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Dial in For Audio: 1-877-273-4202 Access Code: 9669134 Taxes Matter…Renewing the Opportunity for Tax Free Income Strategies Revenue Generation Call #3.

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Presentation on theme: "Dial in For Audio: 1-877-273-4202 Access Code: 9669134 Taxes Matter…Renewing the Opportunity for Tax Free Income Strategies Revenue Generation Call #3."— Presentation transcript:

1 Dial in For Audio: Access Code: Taxes Matter…Renewing the Opportunity for Tax Free Income Strategies Revenue Generation Call #3 for 2013

2 Today’s Call  The opportunity for tax free accumulation solutions  Detailed review of the 4 options  Client Profile  Talking points, introductions, objections  Keys to success

3 Today’s Call Get the most out of today’s call! On a clean sheet of paper 1. Clients 2. Your “to do”

4  Bush tax cuts now permanent - most American's no change  New 39.6% income tax bracket for $400K S / 450K M  Estate/Gift /GST – Permanent  Now $5,250,000 indexed and portable, 40% tax rate  Cap Gains  0% for income below 25% bracket  15% for Income between 25% and 39.6%; 18.8% if 200/250K in investment income  20% for income above 39.6% bracket ; 23.8% if over 250K in investment income  Personal exemption ($3,800) phased out in 2013 at 250K/300K income  Itemized deduction limitation at 250K/300K level  Relevance to AGI  Permanent fix to AMT issues – exemptions increased and indexed Current Taxation

5  Remove tax uncertainty for portion of long term investment strategy  Tax deferred growth  Tax free distributions (walks like a Roth, talks like a Roth, call it life insurance)  Self completing accumulation in the event of death (and disability)  Greater flexibility in the future for death benefit planning  Asset protection in many states  Numerous investment strategy options Why Insurance Accumulation Solutions

6  Remove tax uncertainty for portion of long term investment strategy  Tax deferred growth  Tax free distributions (walks like a Roth, talks like a Roth, call it life insurance)  Self completing accumulation in the event of death and disability  Greater flexibility in the future for death benefit planning  Asset protection in many states  Numerous investment strategy options Best Long Term Financial Planning Vehicle available to the affluent today – Bar none Why Insurance Accumulation Solutions

7 The 4 Options  Universal Life - cash values invested in general fund of insurance company – carrier manages account - current low credited rate, but should increase  Index Universal Life - cash value in general fund plus upside potential on portion used to by options with performance linked to index performance - carrier manages account with owner choosing index strategy – cap upside and downside  Variable Universal Life - cash values invested in sub accounts that invest in an underlying portfolio of mutual funds – owner chooses – explicit fees  Whole Life - cash value invested in general fund of the carrier – carrier manages – consistent dividends – good guaranteed values

8 The 4 Options – cont.  Universal Life - proxy for a bond portfolio – carrier bears principal risk on bond portfolio due to increasing rates. Along with whole life – no down side risk  Index Universal Life - an alternative to fixed UL not VUL – offers enhanced performance with index – no downside risk  Variable Universal Life - unlimited upside and downside exposure. Offers greatest investment selection flexibility. Walks like a mutual fund, talks like a mutual fund, call it a sub account.  Whole Life - same investment structure as a UL contract but with dividends, no downside risk.

9 The 4 Options – cont.

10 Performance Summary

11 Strategies 1.Client asset and income diversification  Alternative to after tax investing

12 Strategies 1.Client asset and income diversification  Alternative to after tax investing 2. Executive Roth IRA/401K Look alike  Fully discriminatory  No funding limits  No income phase outs  Self fulfilling  Asset protected in many states  162 Bonus / REBA Plan

13 Strategies 3. Spousal Access Trust  Allows spouse of grantor access to policy cash values  Death benefit outside of estate  Spouse or children as trustee

14 Strategies 3. Spousal Access Trust  Allows spouse of grantor access to policy cash values  Death benefit outside of estate  Spouse or children as trustee 4. Cross Endorsed Buy Sell Agreement funding  Cross Purchase structure  Individual owns and controls own cash value  No back end taxable ownership transfers  For business owners that are cash cows  Two Birds – succession funding and supplemental retirement

15 Equity Account Comparison Comparing two investment strategies Male 38 pref. NS, Invests $12,000 yr. to age 65, Income for 20 yrs. starting at 66 7% return, 30% tax rate, 1% fee equity account Investment Option A (VUL) = $61,598 AT Income Investment Option B (Eqty Acc) = $49,907 AT Income

16 Client Profile  Age 40 to 60, high income  At least 10 years deferral  Max QP and saving after tax  Minimum of $500/mo, $6k/yr  Healthy, or spouse is healthy  Anti-tax  Asset protection

17 Client Profile cont.  Takes advice  Open to new ideas  Appreciates having a plan

18 Introduction Points  A Roth like solution for high income clients  Provides asset and income diversification  Investment is designed per risk profile  Equity, bond or any combination  Eliminates uncertainty of future tax code  DB is secondary but is self-fulfilling  Invest. gains are tax deferred, income is tax free  Investment strategy, not a life insurance solution

19 Introduction Conversation John, I know how you feel about taxes, and of course the recent tax changes just made your load a little heavier. With that in mind I want to briefly share an investment strategy with you that generates tax free income. With this plan your current investment gains are tax deferred, and when it is time for income, you receive that totally tax free. It is similar to the popular ROTH IRA, but because of your income you do not qualify for a ROTH. This solution is ideally suited to high income clients like you, and particularly those now paying a 3% surtax on investment income. I think it is something you will find of value and I would like to review this with you in person. What is the best day this week or next to visit for an hour?

20 Client Objection I have always heard that mixing investing and life insurance doesn’t work. Why not just do term and invest the difference? Response: I understand and I know there are some who are not advocates of this strategy. Two points- first, I am not recommending this as part of your life insurance protection, I don’t believe you need any more life insurance. And second, I am more concerned about the results and not so much how a solution is packaged. And what I mean by that is, for any solution I recommend for you, I focus primarily on what it does, not so much on what it is. What this “does” is provide confidence that you will have tax free income in retirement. How do you feel about tax free income?

21 Key Factors to Success  You gotta believe  Connect to the value, what it does is more important than what it is.

22 Key Factors to Success  You gotta believe  Connect to the value, what it does is more important than what it is.  Understand what is most important to your client  Taxes, flexibility, guarantees, risk profile

23 Key Factors to Success  You gotta believe  Connect to the value, what it does is more important than what it is.  Understand what is most important to your client  Taxes, flexibility, guarantees, risk profile  Preparation  Work with your Relationship Manager

24 Next Steps  Client List  Contact your Relationship Manager  No RM? Call CORE Case Design

25 Questions

26 Questions


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