2. Make Your Clients’ Money Work Harder: Help Your Clients Reach Life’s Potential
PRESENTED BY: Jeremy Sims
Senior Product Consultant

3. The Elephant in the Room
$9,371,000,000,000
Today’s discussion is going to center around an opportunity for people who have money in cash like accounts but are no longer looking to this portion of their money for expenses while they are living unless there is an emergency need. According to JP Morgan’s Guide to Markets, there is $9,371,000,000,000 in cash like accounts that could potentially fall into the criteria fitting this sales strategy making the potential opportunity large. The coming slides will explain the target market and opportunity for you to help put your client’s money to work.
Cash on the Sidelines: J.P. Morgan Guide to the Markets, U.S., 2Q 2016, As of March 31, 2016

4. A Decade of Decline in Interest Rates
2006
2016 VS
6 Month CD
6 Month Treasury
10 Year Treasury
5.28%
.13%
4.88%
.37%
4.93%
1.80%
Many clients no longer need some of their income taxable liquid assets for retirement income and would like to leave those assets to their loved ones at death. However, many are concerned that with recent declines in interest rates, these liquid assets alone may not grow fast enough to provide their loved ones the legacy they would like to leave them.
Consider John Smith, a 60 year old with $500,000 of his net worth in an income taxable liquid asset. While John no longer needs the taxable liquid asset for retirement, he would like to leverage a portion of the asset into a larger benefit his family will receive at his death. John likes the idea of using life insurance to accomplish this legacy need, but is concerned that the funds may be locked up in case he needs to meet an unforeseen expense.
FDIC: Weekly National Rates and Rate Caps : Federal Reserve Bank of St. Louis Economic Research: Daily Treasury Yield Curve Rates:

5. Making Money Work Harder - Case Study
MetLife Premier Accumulator Universal LifeSM Gender & Issue Age: Male, Age 60 Underwriting Class: Elite Non-Smoker - Enhanced Rate Plus Initial Death Benefit: $513,017 Initial Premium: $250,000 Single Premium Existing Liquid Asset: $500,000 Taxable
In this example, John will use $250,000 of his $500,000 taxable liquid asset portfolio to pay a single premium on the Premier Accumulator UL product. Since John qualifies for MetLife’s Enhanced Rate Plus Program, he is also able to receive Elite Non-smoker rates instead of Standard Non-smoker rates. The initial premium of $250,000 purchases an initial death benefit of $513,017 that will endow at age 121 based on current interest rate and charges assumptions which are not guaranteed.
In this case design, a one-time premium is being used, classifying this policy as a Modified Endowment Contract (MEC). As a result any death benefit is generally income tax-free and cash value build up is tax deferred. If the owner decides to access the cash value through a loan or a withdrawal they will be taxed income-out-first (like an annuity) and if done before age 59 ½, they could face a 10% income tax penalty.

6. Making Money Work Harder - Case Study
Currently, John’s $500,000 liquid asset has an annual after-tax growth rate of 1.25% per year. At a 1.25% after-tax growth rate, the $500,000 would only grow to $566,135 by year 10.
John would like to use a portion of the asset to leave his family a legacy in the form of a death benefit.
By using $250,000 of his $500,000 liquid asset to purchase a Premier Accumulator UL, John will be able to provide a $513,017 initial death benefit that will grow to $580,295 in 10 years based on current non-guaranteed interest rate and charges. If John passed away in 10 years, he would have passed on an additional $297,228 to his family by purchasing the Premier Accumulator UL based on current non-guaranteed assumptions.

7. Making Money Work Harder - Case Study
Above is a comparison of the current non-guaranteed internal rates of return for the Proposed Strategy of using $250,000 of the $500,000 taxable liquid asset to purchase a Premier Accumulator UL policy.
The taxable liquid asset is currently growing at just 1.25% per year after-taxes. By using PAUL to leave a legacy to his family, John can leave more to his family in the event of death. By using $250,000 of the taxable liquid asset to purchase PAUL, the combined non-guaranteed internal rate of return on cash values is 2.31% in year 10 assuming John is still living. In the event of an early death, the combined strategy would have a current non-guaranteed internal rate of return of 5.61% on the assets left to heirs, not taking into account any potential estate taxes that may be due.

8. Making Money Work Harder - Case Study
The comparison above shows the benefits of John using $250,000 of his $500,000 liquid asset to create an enhanced legacy for his family using Premier Accumulator UL. Assuming a lump sum premium of $250,000 into PAUL, the chart above shows how PAUL would increase the amount John can leave to his family in the event of death. The medium blue area above denotes the after-tax value of $500,000 of John’s taxable liquid asset growing at 1.25% after-tax over a 30 year period of time.
The light blue area shows the combination of $250,000 of the liquid asset growing at 1.25% after-tax and the cash surrender value of the Premier Accumulator UL.
The dark blue area shows the increased benefit to heirs created by PAUL product. If death occurred in year 30, John’s family would receive a death benefit of $755,157 based on current non-guaranteed assumptions.

9. Making Money Work Harder – Current Non-Guaranteed Summary
$250,000
Year 1
Year 3
$249,276
$269,670
Let’s summarize the Premier Accumulator non-guaranteed performance in this strategy.
By the end of Year 1, the $250,000 premium payment will result in a non-guaranteed cash surrender value of $249,276 which amounts to 99.7% of the original premium paid.
By the end of year 3 the non-guaranteed cash surrender value will have grown to $269,670 which is nearly 8% total growth over two years helping alleviate the concern that the money is not available in the event of an unforeseen change.
By the end of year 5, the non-guaranteed cash surrender value will represent a 3.05% internal rate of return.
By the end of year 20, the protection provided by the non-guaranteed income tax free death benefit is $639,475 which compared to the original asset should provide an enhancement to the legacy the client intends to leave.
Year 5
Year 20
3.05%
$639,475
The policy is a Modified Endowment Contract (MEC), thus loans and withdrawals are taxable to the extent of policy gain and an additional 10% tax may apply if taken prior to age 59 1/2. Always confirm the status of a particular loan or withdrawal with a qualified tax advisor. Loans and withdrawals will decrease the cash value and death benefit and may cause the policy to lapse. Cash value accumulation may not be guaranteed depending on the type of product selected.

10. Maximizing Product Design – 45M (Elite NS) - $250K Single-pay
The comparison above shows the benefits of John using $250,000 of his $500,000 liquid asset to create an enhanced legacy for his family using Premier Accumulator UL. Assuming a lump sum premium of $250,000 into PAUL, the chart above shows how PAUL would increase the amount John can leave to his family in the event of death. The medium blue area above denotes the after-tax value of $500,000 of John’s taxable liquid asset growing at 1.25% after-tax over a 30 year period of time.
The light blue area shows the combination of $250,000 of the liquid asset growing at 1.25% after-tax and the cash surrender value of the Premier Accumulator UL.
The dark blue area shows the increased benefit to heirs created by PAUL product. If death occurred in year 30, John’s family would receive a death benefit of $755,157 based on current non-guaranteed assumptions.

11. Life Insurance Products:
Disclosures
MetLife Insurance Company USA and Metropolitan Life Insurance Company have designed this presentation to provide introductory information on the subject matter. MetLife, its agents, and representatives do not provide tax and/or legal advice. Please consult your tax advisor or attorney for such guidance. Any discussion of taxes is for general purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
The policy is a Modified Endowment Contract (MEC), thus loans and withdrawals are taxable to the extent of policy gain and an additional 10% tax may apply if taken prior to age 59 1/2. Always confirm the status of a particular loan or withdrawal with a qualified tax advisor. Loans and withdrawals will decrease the cash value and death benefit and may cause the policy to lapse. Cash value accumulation may not be guaranteed depending on the type of product selected.
This material is not valid unless accompanied by the complete basic life illustrations for the life insurance policies listed (as well as a prospectus if applicable).
Life insurance is medically underwritten. Clients should not cancel their current coverage until their new coverage is in force. Surrender charges may be due on an exchange of one contract for another. A change in policy may require a medical examination. Surrenders may be taxable. Clients should consult their own tax advisors regarding tax liability on surrenders. All guarantees are subject to the claims‐paying ability and financial strength of the issuing insurance company.
The MetLife Enhanced Rate Plus program is subject to change. All eligible clients who qualify for Standard Rates without an extra premium will receive the upgrade. Clients with certain factors - including, but not limited to, ratable medical impairments and other health or lifestyle risks that require an extra premium - do not qualify for Standard Rates or program upgrades.
MetLife Premier Accumulator Universal Life is issued by MetLife Insurance Company USA 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.
Life Insurance Products:
• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency •Not Guaranteed By Any Bank Or Credit Union • Not a Condition to Any Banking Service or Activity • May Go Down in Value
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