy dividends can be used in a number of ways called dividend options 12 6

7 Policy Features Dividend Options Cash to policy owner Reduce premiums Purchase paid up additional insurance Accumulate at interest Purchase additional oneyear term insurance Loan repayment 13 Policy Features Paid Up Additions Guaranteed Face Amount Paid up additional insurance purchased by nonguaranteed policy dividends Guaranteed Cash Value $0 Age at Issue Pre-determined age (ex. Age 100) 14 7

8 Policy Features Let s Review In the chat box, type in the correct answer The premium of a whole life insurance policy is and. Sources of divisible surplus are,, and. The policy death benefit is net of any and. The size of the dividend received by a participating policyholder is determined by the. A dividend option available to participating policyholders that results in higher cash values and death benefits is referred to as. 15 Whole Life Legacy Product Suite Whole Life Legacy 100 Premiums payable to age 100 Whole Life Legacy 65 Premiums payable to age 65 Whole Life Legacy 20 Pay Premiums payable for 20 years Whole Life Legacy 10 Pay Premiums payable for 10 years Whole Life Legacy High Early Cash Value Early guaranteed cash value growth Premiums payable to age

9 Whole Life Legacy Product Suite Premium Comparison Male - Age 40 Ultra Preferred Non tobacco, $500,000 Face Amount Product Annual Premium Paid Up Legacy 100 $7,070 Age 100 Legacy 65 $9,845 Age 65 Legacy 20 Pay $11, Years Legacy 10 Pay $16, Years Legacy High Early Cash Value $8,065 Age Whole Life Legacy Product Suite Guaranteed Cash Value Growth Legacy 100 Legacy 65 Legacy 20 Pay Legacy 10 Pay Legacy HECV $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Legacy HECV CV is nearly 90% of premiums paid in Yr 1 Legacy 65 and Legacy 10 Pay CV = in the 30 th Yr Legacy 20 Pay CV exceeds 20% of premiums paid in Yr 1 Legacy 10 Pay CV is = to almost 40% of premiums paid in Yr 1 Legacy 65 CV = Face Amt. at age 100 Year 1 Year 10 Year 20 Year 30 Year 40 Year 50 Age 100 Legacy 100 CV = Face Amt. at age 100 Male, age 40, Ultra Preferred Non tobacco, $500,000 face amount 18 9

10 Whole Life Legacy Product Suite Whole Life Legacy Riders Waiver of Premium Rider (WP) Additional Life Insurance Rider (ALIR) Life Insurance Supplement Rider (LISR) Renewable Term Rider (RTR)* Guaranteed Insurability Rider (GIR) Accelerated Death Benefit Rider (ABR) Transfer of Insured Rider (TIR) Yearly Term Purchase Rider (YTP) *Not available for qualified cases Riders are available at an additional cost. 19 Whole Life Legacy Product Suite Let s Review Match the product to the prospect by drawing a line to the corresponding product for each situation. A 35 year old man with a young family who wants little to no expenses when he retires A couple in their 30s who want to fund their life insurance before retirement A young couple who needs to build cash value quickly to use for their children s college education A businessperson who wants a balance sheet product A 45 year old prospect interested in whole life coverage, but wants to keep the annual cost down Whole Life Legacy 20 Pay Whole Life Legacy 100 Whole Life Legacy 65 Whole Life Legacy 10 Pay Whole Life Legacy High Early Cash Value 20 10

11 Summary Today We Discussed: What is Participating Whole Life Permanent, lifetime coverage The Advantages Guaranteed premiums, death benefit, living benefits Policy Features Guaranteed cash values, dividend options Whole Life Legacy Product Suite Various products available The Bottom Line Is Whole life provides your clients with permanent, lifetime coverage Living benefits through tax deferred accumulation of policy cash values; and tax advantaged access to policy cash values Participating whole life insurance gives the policy holder the potential to receive dividends, which are not guaranteed MassMutual offers a portfolio of high quality whole life products and a variety of riders* to meet your clients needs *Policy riders may require additional premium 22 11

12 A Call to Action Suggested next steps. Learn the products thoroughly. Become familiar with the appropriate marketing materials Build a list of prospects that may be interested in whole life insurance Review your prospect list with your sales manager or wholesaler. Have a plan to approach your prospects Work with an experienced producer to learn best practices 23 Whole Life Legacy 100 (Policy Form WL-2007 and WL-NC-2007 in North Carolina), Whole Life Legacy 65, Whole Life Legacy 20 Pay, Whole Life Legacy 10 Pay, and Whole Life Legacy High Early Cash Value (Policy Form WL-2008 and WL-NC-2008 in North Carolina) are level-premium, participating, permanent life insurance policies issued by Massachusetts Mutual Life Insurance Company, Springfield, MA Massachusetts Mutual Life Insurance Company, Springfield, MA. All rights reserved. MassMutual Financial Group is a marketing designation (or fleet name) for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates

13 HD Vest Financial Services is the holding company for the group of companies providing financial services under the HD Vest name. Securities offered through HD Vest Investment Services SM, Member SIPC Advisory services offered through HD Vest Advisory Services SM 6333 N. State Highway 161, Fourth Floor, Irving, TX FOR INTERNAL USE ONLY 25 13