Opportunities For 2013

Transcription

1 Opportunities For 2013 ING Life Companies Cullen England, CLU, ChFC, MSFS, AEP RETIREMENT INVESTMENTS INSURANCE Retirement - Life Insurance - Investments 1

2 Disclosure The ING Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive; the applicable laws change frequently and the strategies suggested may not be suitable for everyone. Each taxpayer should seek advice from his or her tax and legal advisors regarding their individual situation. These materials are not intended to and cannot be used to avoid tax penalties; and they were prepared to support the promotion or marketing of the matter addressed in this document. Many life insurance products have some flexibility in structuring the face amount, riders, premium and cash values. Therefore, it is important that you consider your client s particular needs, circumstances and goals carefully, and discuss them at length before recommending any life insurance product. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies. Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Variable universal life insurance products are distributed by ING America Equities, Inc. Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and it's products issued. All are members of the ING family of companies 2

3 Disclosure ING Indexed Universal Life - Global Choice (ING IUL-Global Choice), policy form # /12, ING Indexed Universal Life - Global (ING IUL-Global) policy form series # /09 and ING Indexed Universal Life Global Plus (ING IUL-Global Plus), policy form series # /10 have an equity indexed feature, varies by state and may not be available in every state. Not available in New York. They are issued by Security Life of Denver Insurance Company (Denver, CO), a member of the ING family of companies. The index cap and index participation rate are subject to change for new index blocks. These policies contain an index-linked crediting strategy that is calculated based on changes in external indexes. While policy values may be affected by the external indexes, the policy is not an investment in the stock market and does not participate in any index fund, stock or equity investments. These unmanaged indexes are not intended to represent specific investments. Investors cannot invest directly in an index. Past performance is not guarantee of future results. Product s actual features and benefits, expenses, loads and charges, may vary from client to client and will impact the values shown. Products are not identical, and the products specific features and the client s use of those features will impact long term policy performance. Registered and/or variable insurance products are offered by prospectus only. To solicit registered and/or variable insurance products you must be appointed with the issuing insurance company and be a registered representative of a broker-dealer that has a current selling agreement with the issuing company; variable insurance products may also require you to obtain a variable insurance product line on your insurance license. Before investing, your clients should carefully consider their need for life insurance coverage and the charges and expenses of the variable universal life insurance policy. They should also consider the investment objectives, risks, fees, and charges of each underlying variable investment option. This and other information is contained in the prospectuses for the variable universal life insurance policy and the underlying variable investment options. Obtain these prospectuses for your client by calling or from Your clients should read them carefully before investing. 3

4 Disclosures The S&P 500 Index is an Index of the stock performance of 500 publicly traded companies that does not reflect the dividends payable on the underlying stocks. Standard & Poor s, S&P, S&P 500 are registered trademarks of Standard & Poor s Financial Services LLC and have been licensed for use by Security Life of Denver Insurance Company. The Policy is not sponsored, endorsed, sold or promoted by Standard & Poor s and Standard & Poor s makes no representation regarding the advisability of investing in the Policy. EURO STOXX 50 Index An Index of blue-chip stocks that are represented by 50 stocks covering the largest sector leaders in the EURO STOXX 50 Index. It does not reflect dividends payable on the underlying stocks. STOXX Limited, Zurich, Switzerland and its licensors (the Licensors ) have no relationship to Security Life of Denver Insurance Company ( Security Life ), other than the licensing of the EURO STOXX 50 Index and the related trademarks for use in connection with the ING Indexed Universal Life Global Choice ( ING IUL-Global Choice ) insurance policy. STOXX and its Licensors do not: (1) Sponsor, endorse, sell or promote the ING IUL-Global Choice policy; (2) Recommend that any person invest in the ING IUL-Global Choice policy or any securities; (3) Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the ING IUL-Global Choice policy; (4) Have any responsibility or liability for the administration, management or marketing of the ING IUL-Global Choice policy; or (5) Consider the needs of the ING IUL-Global Choice policy or the owners of the ING IUL-Global Choice policy in determining, composing or calculating the EURO STOXX 50 Index or have any obligation to do so. 3

5 Disclosures The Hang Seng Index (the Index ) is published and compiled by Hang Seng Indexes Company Limited pursuant to a license from Hang Seng Data Services Limited. The mark and name Hang Seng Index are proprietary to Hang Seng Data Services Limited. Hang Seng Indexes Company Limited and Hang Seng Data Services Limited have agreed to the use of, and reference to, the Index by Security Life of Denver Insurance Company ( Security Life ) in connection with this Indexed universal life insurance policy (the Policy ), BUT NEITHER HANG SENG INDEXES COMPANY LIMITED NOR HANG SENG DATA SERVICES LIMITED WARRANTS OR REPRESENTS OR GUARANTEES TO ANY BROKER OR HOLDER OF THE POLICY OR ANY OTHER PERSON (i) THE ACCURACY OR COMPLETENESS OF THE INDEX AND ITS COMPUTATION OR ANY INFORMATION RELATED THERETO; OR (ii) THE FITNESS OR SUITABILITY FOR ANY PURPOSE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT; OR (iii) THE RESULTS WHICH MAY BE OBTAINED BY ANY PERSON FROM THE USE OF THE INDEX OR ANY COMPONENT OR DATA COMPRISED IN IT FOR ANY PURPOSE, AND NO WARRANTY OR REPRESENTATION OR GUARANTEE OF ANY KIND WHATSOEVER RELATING TO THE INDEX IS GIVEN OR MAY BE IMPLIED. The process and basis of computation and compilation of the Index and any of the related formula or formulae,constituent stocks and factors may at any time be changed or altered by Hang Seng Indexes Company Limited without notice. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO RESPONSIBILITY OR LIABILITY IS ACCEPTED BY HANG SENG INDEXES COMPANY LIMITED OR HANG SENG DATA SERVICES LIMITED (i) IN RESPECT OF THE USE OF AND/OR REFERENCE TO THE INDEX BY SECURITY LIFE IN CONNECTION WITH THE POLICY; OR (ii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES OR ERRORS OF HANG SENG INDEXES COMPANY LIMITED IN THE COMPUTATION OF THE INDEX; OR (iii) FOR ANY INACCURACIES, OMISSIONS, MISTAKES, ERRORS OR INCOMPLETENESS OF ANY INFORMATION USED IN CONNECTION WITH THE COMPUTATION OF THE INDEX WHICH IS SUPPLIED BY ANY OTHER PERSON; OR (iv) FOR ANY ECONOMIC OR OTHER LOSS WHICH MAY BE DIRECTLY OR INDIRECTLY SUSTAINED BY ANY BROKER OR HOLDER OF THE POLICY OR ANY OTHER PERSON DEALING WITH THE POLICY AS A RESULT OF ANY OF THE AFORESAID, AND NO CLAIMS, ACTIONS OR LEGAL PROCEEDINGS MAY BE BROUGHT AGAINST HANG SENG INDEXES COMPANY LIMITED AND/OR HANG SENG DATA SERVICES LIMITED IN CONNECTION WITH THE POLICY IN ANY MANNER WHATSOEVER BY ANY BROKER, HOLDER OR OTHER PERSON DEALING WITH THE POLICY. Any broker, holder or other person dealing with the Policy does so therefore in full knowledge of this disclaimer and can place no reliance whatsoever on Hang Seng Indexes Company Limited and Hang Seng Data Services Limited. For the avoidance of doubt, this disclaimer does not create any contractual or quasi-contractual relationship between any broker, holder or other person and Hang Seng Indexes Company Limited and/or Hang Seng Data Services Limited and must not be construed to have created such relationship. 4

6 What Does This All Mean? Save People Need to Save More Risk of higher taxes and less benefits in the future Protect People Need to Protect More Income replacement & tax rate insulation Prompt We Need to Educate Clients, so They Act BEFORE it is Too Late! 6

7 2013 Our Focus ACCUMULATION & PROTECTION Term Insurance Foundation Leverage E-Delivery and other E-Solutions Maintain solid cycle times Current Assumption Product Opportunities ING Protector UL (policy form ) Competitive UL for Death Benefit focused needs VUL ING IUL-Global Choice Middle, Mass Affluent and Affluent Market Solutions Training and Education Training and Education 7

8 ING Life Companies: A Complete IUL Platform Comprehensive End-to-End Platform Product Market Segents Tols Concierge Unique Product Family IUL Education & Training Market Segments: Middle, Mass & Affluent Tools: Percentiles Calculator Index Reporting Concierge Service 8

9 ING IUL-Global Choice A Good Fit Product Three Index Strategies Early Cash Value Rider Traditional Loans or Combination of Strategies Long-term Accumulation Potential Select Loans 9

10 INDEXED UNIVERSAL LIFE First IUL was 1968 Not as new as you think. There have been several generations already. Some are better than others. WE THINK OURS IS BEST LET S SEE WHY!

11 IUL DESIGN EVOLUTION SINGLE INDEX The Beginning Multi- Index Several Indices You Choose Multi-Index Several Indices Carrier Chooses Multi-Index Several Indices Market Chooses

12 WHY MULTI-INDEX 12

13 Percentage of World Stock Market Capitalization Canada 5% Other Europe 20% United States 49% United Kingdom 10% Other Pacific 6% Japan 10% Source: Ibbotson Stocks, Bonds, Bills, and Inflation Yearbook It is a BIG WORLD out there - 51% Non US! 13

14 The U.S. Is Not Always the WINNER! Best 2nd Best Worst THE USA IS NOT ALWAYS THE WINNER 70's 80's 90's 00's Canada 11.00% 11.70% 9.90% 9.20% 10.70% Europe 8.60% 18.50% 14.50% 2.40% 10.70% Pacific 14.80% 26.40% 0.50% -0.30% 10.00% EAFE 10.10% 22.80% 7.30% 1.60% 10.10% USA 5.90% 17.60% 18.20% -0.90% 10.00% WORLD 7.00% 19.90% 12.00% 0.20% 9.60% Long Term Returns for the different parts of the World are remarkably similar However, there is significant difference from decade to decade! Source: Ibbotson Stocks, Bonds, Bills, and Inflation Yearbook 14

15 WHAT IF THERE WAS A WAY TO CAPTURE JUST THE BEST PERFORMANCE HOW WOULD THAT LOOK? 15

16 Global Indexed Strategies Available in 2 Year and 5 Year strategies Both the 2 Year and 5 Year Indexed Strategies use the following indexes: S&P 500, EURO STOXX 50, Hang Seng Index After each 2 Year or 5 Year index crediting period, a portion of the two top indexes are used in the Index Credit calculation as follows: 75% of the highest Index Change Rate; plus 25% of the next highest Index Change Rate; 0% of the lowest Index Change Rate 0% Guaranteed Minimum Interest Rate

17 Global Indexed Strategies These unmanaged Indexes are not intended to represent specific investments. Investors cannot invest directly in an Index. Past Index performance does not represent future performance of these Indexes. The finishing positions for each Index were determined based on the changes in the value of each Index between the 28th day of each month during the period shown and the same date two or five years earlier. The percentages shown reflect the number of times that each Index had the highest (1st place), second highest (2nd place), and lowest (3rd place) 2-year or 5-year Index Change Rate on the 28th day of each month during the period. The data provided provides only a comparison of the Indexes to each other and provides no information relative to the performance of the Indexes during the period shown.

18 Which Strategy Should Be Picked? 18

19 ING IUL-Global Choice A Good Fit Product Three Index Strategies Early Cash Value Rider Traditional Loans or Combination of Strategies Long-term Accumulation Potential Select Loans 19

20 Select Loans Select Loans are policy loans in which an amount equal to the loan is added to the policy Loan Amount while also remaining in the Fixed Strategy and/or Indexed Strategy as elected by the policy owner - Interest rate charged on the Loan Amount on Select Loans* is fixed at 6.0% per year (current and guaranteed) - Allows access to policy values while still enjoying the growth potential offered by ING IUL-Global Choice. 20

21 Select Loans The Risk in a Picture Crediting rates and Index credits less than 6% have a negative spread - Historical Returns 1 Year Hypothetical Periods - 6% Select Loan Interest Rate 21

22 Education - A Necessary Foundation Training Learning Critical Product Basics How IUL Really Works, and How to Illustrate and Compare Understanding The Power Of Global Leveraging the Power of ING IUL-Global Choice Utilizing ING s Accumulation and Protection Platform Critical Capabilities Beyond the Product Aligning To Market Segment Solutions Environmental Changes To Prompt Clients to Act Now Positioning for Middle, Mass Affluent and Affluent Markets 22

23 IUL - Multiple Market Opportunities Market Segments Middle Market (protection & retirement) Term and IUL Combo Mass Affluent Market (retirement) S.O.L.A.R. (Self Owned Life And Retirement) Insurance Arrangement Employer /Business Owner funded approaches Employee / Individual funded approaches (401k look-alike) Affluent Market (estate planning & asset management) Leverage sales (premium and private financing) Non-Leverage sales with tax advantaged asset (cash value) 23

24 IUL Tools Percentile Guide Tools Compare indexing strategies fairly Historical percentile rates do not and should not be used to predict index credit rates in the future. Past performance does not guarantee future results. 24

25 IUL Tools Hypothetical Index Strategy Calculator Tools When you want to compare a specific rate Historical percentile rates do not and should not be used to predict index credit rates in the future. Past performance does not guarantee future results. 25

26 Retirement Security Isn t About Our Assets; It s About Our Income We can t spend our assets, we need to convert them into something we can spend first 26

27 Traditional Solutions 27

28 What are the ideal attributes of a retirement plan Pre Tax Deposits Tax Deferred Growth Tax Free income What is your retirement account worth if you die before retirement? Your retirement plan is broken! Life Insurance can provide spouse with a definitive answer 28

29 Summary Taxable Bucket Tax-Deferred Bucket- Qualified Accounts Tax Deferred Bucket- Other Assets Tax-Free Bucket Money In Deposits Growth After Tax Pre-Tax After-Tax After-Tax Immediate Tax No Deferral Tax-Deferred Tax-Deferred Tax-Deferred Money Out Deposits Tax-Free Fully Taxed Tax-Free Tax-Free Money Out- Growth Fully Taxed Fully Taxed Tax Rates Vary By Asset Tax-Free 29

30 Roth IRA alternative What do people like about the Roth IRA? After Tax Dollars Grows Tax Deferred Tax Free Income No Required Distributions Spousal Rollover What don t people like about the Roth IRA? Nothing!! Except the Mass affluent can t qualify. Anybody that doesn't qualify for a Roth IRA, LOVES the Roth IRA. 30

31 Retirement Solutions 45 Male, Preferred Nonsmoker Assumes 7.47% 31

32 Retirement Extra using Life Insurance 45 Male, Preferred Nonsmoker Assumes 7.47% Pretax equivalent of $104,447 32

33 WHAT ARE THE 4 USES OF SOLAR? SOLAR For The Key Employee Benefit SOLAR For The S-Corp, LLC Or LLP Owner IRA RESCUE 72(t) IRA RESCUE, RMD 33

34 SOLAR FOR THE KEY EMPLOYEE S BENEFIT Not Subjected To The Company s Creditors No Cost To Employee Who Can Participate? No ERISA 34

35 Key Employee Key Employee Receives Bonus Of $20,000 for 20 years Employee is in a 35% Tax Bracket Retirement Age 65 Retirement Income For 25 Years 35

36 Key Employee Comparison 36

37 Key Employee Comparison 37

38 SOLAR FOR THE SMALL BUSINESS OWNER What Is The Number 1 Question The Owner Of A Small Business (S-Corp, LLP, or LLC) Ask Their Advisors?? What About Me? 38

39 SMALL BUSINESS OWNER Male Age 50, Preferred Non Tobacco 40% Tax Bracket Pay $100,000 Per Year For 15 Years Retire At Age 70. Take Retirement Distributions For 20 Years Minimum Face Amount, Increasing And Optimal Switch Exercise The Overloan Lapse Protection Rider 8.18% Illustrative Rate 39

40 SMALL BUSINESS OWNER OPPORTUNITY 40

41 SMALL BUSINESS OWNER OPPORTUNITY 41

42 S.O.L.A.R. Insurance Arrangements funded by IRA Distributions According to the Investment Company Institute, there is about $4.7 trillion invested in IRA s IRA Distributions are income taxable at receipt Those taxes are not known at this time If desired, the client could borrow money from the ING IUL-Global Plus policy to pay the income taxes owed on the IRA distributions. ING IUL Global Plus provides death benefit protection and a resource to pay income taxes that may be due A complete assessment of the client's financial situation should be performed with the client's tax advisor and should include several important considerations, such as if the amount or method of payment changes, the 10% penalty applies retroactively, Federal and State ordinary income taxes are still applicable, there is a possibility your client could exhaust their retirement account early, and any Internal Revenue Code Section 72(t) distribution payment over the free withdrawal provisions of the existing contract or investment may be subject to surrender charges, should be reviewed with your client when considering this option. For For agent/registered agent/registered representative representative use use only. only. Not Not for for public public distribution. distribution. 42

43 SOLAR IRA RESCUE 72(t) Male 50, Preferred Non Tobacco, 35% Tax Bracket His Current IRA Balance Is $300,000. He Is Going To Take A 72(t) Distribution For 10 Years. At Age 60, He Will Then Liquidate The Rest Of His IRA Over The Next 10 Years. Distributions From Age 70 To Age 90 43

44 SOLAR IRA RESCUE 72(t) 44

45 SOLAR IRA RESCUE 72(t) 45

46 SOLAR IRA RESCUE 72(t) 46

47 SOLAR IRA RESCUE RMD Male Age 65, Preferred Non Tobacco Current IRA Balance of $1,000,000 Does Not Need IRA For Retirement And Would Like To Pass It On To His Children. 35% Tax Bracket He Liquidates His IRA Over 5 Years By Taking Withdrawals Of $200,000 Per Year 47

48 SOLAR IRA RESCUE RMD 48

49 Roth IRA alternative What do people like about the Roth IRA? After Tax Dollars Grows Tax Deferred Tax Free Income No Required Distributions Spousal Rollover What don t people like about the Roth IRA? Nothing!! Except the Mass affluent can t qualify. Anybody that doesn't qualify for a Roth IRA, LOVES the Roth IRA. 49

50 Retirement Solutions 45 Male, Preferred Nonsmoker Assumes 7.47% 50

51 Retirement Solutions 54% INCREASE IN TARGET $30, $615,380 $723,905 $75,500 12% INCREASE IN DISTRIBUTIONS $2,642,500 $20,051,579 $664,000 $1,092,306 $20.252,366 51

52 Information Keep Clients Informed! Reporting Monthly report for policyholders featuring interim index values. 52

53 ING Global Life Concierge Concierge Available on Global family of products ING s commitment is to provide you and your client customized retirement income analysis and we monitor those distributions annually. Count on a Dedicated Service Team Answers questions about your client s policy during the accumulation phase regarding premiums, loans, illustrations, distributions and more. Trained to maximize your client s policy distributions to supplement income during the distribution phase while lessening the risk of policy lapse. Trained to lessen the risk of negative income tax consequences for your clients. * We reserve the right to change or modify this program at anytime in the future. 53

54 Why? Unlike annuities which have no hidden hazards in the event of lapse Life Insurance can be subject to PHANTOM INCOME The ING Concierge Unit is available to help clients manage and maximize income from policies and avoid phantom income. 54

55 The Problem Illustration systems easily solve for the maximum income for an assumed illustrated crediting rate. This illustration has absolutely nothing to do with what can be taken out of a policy! This presents a serious problem for the Client, the Agent and the Carrier. 55

56 Example Original Illustration: M45 PNT - $25,000 annual premium to age 65 Distribution age (traditional loans only) ING IUL-Global Choice 2-year point to point Global Index Strategy Unlimited Cap / 0% floor / 55% participation 7.4% illustration rate CSV at age 65 = $920,389 Annualized distribution $84,500 (percent of CV at age 65 = 9.18%) 56

57 Here We Are at Retirement Age 65 Let s assume we had an un-eventful accumulation period. We have arrived at retirement with $920,389 in cash surrender value. The client picks up the original illustration out of his slightly musty file and sends a note to the insurance carrier to start sending him $84,500 every year. What happens if the future crediting rate averages 7% over 10 year periods instead of the 7.4% assumed in the original illustration? 57

58 Insert 10 year hypothetical index return rates - Repeat Original illustration assumed 7.4% return in all years. Hypothetical Index Credit Rates Year Illust. Rate 1 6% 2 5% 3 8% 4 9% 5 7% 6 8% 7 4% 8 9% 9 6% 10 8% Ave 7.00% 58

59 If We Leave The Client On His Own! BIG PROBLEM! $84,500 Client Takes Projected Income Lapses at age 85 $1,654,569 income received - 500,000 cost basis $1,154,569 Taxable Income $461,827 Tax due at 40% bracket 59

60 Concierge Distribution Options Original Distribution Results Income age 66 to 84 $84,500 Income age 85 $49,069 LAPSED age 85 Total Income $1,605, year Avg Income $80,275 Original Distribution Results with OLP Rider Income age 66 to 83 $84,500 Income age 84 $61,470 Income age 85 $4,607 Total Income $1,587, year Avg Income $79,353 Resolve Level Distribution Income age 66 to 85 $82,677 Total Income $1,653, year Avg Income $82,677 Age 121 CV LAPSED Age 121 DB LAPSED Taxable Inc $1,154,569 40% $461,827 Age 121 CV $0 Age 121 DB $0 Taxable Inc none 40% none Age 121 CV $1,008 Age 121 DB $1,008 Taxable Inc none 40% none 60

61 Concierge - Annual Managed Re-Solve Original Distribution Results Total Income $1,605, year Avg Income $80,275 Age 121 CV LAPSED Age 121 DB LAPSED Taxable Inc $1,154,569 40% $461,827 Resolve Level Distribution Total Income $1,653, year Avg Income $82,677 Age 121 CV $1,008 Age 121 DB $1,008 Taxable Inc none 40% none Managed Distribution Results Age Dist Age Dist 66 80, , , , , , , , , , , , , , , , , , , , ,000 Total Income $1,718, year Avg Income $81,900 Age 121 CV $1,008 Age 121 DB $1,008 Taxable Inc none 40% none Income range from $80,000 to $84,500 Income extended one year longer Higher total income Policy stays inforce to maturity 61

62 WHAT ABOUT SELECT LOANS? 62

63 SIMILAR DIFFERENT - VOLATILE Historically, Select Loans are positive 65% to 75% of the time. They may be worthwhile. Select Loans will result in more volatile income streams than is show in illustrations. If you have support, a Concierge Unit, in ING s case, you can work with Select Loans. IF YOU DON T - DISASTER AWAITS!!! 63

64 Concierge Unit Extremely Important Leaving a Client on their own is Dangerous. Concierge is Necessary for all Leverage Sales. If Your Carrier Can t or Won t Do It - You Must! Take it Seriously! 64

65 How The Concierge Unit Can Help? ING Life Companies sends reminder to Client Annually. Client & Concierge Unit Agree on Assumptions. Annual Re-Solve is Done to Maximize Income. Start With Original Sales Assumptions or Use More Conservative Assumptions. 65

66 THE A.P.P. ING s Accumulation & Protection Platform (A.P.P.) Download Icon to ipad! 66

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68 The Opportunity People need to : Save More Protect More 68

69 Life Insurance a Great Solution ING s Accumulation and Protection Platform ~ The complete IUL Package 69

70 THANK YOU! Questions? 70