A Safety Net for the Future

1. Insuring the young generation A Safety Net for the Future

2. Financial planning for families Parents Cash Flow and Savings Debt Management Retirement Planning Estate Planning Tax Planning Investment Management Kids Education Future Financial Security

3. Life insurance A key element of financial security Financial Plan Premature Death L i f e I n s u r a n c e

4. Risk management Life Insurance It’ s not about whether you can afford it. Can you afford not to have it? Reference: www.nber.com/life-insurance

5. Life insurance A key element of financial security Possible needs: • Funeral and final expenses • Pay off debts • Preserve or increase value of estate • Preserve family’s lifestyle • Charitable donation • Etc.

6. Life insurance A key element of financial security Why not put this piece of the puzzle in place now for your kids’ future? • Simple underwriting process • Low premiums • Temporary payment period for many policies • Ensures life insurance will be available when children become adults.

7. Who buys insurance for kids Parents Grandparents Insurable interest

8. What Type of life insurance Should You buy ? • Protection in place for lifetime of insured • Available with temporary payment period • Possibility of increasing insurance amount • Possibility of accessing cash PERMANENT TERM • Less expensive • Terminates at a specific time • Look for guaranteed insurability clause

9. From one generation to the next Term Insurance Parent buys and is owner of term insurance on child. Guaranteed insurability option at end of term insurance. Adult child buys and pays for new policy at standard rates.

10. From one generation to the next Permanent Insurance Parent buys and is owner of permanent insurance on child. Ownership is transferred at a time of the owner’s choosing. Adult child owns permanent policy and has full control. *The policy’s transfer to the insured child or grandchild for no consideration is a tax-free rollover.

11. Guaranteed Insurability • Guarantees the possibility to buy life insurance on the insured at a given time, usually at the end of the original term life insurance. • No underwriting, no questions asked when option is exercised. • Amount of insurance available typically higher than original amount on first policy, up to a certain limit. • New policy issued at standard rates.

12. Guaranteed Insurability • Most likely kids will need life insurance as adults, as it is a key element in an adult’s financial security. • Constant improvements in diagnosis methods + rising statistics in obesity = increased chances of premium ratings or refusals to insure. • Guaranteed insurability addresses these points.

13. Insurance for life… and more • Permanent insurance lasts for lifetime of insured. • In addition to basic life insurance coverage: • access to cash in future to help cover certain expenses; • increase insurance coverage over time without increasing premiums.

14. Insurance for life… and more Accessing cash to help cover certain expenses • Withdrawal from the accumulation fund in a UL • Accumulated policy dividends from a participating whole life policy • Receipt of policy dividends from a participating policy • Policy or collateral loans guaranteed by cash values

15. Insurance for life… and more Increase insurance coverage over time • Start with amount sufficient to cover final expenses. • Insurance coverage grows and will help cover greater needs when child is an adult. • In most cases, premiums do not increase and sometimes, payment duration is temporary. • Participating whole life (paid-up additions) or UL (face amount + accumulation fund)

16. Insurance for life… and more Case Study 1 (for illustration purposes only; values will vary depending on product) • Insured: 5-year-old boy • Participating whole life with paid-up additions • Initial face amount: $25,000 • Monthly premium $42.71 • Policy paid up in 20 years

17. Insurance for life… and more Case Study 1 (for illustration purposes only; values will vary depending on product) *Policy dividends are not guaranteed. Therefore, the death benefit and cash value may vary.

18. Insurance for life… and more Case Study 1 (for illustration purposes only; values will vary depending on product) The policy owner has the flexibility to: • Let the insurance coverage grow • With a growing paid-up coverage, he won’t have to buy as much life insurance to cover his other needs. • Change the dividend option to receive cash annually • At a point when he finds the insurance coverage is sufficient, he can use the dividends for other purposes such as annual expenses or investments. • Access cash with a policy or collateral loan guaranteed by the CSV • To help with a specific project or to address an emergency. • Consideration of possible tax consequences of a policy loan should be given before going forward with the transaction.

19. Insurance for life… and more Case Study 2 (for illustration purposes only; values will vary depending on product) • Insured: 5-year-old boy • Universal Life policy • YRT cost of insurance for first 20 years then converted to Level COI • Initial face amount: $50,000 • Monthly premium $41,00 • Premiums paid for 20 years (policy not paid up, COI covered by accumulation fund) • Annual return on accumulation fund: 4% (not guaranteed)

20. Insurance for life… and more Case Study 2 (for illustration purposes only; values will vary depending on product) *Return on accumulation fund is not guaranteed. Therefore, the death benefit and CSV may vary.

21. Insurance for life… and more Case Study 2 (for illustration purposes only; values will vary depending on product) The policy owner has the flexibility to: • Access cash through withdrawals or loans • To help with a specific project or to address an emergency. • Consideration should be given to possible tax consequences of the transaction (withdrawals and policy loans). • Leave money in accumulation fund to increase death benefit • To cover growing needs. • Pay additional premiums to increase coverage and tax-sheltered savings • Flexibility in amount of premium and payment schedule

22. Which insurance is better? Depends on your clients: • Budget • Term insurance is less expensive • Preferences • Level insurance amount at lower cost • Increasing insurance amount • Paid-up options • Tax-sheltered savings options • Level of control on investments within the policy

23. Immediate benefit when needed • Should the unthinkable happen… • Tax-free benefit • Final expenses • Time off work for parents to heal and recover • Some policies offer living benefits in case of illness

24. Looking after the entire family • When taking care of your clients’ insurance needs, take the opportunity to look after the entire family by discussing life insurance for their kids. • Options for every budget, easy process. • The young generation of today are your future clients. Why not create that client-advisor relationship now.

25. Insuring the young generation Putting a financial safety net in place for their future while being ready for todays’s unforeseen events.

26. Thank you! Thank you!