Life Insurance Retirement Plan

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1 Eighty-eight percent of all Americans are worried about maintaining a comfortable standard of living in retirement. - Americans for Secure Retirement. (2012)

2 Cause for Concern Eighty-eight percent of all Americans are worried about maintaining a comfortable standard of living in retirement, according to a 2012 survey by Americans for Secure Retirement. Based on recent statistics, this majority of Americans are justified in their concern. The U.S. Department of Labor estimates that an individual will need 70 to 90 percent of their pre-retirement income to maintain their current standard of living once they begin retirement. It seems that a large portion of Americans will not been able to secure the adequate 70 to 90 percent income through their current retirement planning. The average retired middle- income American will have to reduce their standard of living by 51 percent to avoid outliving their financial assets, according to a 2009 study by Ernst & Young. Additionally, one-third of U.S. homeowners, between the ages of 30 and 59, will not be able to maintain their standard of living after retirement, even if they delay their retirement until age 70, according to a 2012 study by the Employee Benefit Research Institute.

3 Cause for Concern This lack of preparation has left many retirees with unwarranted debts in the past. In 2010 more than 80 percent of those between age 50 and 61 held debt, according to the Social Security Administration (SSA). The average debt amount among this age group was more than $150,000. In the same year those aged 75 and older held an average debt of $27,409. Alarmingly, that figure had more than doubled since 2007 when the average debt was $13,665, according to the Employee Benefit Research Institute (EBRI). One out of every six elderly Americans in 2012 was living below the federal poverty line, according to the U.S. Census Bureau. Furthermore, 56 percent of American retirees still had outstanding debts when they retired in 2012, according to a survey by CESI Debt Solutions. Today, based on data from recent surveys, a large percentage of American workers are still not taking the necessary precautions to save for their retirement. More than 35 percent of workers have less than $1,000 in savings and investments that directed towards their retirement (not counting their primary residence or defined benefits plans such as traditional pensions), according to a 2014 survey by the Employee Benefit Research Institute and Greenwald and Associates. Additionally, about 60 percent of workers have less than $25,000, according to the survey.

4 The Solution One financial tool you may use to supplement your retirement and add to your financial portfolio is a life insurance retirement plan. A life insurance retirement plan provides death benefit protection potentially income tax-free to the beneficiaries. In addition, the strategy can be a cash accumulation vehicle that grows tax deferred and may be used to supplement retirement. Using an indexed universal life insurance policy in a life insurance retirement plan, when premiums are paid, a portion pays for the insurance coverage and any fees involved while the rest is added to the cash value. The total amount of cash value is credited with interest over the duration of the policy. This deferred growth of cash value may help alleviate the higher capital gains and income tax consequences. Policy owners can generally access their policy s available cash surrender value for supplemental retirement income, cash emergencies, or other financial needs income tax-free, as long as the policy is properly structured. * The tax-free income from loans and withdrawals may provide the policy owner with a cost-effective method to supplement their retirement income.

5 How it Works You purchase a personally owned cash value life insurance policy. Any growth in the policy s cash value will be tax-deferred. At your death, your beneficiary will receive the policy s net death benefit income tax-free. You take taxable retirement plan distributions. At your retirement, you may take tax-free loans or withdrawals from the policy s available cash value to pay the income taxes due on your retirement plan distribution. * Income Taxes are paid!

6 Other Benefits Adding a benefit rider, such as a chronic, critical or terminal illness rider, to the life insurance policy is another method to strengthen your post retirement financial plan. The three major cases of chronic illness are cancer, heart disease, and stroke. Based on 2013 findings from the American Association for Critical Illness Insurance (AACII), an individual has more than a 20 percent chance of experiencing any of those three conditions before age 65. In 2012 around 1.5 million Americans declared bankruptcy, about 60 percent of those bankruptcies were due to medical bills, according to the AACII. What s disturbing is that this figure has risen 50 percent over the past six years. More than 75 percent of those affected had health insurance, but they were still impacted by deductibles, co-payments and other uncovered expenses. Planning for a long-term illness is a necessity that most Americans seemingly overlook. Making arrangements for this type of situation is going to be more expensive the longer you wait. Generally, at younger ages you are more likely to qualify for good health discounts and lower annual premiums. This type of care can last for undetermined amounts of time, costing the victim and their family tens or even hundreds of thousands of dollars. Life-long savings and retirement funds can be threatened by the associated costs of care. In any case, it is best to speak with a licensed professional before making deciding which type of insurance or retirement planning strategy is best for you. *

7 * The following presentation is for educational purposes only and should not be considered as specific investment or planning advice. Depending on individual circumstances, the strategies discussed in this presentation may not be appropriate for your situation. Please consult a qualified advisor regarding your individual circumstances. This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. For federal income tax purposes life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a) Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage and will reduce the death benefit and policy values. Benefits included in these plans are based on IRS code sections 7702 and 7702A. One should consult with a licensed insurance or financial professional before participating in any insurance or financial strategy mentioned in this document.