Product Marketplace Comparison Report

Transcription

1 Product Marketplace Comparison Report Ownership Insured Carrier Policy Number Type of Policy Sample Trust Owned Bill Tall Lincoln National Indexed Life Prepared By: Michael D Pepe CLU The TOLI Group 2035 Crocker Road Suite 105 Westlake OH mpepe@toligroup.com P: F: /03/2014 Disclosure We believe the sources to be reliable, however, the accuracy and completeness of the information is not guaranteed. In the event of any discrepancy, the carrier's information shall prevail. Performance data represents past performance and does not guarantee future results. The values represented in this report may not reflect the true original cost of the client's initial investment. Calculations and data provided should not be relied upon for tax purposes, use original confirmations and carrier statements instead. The Information contained in these reports is collected from sources believed to be reliable, however the accuracy and completeness of the information is not guaranteed. Always rely on statements you receive directly from the carriers, whose valuation shall prevail in the event of any discrepancy. If you have any questions regarding your report, please call your representative.

2 TABLE OF CONTENTS 1. Policy Summary 2. Performance Guidelines 3. Policy Information 4. Original Structure 5. Current Structure 6. Life Expectancy Analysis 7. Carrier Analysis 8. Premium Gift Analysis 9. Executive Analysis 10. Policy Objectives 11. Policy Design 12. Product Alternatives 13. Product Comparison Analysis 14. Resources Used in This Analysis

3 POLICY SUMMARY Insured Carrier Policy Number Type of Policy Bill Tall Lincoln National Indexed Life This policy analysis has been created to determine the strengths and weaknesses of this life insurance policy based upon your goals, objectives, risk tolerance and personal financial situation. The goal of this report is to provide objective and quantifiable information regarding the existing policy. The analysis is based upon the objective information that has been gathered from the insurance company, your advisors and/or the responses to the TOLI Vault Design Guidelines and Risk Tolerance Questionnaire. POLICY MONITORING GUIDELINES Guideline Desired Acceptable Range Unacceptable Lapse Age Death Benefit $7,000, $6,999, Premium $35, $35, Policy Performance 7.50% 7.49% % 6.74% Carrier Performance Policy Type Indexed Life Carrier Lincoln National LAPSE AGE Age at which coverage may no longer be in force 54 Policy # DEATH BENEFIT The amount of coverage in force $7,000, PREMIUMS The amount and frequency of policy funding $35, POLICY PERFORMANCE Earnings rate of the policy 5.00% CARRIER PERFORMANCE Financial strength and rating of the insurance company 91 Color Key: The performance is as desired -guideline parameters are being met The performance is on track -desired guideline parameters are within the acceptable range The performance is lagging -desired guideline parameters are unacceptable

4 POLICY MONITORING SPECIFICATIONS Insured Lapse Age Death Benefit Premium Policy Performance Carrier Performance Bill Tall POLICY INFORMATION Policy Type IndexedLife Product Name Protector Insurance Carrier Lincoln National STAR Ranking 3 Comdex Rating 91 Policy Number Policy Issue Date 10/23/2009 Policy Anniversary Date 10/23 Owner Sample Trust Owned Trustee Sample Trustee Beneficiary Benny Hill Beneficiary Tony Russo ORIGINAL STRUCTURE Coverage Length Requirement 100 Original Premium $35, Was this policy issued with 1035 exchange money Yes If Yes, How much was the 1035 exchange amount $500, Was this policy issue with a first year unscheduled premium Yes If Yes, How much was the unscheduled premium amount $10, Original Death Benefit $6,000, Guaranteed Credited Interest Rate 2.00% Original Projected Interest Rate 7.50% Guaranteed Lapse Age 90 Policy Riders Estate Liquidity CURRENT STRUCTURE Current Premium $35, Total Premiums Paid $70, Total Current Cash Value $530, Current Cash Surrender Value $450, Cost Basis $575, Total Current Death Benefit $7,000, Current Credited Interest Rate 5.00% Projected Lapse Age 54 Total Amount of Outstanding Loan $0.00 Market Cap 12.00% Index being used S&P 500 Is this Policy a MEC No

5 Is this Policy Collaterally Assigned No Is this Policy part of a Split Dollar Arrangement No Is the Premium for this Policy Premium Financed Yes Loan Number

6 LIFE EXPECTANCY ANALYSIS Client Data Insured Bill Tall Sex M Smoker Y Policy Rating Classification Preferred Current Age 50 Life Expectancy (YEARS) CLIENT(1) Policy # Policy Lapse Age-Guaranteed Basis 90 Probability of Survival at this age 27.16% Policy # Policy Lapse Age-Projected Basis 54 Probability of Survival at this age 98.48% All values are derived from the 2008 VBT Mortality Table

7 CARRIER ANALYSIS

8 EXECUTIVE ANALYSIS Current Product will not achieve your coverage duration goal and the credit rate is below your unacceptable range. PERFORMANCE TRACKING Death Benefit Year Projected Actual +/-% 2014 $6,000,000 $7,000, $7,000,000 $6,000, $7,000,000 $6,000, Cash Value Year Projected Actual +/-% 2014 $0 $530, $0 $530, $0 $530, indicates imported from carrier Premium Projected Actual +/-% $35,000 $35, $35,000 $35, $35,000 $35, Surrender Value Projected Actual +/-% $0 $450, $0 $450, $0 $450, Lapse Age Projected Actual +/-% Credit Rate Projected Actual +/-% Color Key: > 94%: The performance is on track -guideline parameters are being met 94% - 80%: The performance is lagging -monitoring is suggested < 80%: The performance is inadequate -review is recommended Data is incomplete- information is needed

9 POLICY MONITORING GUIDELINES Guideline Desired Acceptable Range Unacceptable Lapse Age Death Benefit $7,000, $6,999, Premium $35, $35, Policy Performance 7.50% 7.49% % 6.74% Carrier Performance Policy Type Indexed Life Carrier Lincoln National LAPSE AGE Age at which coverage may no longer be in force 54 Policy # DEATH BENEFIT The amount of coverage in force $7,000, PREMIUMS The amount and frequency of policy funding $35, POLICY PERFORMANCE Earnings rate of the policy 5.00% CARRIER PERFORMANCE Financial strength and rating of the insurance company 91 Color Key: The performance is as desired -guideline parameters are being met The performance is on track -desired guideline parameters are within the acceptable range The performance is lagging -desired guideline parameters are unacceptable Policy meets some objectives

10 PRODUCT ANALYSIS Product Type: Indexed Life Lowest Premium Lowest Premium Payments Policy Flexibility Ability to alter premium or death benefit Coverage Duration Guarantees Guaranteed Length of Coverage Premium Guarantees Guaranteed Premium Payments Cash Accumulation Building Substantial Cash Value within the Policy Color Key: The Product Type has the desired features The Product Type can produce the desired features The Product Type does not have the desired features Equity Index Universal Life Advantages Disadvantages Not currently registered with the SEC even though returns are Premium flexibility based upon the returns of stock market indices Adjustable death benefit Growth is driven by derivatives Credited return excludes any dividends, which have Unbundled product structure where historically made up 40% of the total return of the S&P 500 pricing components are disclosed Index May require a substantial waiting period to benefit from growth Carrier can limit upside potential through manipulation of caps and participation rates Cash values subject to claims of insurance company creditors Policy meets some design parameters

11 PRODUCT ALTERNATIVES Universal Life with Secondary Guarantees Advantages Disadvantages Lowest guaranteed premium Generally little or no cash values due to high expense loads Premium flexibility, but changes If carrier solvency concerns arise, little cash value available to assist may impact guarantees in a Section 1035 exchange to a different carrier Little upside potential from non-guaranteed elements Cash values subject to claims of insurance company creditors Not available at older ages Variable Universal Life with Guarantees Advantages All expenses are described in prospectus Client controls investment direction of cash values Upside performance potential could be used to abbreviate premium payments, increase death benefit or allow access to policy cash values Policy cash values held in separate account give maximum protection with carrier insolvency Guarantees provide assurance of death benefit coverage Disadvantages Client at risk for having to pay a higher premium Volatility of equities may impact insurance expenses due to changes in net amount at risk Requires client sophistication and commitment to policy management Guarantees are typically more expensive than Universal Life

12 PRODUCT COMPARISON ANALYSIS Variable Universal Life Sample Office Mike Black 02/23/1960 Table D(4) Death Benefit Requirement $1,000, Exchange $35, Premium Payments To Age Coverage Needed To Age 100 No Lapse Protection To Age 100 Carrier Diversification Is Not A Concern Acceptable Comdex Rating Range Premium Comparison Carrier Amount A.M. Best S & P Moody's Fitch Comdex MetLife VUL-G John Hancock VUL-G New York Life VUL-G MassMutual VUL-G Minnesota Life VUL-G $9, A+ AA- Aa3 AA- 95 $10, A+ AA- A1 AA- 93 $11, A++ AA+ Aaa AAA 100 $11, A++ AA+ Aa2 AA+ 98 $12, A+ A+ Aa3 AA- 92

13 RESOURCES USED IN THIS ANALYSIS In reviewing your insurance policy's performance and carrier strength, the following resources were used: - The TOLI Vault - policy monitoring and management software - Vital Signs - key financial reports and ratings from major rating agencies AM Best, Moody's, Fitch, and Standards and Poor's - Life Expectancy Analysis- utilizing the 2008 VBT Mortality Table