Our perspective on universal life insurance. Protect and maximize your legacy. Client Guide. Universal Life Insurance

Transcription

1 Universal Life Insurance Our perspective on universal life insurance Protect and maximize your legacy The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York Not a deposit Not FDIC-insured May go down in value Not insured by any federal government agency Not guaranteed by any bank or savings association Client Guide LIFE SOLUTIONS

2 Leave a legacy that s more than just memories We believe... Your life s work should live on long after you do Your legacy should not be eroded by taxes You can take steps now to provide for the things you care about later With your life s work, you ve built a life for those you care about. That legacy deserves to be protected from the risks that could affect your plans.

3 Risking your legacy Tax burdens Estate laws have been in constant flux. Retirement savings can be depleted just to pay estate taxes without proper planning. No business continuation plan It s typically not ideal for family members who are not involved in the business to have to step into the day-to-day operations especially under difficult circumstances. Longevity The female member of a 65-year-old couple has a 48% chance of living to 90 and a 24% chance of living to Will your legacy live on at least as long as your spouse does? Healthcare expenses How would your family cover major expenses without your income stream or healthcare benefits? Parenting costs Today, average annual college costs are more than $39,000 for a private four-year institution. 2 The average yearly cost for center-based infant care is higher than a year s tuition and fees at a four-year public college. 3 Outstanding mortgage If your family home is not paid off, the payments may be too much of a burden on your family, and they may be forced to sell. 1 Society of Actuaries, Simple Life Expectancy Calculator, accessed April 16, The College Board, Trends in College Pricing 2012, accessed April 16, ChildCare Aware of America, Parents and the High Price of Child Care: 2012 Report, accessed April 16, 2013.

4 How much money will my family need? Consider how much money your family will need both immediately and in the future if you re no longer there to help. Financial protection for your family Immediate expenses Lincoln universal life provides a death benefit that can help cover medical debts, estate transfer costs, funeral costs or any number of final expenses without causing family members to tap other assets. Mortgage(s) Making monthly mortgage payments over a number of years on a primary residence or vacation home without your income may be impossible for your family. A Lincoln universal life death benefit can be used to pay off outstanding mortgages, so the family can continue to stay in their home and not be forced to sell at an inopportune time. FAMILY CARE In 2011, the national average cost for a year of full-time care for a four-year-old in a day-care center ranged from $3,900 in Mississippi to $11,700 in Massachusetts. The average cost of before- and after-school care in a center ranged from about $1,950 in Mississippi to nearly $11,000 in New York. 1 If you or your spouse pass away when your children (or grandchildren you may be caring for) are young, there may be additional child-care costs to consider. And don t forget about any elder care you may be responsible for as well. A Lincoln universal life death benefit can help cover these costs. College education On average, tuition increases about 8% per year roughly twice the general inflation rate, and with annual costs for a private college running more than $39,000 a year, protection is essential. 2 A Lincoln universal life death benefit can help ensure that a college education for your children or grandchildren is still within reach. Medical expenses Your family may not be able to cover major healthcare expenses without your income stream or healthcare benefits. Basic health coverage can be a costly expense that a Lincoln universal life death benefit can help cover. Also consider that you might be helping to cover medical expenses for an older relative. Insurance should be flexible enough to meet your changing needs 1 ChildCare Aware of America, Parents and the High Price of Child Care: 2012 Report, accessed April 16, FinAid, Tuition Inflation, The Smart Student Guide to Financial Aid, accessed April 16, The College Board, Trends in College Pricing 2012, accessed April 16, Society of Actuaries, Single Life Expectancy Calculator, accessed April 16, 2013.

5 Retirement income for your spouse Your spouse may outlive you by many years. Presently, one member of a 65-year-old couple has a 50% chance of living to age 90 and a 30% chance of living to age A Lincoln universal life death benefit can replace years of income you would have earned, as well as years of building retirement savings. Business protection and continuation There are many ways Lincoln can protect your life s work. It s typically not ideal for family members who are not involved in the business to have to step into the day-to-day operations especially under difficult circumstances. A Lincoln life insurance death benefit can fund a buy-sell agreement to protect the business from having to be sold and would ensure it continues the way you would have chosen. It can also fund a key person plan to protect your business from the loss of an essential employee. Estate planning Because it s generally paid income tax-free and can be structured so that it s not subject to estate taxes, your Lincoln universal life death benefit can provide for your loved ones, business or charity without eroding your retirement savings. By purchasing life insurance, you can actually increase your financial legacy for your beneficiaries and leave behind an amount that can be significantly more than the amount of money you paid for the policy. There are many estate planning tactics that can be utilized. Your attorney and Lincoln representative can help you find a strategy that makes sense for your situation. Have a spouse not employed outside the home? Consider the cost of services to replace essential tasks like child care and transportation, tutoring, cleaning, maintenance, auto repair, shopping, cooking, gardening, managing the household budget and much more. When you add it all up, the cost you would have to pay for others to perform these services could be significant.

6 See how Lincoln universal life can help you A hypothetical example Paul and Lisa have a blended family with one adult child and two sons in high school. Paul is an attorney who plans to continue practicing law for another 15 years. Paul and Lisa Ages: 60 and 53 Children: 3 Paul s Concerns If I die prematurely and my earnings potential is cut short, I want to be sure: My family has assets to replace my monthly income. My loved ones maintain their standard of living immediate and down the road. My business is protected and continues the way I ve planned. I am making the most of tax advantages when it comes to my legacy. My overall portfolio is diversified. My policy is flexible enough to meet my changing needs now and my beneficiaries needs later. Meeting needs with Lincoln universal life Paul s beneficiaries can receive flexible payout options including a monthly payout to help his family meet the expenses he is now covering with his paycheck. The things most important to Paul like his kids college tuition or security for his wife can be addressed with the death benefit. Paul has structured his policy to help ensure his law practice can carry on if he or a key employee dies prematurely. Because of the unique tax advantages of life insurance, Paul can structure his policy so that his beneficiaries can receive the death benefit generally income and estate tax-free. Lincoln universal life is flexible. Paul can guarantee the death benefit for the time frame he needs, choose the amount of protection that best suits his needs, and adapt that coverage as life changes. He can control the amount and frequency of premium payments. He can also add, at an additional cost, any of the available riders to further customize his policy. Paul and Lisa could also consider the addition of a second-to-die universal life policy to ensure they are maximizing the tax advantages of their estate plan. With the Lincoln universal life death benefit, Paul doesn t need to be concerned about stock market volatility. Guarantees are subject to the claims-paying ability of the issuing company.

7 Lincoln universal life Protect your plan for the future You ve heard about how Lincoln universal life can help protect your family or business. You ve learned about how it can play a key role in estate planning and help diversify your portfolio. And you ve just seen a hypothetical example of what it can do for one man who wants to ensure that he can protect what s most important to him. From the start, you have made many plans for the future. Protecting those plans with Lincoln universal life insurance is an important and fundamental step in looking forward with confidence both for you and your family. Talk to your advisor about which Lincoln universal life insurance product may be the right choice for you. With any universal life insurance policy, there are certain fees and associated costs, including the monthly cost of insurance, administrative expenses and premium load charges, and charges for additional riders. Ask your financial advisor for more detailed information. Also please discuss tax implications with your tax and legal advisors.

8 Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2013 Lincoln National Corporation LincolnFinancial.com Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. LCN POD 9/13 Z07 Order code: LIF-DB-BRC Important disclosures: This material was prepared to support the promotion and marketing of investment and insurance products. Lincoln Financial Group affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Lincoln universal life insurance is issued on policy forms UL5023, UL6000, SUL6008, UL5051, UL5062/ ICC12UL5062, UL5041, UL5072 and state variations by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker-dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. In some states, contract terms are set out and coverage may be provided in the form of certificates issued under a group policy issued by The Lincoln National Life Insurance Company to a group life insurance trust. Policies sold in New York are issued on policy forms UL5023N, UL5051N and UL5062N by Lincoln Life & Annuity Company of New York, Syracuse, NY, and distributed by Lincoln Financial Distributors, Inc., a broker-dealer. All guarantees and benefits of the insurance policy are subject to the claims-paying ability of the issuing insurance company. They are not backed by the broker-dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. Products, riders and features are subject to state availability. Limitations and exclusions may apply.