For Producer or Broker/Dealer Use Only. Not for Public Distribution. Help your business owner clients Recruit, Reward and Retain their best employees Executive Bonus

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Agenda Identify Potential Clients and Their Concerns What is Executive Bonus and How Does it Work? Case Studies and Action Plan Consider MetLife for Business Owner Clients Please note: This document is designed to provide introductory information on the subject matter. MetLife does not provide tax and legal advice. Clients should consult their attorney and /or tax advisor before making financial investment or planning decisions.

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Identify Potential Clients & Concerns For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Age: Income: $100,000+ (Typically) Successful owner of a small business Would like to help supplement key employees retirement income and provide death benefit protection They may be their own key employee Looking for a plan that is easy to administer Do You Know This Client? Wants to improve benefits package for key employees

For Producer or Broker/Dealer Use Only. Not for Public Distribution. The Concern I want to provide additional benefits only for the employees I choose. I want to control the amount (and conditions upon the receipt) of these benefits. I still want a current tax deduction for my business. additional benefits control tax deduction

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Qualified Retirement Plans (QRPs) discriminate against highly compensated employees, limiting the percentage of income they may be able to contribute. QRPs force inclusion of rank and file employees. Success of business depends on one or more key employees. Need to provide better benefits than competition to recruit, retain and reward executives. Want to effect some control over executive with these benefits. Issues Facing These Clients

For Producer or Broker/Dealer Use Only. Not for Public Distribution. The Executive Bonus Plan For Producer or Broker/Dealer Use Only. Not for Public Distribution.

What is an Executive Bonus Plan? Executive Bonus Plans are simple to administer non- qualified plans. They are an innovative way to help Recruit, Reward and Retain key employees – while still generating a current year business tax deduction for the plan contributions. simple to administer tax deduction

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Assuming no restrictive endorsement, the executive can access the policy's cash value through withdrawals and loans. (Loans and withdrawals will decrease the cash value and death benefit) In the event of the executives death, his/her designated beneficiary will receive the life insurance policys death benefit. The death benefit (less any outstanding loan balance) generally is paid to his/her beneficiaries income tax free. The employer can directly pay the life insurance premiums to the insurance company or indirectly pay premiums via the bonus to the executive. The executive owns the policy and names a beneficiary of his/her choice. The employer selects the key executive(s) who will participate in the plan and enters into an agreement to purchase a life insurance policy. Executive access to policy cash value Life Insurance Premium Beneficiary Executive Employer Life Insurance Policy IRS Bonus Taxable Income Life Insurance Death Benefit 3 Tax deduction Tax-favored distributions assume that the life insurance policy is properly structured, is not a Modified Endowment Contract (MEC) and distributions are made up to the cost basis and policy loans thereafter. Should the policy lapse or be surrendered prior to the death of the insured, there may be tax consequences. Corporate Resolution How it Works

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solutions: Allows the Employer to Discriminate Employer has complete discretion over who is in the plan Employer can fund the plan generously, up to reasonable compensation guidelines* Employer can control when and how bonuses are paid *Overall compensation must fall within reasonable compensation limits as determined by the Internal Revenue Service.

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solutions: The Best Possible Staff Recruit Reward Retain Retire

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solutions: Tax Deductions vs. Control Golden handcuffs Restrictive bonus design With respect to a § 162 Executive Bonus plan, the employer should consult with and rely on independent legal and tax advisors regarding whether any executive bonus plan may be considered to be a welfare benefit plan under ERISA and if so, what requirements must be met.

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Employee determines policy beneficiaries 5 Discuss clients goals for business 1 Determine if client has employees they would like to provide additional benefits for 2 Determine scope of benefits to be provided Amount of bonus Restrictive or Non-restrictive 3 Business owner enters into agreement with covered employees 4 Initiate underwriting process on employee 6 Fund life insurance policy 8 Implementing an Executive Bonus Plan Bonus to employees in form of premiums or cash 7

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Case Studies & Action Plan For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Case Study: Darlenes Designs Darlenes goals: 1.Reward Sam, her website designer, with additional life insurance for his family in the amount of 10x his pay 2.Help provide Sam with an alternate source of retirement income, if needed 3.Keep Sam from considering a job with one of her competitors 4.Not be forced to provide equal benefits to her other employees

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solution: Executive Bonus Sam purchases a $1 million Universal Life insurance policy. Darlene's business pays expected annual premiums of $11,594 for 15 years - this is a taxable bonus to Sam. Darlene's business pays double bonus of $4,509 to cover Sam's income taxes due on premium bonus (assumes 28% tax bracket for Sam). *This example is for illustrative purposes only. Figures are based on MetLife's Guarantee Advantage Universal Life, male, age 35 with standard non-smoker health rating. Please see a full product illustration for additional details. Results: Darlene enters into a restrictive executive bonus agreement with Sam

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solution: Executive Bonus *This example is for illustrative purposes only. Figures are based on MetLife's Guarantee Advantage Universal Life, male, age 35 with standard non-smoker health rating. Please see a full product illustration for additional details. Results (contd): Darlene's business takes income tax deduction for total bonus of $16,103. Sam must have Darlene's permission to access the policy cash values for 10 years. Sam has unrestricted access to policy cash values after 10 years. Upon Sams death, his beneficiaries receive the income tax free death benefit less any outstanding loans or withdrawals.

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Case Study: Steves Seafood Restaurants Steves Goals: Make sure that either he or his wife, Diane, will be able to continue the business in the event of the others death Provide a death benefit for their children Establish greater retirement savings for him and Diane, should the business fail to fully support them in their retirement years

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Potential Solution: Executive Bonus Benefits for Steve and Diane: They are not forced to include other employees in the plan 100% of the contributions go to the owners plans* No complex administration (or associated costs) Death benefit to help continue the business and provide for beneficiaries Potential for supplemental income through tax-advantaged loans and withdrawals** * If the business is a pass through entity, an Executive Bonus plan may not provide an income tax deduction advantage when the owners are participants. **Tax-favored distributions assume that the life insurance policy is properly structured, is not a modified endowment contract (MEC), and distributions are made up to the cost basis and policy loans thereafter. Loans and withdrawals will decrease the cash value and death benefit. If the policy has not performed as expected and to avoid a policy lapse, distributions may need to be reduced, stopped and/or premium payments may need to be resumed. Should the policy lapse or be surrendered prior to the death of the insured, there may be tax consequences.

For Producer or Broker/Dealer Use Only. Not for Public Distribution. 143 $37,371 $2,384,602 $40,708 $2,384, $334,075 $2,384,602 $528,921 $2,384, $580,598 $2,384,602 $1,513,218$3,148, $123,289 $2,384,602 $2,534,205$4,057, Lapse at age 70Lapse at age 70 $4,090,188$5,327,470 Policy YearAge Insured Cash Value Death BenefitCash ValueDeath Benefit (Assuming 0%(Assuming 0%(Assuming 8% (Assuming 8% rate of return and rate of return and rate of return and rate of return and guaranteed charges) guaranteed charges) guaranteed charges) guaranteed charges) Hypothetical Example. Actual results will vary. This example uses MetLife's Equity Advantage Variable Universal Life product. Male, Age 42, Standard non-smoker. Policy premium of $50,000 for 20 Years. Cash Value Accumulation Test. Assumptions for both charts: Guaranteed charges = Sales Load 5% for policy face amounts greater than $5,000,000 this charge is reduced to 3.5%. Potential Cash Value and Death Benefit Amounts How the Policy Can Build Cash Value…(Steve)

For Producer or Broker/Dealer Use Only. Not for Public Distribution. 141 $38,315$2,919,048 $41,691 $2,919, $347,055$2,919,048 $547,344 $2,919, $608,676$2,919,048$1,561,228$3,869, $247,007$2,919,048$2,675,243$5,015, Lapse at age 75Lapse at age 75 $4,491,896$6,630,398 Policy YearAge Insured Cash Value Death BenefitCash ValueDeath Benefit (Assuming 0%(Assuming 0%(Assuming 8% (Assuming 8% rate of return and rate of return and rate of return and rate of return and guaranteed charges) guaranteed charges) guaranteed charges) guaranteed charges) Hypothetical Example. Actual results will vary. This example uses MetLife's Equity Advantage Variable Universal Life product. Female, age 40, Standard non- smoker. Policy premium of $50,000 for 20 years. Cash Value Accumulation Test. Potential Cash Value and Death Benefit Amounts Assumptions for both charts: Guaranteed charges = Sales Load 5% for policy face amounts greater than $5,000,000 this charge is reduced to 3.5%. How the Policy Builds Cash Value…(Diane)

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Benefits to employer Decide whom the plan covers Determine the amount of the benefit Restrict access to policy cash values for a period of time Obtain current business tax deduction Recruit, reward and retain best employees Benefits to employees Provide life insurance death benefit for executives beneficiaries Provide potential source of supplemental retirement income Benefits to Your Clients

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Benefits to You Deepens client relationships May free up additional assets for the business owner Creates potential for multiple sales Potential for valuable new clients

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Action plan Have agreement drafted and signed by all parties 5 Discuss strategic partnership 1 Identify and qualify clients 2 Schedule time for client meetings and discuss approach 3 Define client goals 4 Initiate underwriting process on insured 6 Employer pays bonus 7

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Life Insurance Products are: Not A Deposit Not FDIC-Insured Not Insured By Any Federal Government Agency Not Guaranteed By Any Bank Or Credit Union May Go Down In Value BDVL23045 L [1214] © 2013 METLIFE INC. PEANUTS © 2013 Peanuts Worldwide Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. MetLife, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisors regarding your particular set of facts and circumstances. Like most insurance policies, MetLife's policies contain charges, limitations, exclusions, termination provisions and terms for keeping them in force. Contact your financial representative for costs and complete details. Equity Advantage Variable Universal Life is issued by MetLife Investors USA Insurance Company on Policy Form 5E and in New York only, by Metropolitan Life Insurance Company on Policy Form 1E NY-1. Variable products are distributed by MetLife Investors Distribution Company (member FINRA). All are MetLife companies. Guarantee Advantage Universal Life is issued by MetLife Investors USA Insurance Company on Policy Form 5E and in New York only by Metropolitan Life Insurance Company on Policy Form 1E NY. All product guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. January 2013 Life insurance products are issued by: MetLife Investors USA Insurance Company 5 Park Plaza, Suite 1900 Irvine, CA And in NY only by: Metropolitan Life Insurance Company First MetLife Investors Insurance Company 200 Park Avenue New York, NY metlife.com