Presentation on theme: "Income Maximization Leveraging current assets can provide: Guaranteed lifetime income Guaranteed death benefit for your heirs Manulife and the block design."— Presentation transcript:
Income Maximization Leveraging current assets can provide: Guaranteed lifetime income Guaranteed death benefit for your heirs Manulife and the block design are registered service marks and trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial corporation. The Manufacturers Life Insurance Company of New York, Valhalla, NY. All rights reserved. MNY Expires 02/2005
2 Many investors were under the impression they would be receiving 7% returns on their investments for life. 1 1 Wall Street Journal, “ Author worries that investors are unprepared for retirement.”, May 29, 2003.
3 Many retirees have been forced to return to the workplace due to: Dwindling savings Lost pensions Death of a spouse Divorce
4 Returns on “Safe” Investments Money Market Fund1.41% 5-yr CD3.05% 10-yr Muni Bond (AAA) 2.99% 10-yr Corp Bond (AAA) 4.14% bonds.yahoo.com, as of June 26, 2003
5 Do your clients cringe each time their 401(k) or investment statement arrives?
6 Do they fear that they will need to go back to work to make ends meet?
7 Recommend Income Maximization
8 What is Income Maximization? Liquidating an asset that is not generating enough annual income Purchase a single premium immediate annuity (SPIA) 1 1 The liquidation of any investment asset may result in sales charges and taxes. A single premium immediate annuity may have more risks and cost associated with it than other investment options. Manulife New York does not issue the Single Premium Immediate Annuity.
9 What is Income Maximization? Part of SPIA payment provides income for life Part pays annual premium for Manulife UL-G Which can provide…
10 What is Income Maximization? Guaranteed income as long as you live 1 Guaranteed death benefit for your heirs 2 1.SPIA income is taxable. The tax due will vary depending on your tax bracket and your exclusion rate each year. Manulife New York does not issue the Single Premium Immediate Annuity. 2.Manulife New York UL-G is issued by The Manufacturers Life Insurance Company of New York, [Manulife New York], a stock company which is a member of the Manulife Financial New York of companies, wholly owned subsidiaries of Manulife Financial New York.
11 Client Profile Age 70 and older Concerned about having enough retirement income Wants to create a legacy for heirs Invested in “safe investments” such as CDs, money market funds, Muni and Corporate Bonds
12 Why Income Max? Secure, safe, and guaranteed income stream from SPIA 1 Usually more income is generated than before Able to purchase a Manulife UL-G to create a legacy 1.SPIA income is taxable. The tax due will vary depending on your tax bracket and your exclusion rate each year. Manulife New York does not issue the Single Premium Immediate Annuity.
13 How it Works Three Simple Steps 1.Liquidate or sell existing assets 2.Purchase a SPIA 3.Gift excess annuity income to an ILIT using annual exclusion gifts 1 1Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation-skipping tax). Failure to do so could result in adverse tax treatment of trust proceeds.
14 Advantages and Disadvantages Advantages –Eliminate market risk –Maximize net after-tax income –Potentially increase investment rate of return –Increase legacy to heirs Disadvantages –Potential loss of liquidity –SPIA is locked, no changes permitted –Underwriting for life insurance policy necessary –SPIA and life insurance may have more risk and charges
13 Case Study LuAnn Edmunds
16 The Facts LuAnn Edmunds, age 84, non-smoker preferred Retired, widow, 2 kids, 3 grandchildren $800,000 in corporate bonds with an A/T yield of 4% Annual bond income of $32,000 Wants to create a legacy for heirs
17 The Solutions Liquidate the corporate bonds and purchase a SPIA Use the excess income to buy a Manulife UL-G policy inside an ILIT
18 The Numbers The SPIA will generate $114,054 in annual income 1 $70,054 will be gifted to the ILIT to purchase a Manulife UL-G policy with a $800,000 face amount LuAnn will retain $44,000 in annual A/T income 1. $114,054 is the SPIA payment after tax due. The annual income may vary each year because the tax due will vary depending on your tax bracket and the SPIA exclusion rate each year.
19 Here is what it looks like 1 The after tax income will vary depending on your tax bracket and the SPIA exclusion rate each year. 2 Assumes premium is paid when due and there are no loans, withdrawals or face increases. Corporate Bonds $800,000 value $32,000 Annual Income SPIA $114,054 Annual Income Manulife UL-G $800,000 Face $70,054 Annual Premium 2 A/T Income 1 $44,000
20 Summary LuAnn will receive $12,000 in additional income – all guaranteed for life 1 She can create a legacy by purchasing a Manulife UL-G policy Peace-of-Mind and Legacy Creation The after tax income will vary depending on your tax bracket and the SPIA exclusion rate each year.
21 Manulife UL-G Guaranteed coverage for life –Policy Protection Rider –Age 100 Advantage Flexibility Affordability
20 For more information on Income Maximization, please call your local Manulife New York Representative, or the Advanced Markets Group at (800) , option 5