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Protection Now. Income Later. Presented by June 2012 VLCM-OC-286A Life Insurance Retirement Plan for Women 1 of 18.

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Presentation on theme: "Protection Now. Income Later. Presented by June 2012 VLCM-OC-286A Life Insurance Retirement Plan for Women 1 of 18."— Presentation transcript:

1 Protection Now. Income Later. Presented by June 2012 VLCM-OC-286A Life Insurance Retirement Plan for Women 1 of 18

2 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. Pacific Life, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. 2 of 18

3 You should carefully consider a variable life insurance product’s risks, charges, limitations and expenses, as well as the risks, charges, expenses and investment objectives of the underlying investment options. This and other information about Pacific Life are in the product and underlying fund prospectuses available from your registered representative or by calling (800) Read the prospectuses carefully before investing. Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance products and their guarantees, including optional benefits and any fixed subaccount crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company, but they do not protect the value of the variable investment options. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency or their affiliates from which this product is purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Variable insurance products are distributed by Pacific Select Distributors, Inc., (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company, and an affiliate of Pacific Life & Annuity Company, and are available through licensed third-party broker- dealers. Pacific Life Insurance Company Newport Beach, CA (800) * Pacific Life & Annuity Company Newport Beach, CA (888) * Investment and Insurance Products: Not a Deposit – Not FDIC Insured – Not Insured by any Federal Government Agency – No Bank Guarantee – May Lose Value 3 of 18

4 Which Describes You? Sources of Affluence Business OwnerBusiness Owner ProfessionalProfessional Highly-Paid ExecutiveHighly-Paid Executive Divorce SettlementDivorce Settlement Inherited WealthInherited Wealth EntrepreneurEntrepreneur WifeWife Suddenly Single - Divorcee -WidowSuddenly Single - Divorcee -Widow Never MarriedNever Married Unmarried CoupleUnmarried Couple MotherMother DaughterDaughter CaretakerCaretaker Relationship Roles 4 of 18

5 Women as Key “Financial Decision Makers” * See “Women CEOs of the Fortune 1000” published by Catalyst, July 2009; ** “Men or Women: Who’s the Better Leader? A Paradox in Public Attitudes;” P. Taylor, R. Morin, D. Cohn, A. Clark, W. Wang, Research Analyst (August 25, 2008, Pew Research Center); org/pubs/932/men-or-women-whos-thebetter-leader and *** org/research/keyfacts/; see also “Key Facts About Women-Owned Businesses ( )” published by the Center for Women’s Business Research.http://pewresearch 5 of 18

6 Potential for Outliving Retirement Assets Family’s Financial Vulnerability Two Problems Facing Today’s Woman 6 of 18

7 What Unique Retirement Challenges Do Women Face? “Is retirement planning really that different for women?” 7 of 18

8 Women typically earn less. Women leave & rejoin the work force more often (i.e., pregnancy, spouse relocation, taking care of ailing parents. Less opportunity to contribute to a 401(k) or other retirement plan Why Women May Need To Save and Plan More Than Men Source: "Women And The Retirement Perfect Storm", M. Beams (May 2, 2012); Forbes.com at 8 of 18

9 Like men, as a woman’s income increases, a decreasing % of their income may be provided at retirement through qualified plans & Social Security Will You Have What You Need To Maintain Your Lifestyle? Compensation$50,000$70,000$100,000$150,000$200,000$250, (k) Plan Deferral 10% of Compensation* $5,000$7,000$10,000$15,000$17,000$16,500 Benefits at Age 67 from 401(k) Plan** 17,14824,01234,30751,46758,33156,615 Benefits at Age 67 from Social Security*** 20,14824,51628,69230,91230,97230,972 Total Retirement Benefits 37,33248,52862,99982,37989,30389,303 % of Compensation 74.7%69.3%63.0%54.9%44.7%35.7% *The maximum contribution for 2012 is $17,000. However, if you will attain age 50 before the close of the plan year, you will also be eligible to defer an additional $5,500 as a catch-up contribution. In order to take advantage of the catch-up contribution election, you must first defer and contribute the full $17,000 of your pay during the plan year. Chart does not reflect the use of the catch-up provision. The maximum annual contribution may differ for other types of qualified plans. ** Benefits from the 401(k) assume: (1) An individual age 45; (2) Contributions made for 22 yrs.; (3) Annual contribution increases at a rate of 2%; (4) 401(k) assets accumulate at 8% and payout is based on a single life annuity purchased at age 67. *** Social Security benefits are based on the 2009 Quick Benefit Calculator at Calculations assume: (1) An individual age 45 in 2012will receive full Social Security benefits at age 67; (2) A worker’s past earnings are based on the national average wage indexing series with a relative growth factor of 2%; (3) Current earnings stay the same until age 67 and are limited to the 2012 taxable maximum of $110,000.www.ssa.gov Annual Compensation Replacement Example 9 of 18

10 Where Do I Start? “What options do I have to save for retirement and how do they compare with each other?” 10 of 18

11 A Number of Ways to Save for Retirement 11 of 18 Annual Limits on Contributions Pre-Tax Contributions Tax-Deferred Accumulation Tax-Preferred Distribution Income Tax-Free Distributions at Death Traditional Individual Retirement Account (IRA) Yes No Roth IRAYesNoYesYes 1 Yes 2 Qualified PlanYes No Certificate of Deposit (CD) 3 No Mutual Fund 4 No Municipal Bond Fund 5 No Yes No Individual Owned Deferred Annuity No YesNo 6 No Life InsuranceNo 7 NoYesYes 8 Yes 9 1 A Roth IRA allows you to make contributions with after-tax money without current income tax deductions. You pay taxes now and may enjoy tax-free income later, provided you hold the Roth IRA for at least five years and don’t take distributions before reaching age 59½. If you do not meet the five years and attaining age 59½ requirements and need to take a distribution, you may owe income tax on earnings, and a 10% federal tax penalty may apply to the earnings and prior converted amounts. Similar to the traditional IRA, there are exceptions to the 10% federal tax penalty for withdrawals and the 59½ age requirement, such as first-time home purchase, death, disability, certain qualifying medical expenses, health insurance premiums, or higher-education expenses. 2 A distribution from a Roth IRA generally is income tax-free if (a) it meets all the requirements for a qualified distribution (which include a 5-year waiting period and one of several additional requirements, one being that the distribution is made to a beneficiary on or after the death of the individual), or (b) it is a nonqualified distribution to the extent of after tax distributions (basis). 3 A Certificate of Deposit (CD) is FDIC insured. 4 Mutual funds may be subject to income tax and/or capital gains taxation. Consult your tax advisor for more information. 5 Generally, interest paid on municipal bonds is tax-free, but not all municipal bonds are exempt from federal and/or state income tax. Some bonds may be subject to capital gains tax at sale. Consult your tax advisor for more information. 6 Upon distribution, when a contract annuitizes, a portion of principal is included in the annuity payout. The principal portion is not subject to tax. 7 There is not a specific limit on dollars allocated to purchase life insurance; however, there are maximum premium limits determined by a specified policy face amount. A policy will qualify as life insurance if it meets the requirements of IRC Sec. 7702, which includes limits on the amount of premium that may be paid into a specific face amount and still qualify as life insurance. 8 Tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC Sections 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 9 For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Section 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Section 101(a)(2) (i.e. the “transfer-for- value rule”); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Section 101(j ).

12 Financial Protection Death Benefit protects loved ones while building toward retirement.Death Benefit protects loved ones while building toward retirement. Cash Flow Flexibility Increase premiums as income increases, orIncrease premiums as income increases, or Suspend premiums at retirement.Suspend premiums at retirement. Supplements Income in Retirement Distributions through policy loans and withdrawals *Distributions through policy loans and withdrawals * Portability You own the life insurance policy so changing jobs or careers has no impact.You own the life insurance policy so changing jobs or careers has no impact. A Retirement Planning Plan to Consider… Life Insurance Retirement Plan (LIRP) Protection Now. Income Later. 12 of 18 *The amount of policy loans and withdrawals will depend on various factors that include policy performance and policy fees or expenses. Policy fees and expenses encompass premium loads, cost of insurance charges, administrative fees and charges, surrender charges or any other charges that may be incurred under the policy. A personalized illustration reflecting the effect of policy fees and expenses can be obtained from your financial advisor.

13 How Does the LIRP Work? “How do I structure a Life Insurance Retirement Plan?” 13 of 18

14 How It Works: Life Insurance Retirement Plan You, the Insured Beneficiaries Life Insurance Policy Annual Premiums Death Benefit Supplemental Retirement Income (Policy Loans/Withdrawals) 14 of 18

15 Protects Your Loved Ones Offers Flexibility in Cash Flow Provides Supplemental Income in Retirement How Does the Life Insurance Retirement Plan Help? 15 of 18

16 A Few Things To Consider Life insurance death benefit proceeds will be included in the insured’s taxable estate* (unless additional planning is completed). Policy may require additional premiums to meet supplemental retirement income needs. Premium payments are made with the policyholder’s after-tax dollars. * From January 1, 2012 to December 31, 2012, the federal estate tax exemption amount is $5,120,000 ; the maximum estate tax rate is 35%; and, the rules regarding step-up in basis for property transferred at death are reinstated. Also over the same time period, if the executor of a deceased spouse’s estate so elects, the surviving spouse could later use his or her own unused estate tax exemption, plus the unused exemption of his or her most recently deceased spouse. 16 of 18

17 Don’t Feel You Have To Go It Alone – As Your Life Insurance Producer, I can help you make a Product Choice that fits your risk tolerance & time horizon. 17 of 18

18 What Should I Do Next? 18 of 18 VLCM-OC-286A PT


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