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The TransSecurity SM Solution

The TransSecurity SM Solution. Creating Opportunities for Future Generations . 1. Challenges to Your Business. Changing Environment High-net-worth market Estate Tax laws Premium Financing Guaranteed products. Ma ss Affluent Marketplace . HIGH-NET-WORTH ($5 Million +).

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The TransSecurity SM Solution

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  1. The TransSecuritySMSolution Creating Opportunitiesfor Future Generations 1

  2. Challenges to Your Business Changing Environment • High-net-worth market • Estate Tax laws • Premium Financing • Guaranteed products

  3. Mass Affluent Marketplace HIGH-NET-WORTH($5 Million +) MASS AFFLUENT($1 - $5 Million) MIDDLE MARKET(less than $1 Million)

  4. Standard of Living:The Next Generation Better or Worse Off? Source: Where America Stands, CBS News Poll, May 2010

  5. Challenges to the Opportunity of Future Generations • Budget deficits • Increased taxes & slower recovery • Real estate & equity depreciation

  6. The Federal Debt Congress of the United States Congressional Budget Office 2010 Projected Deficit 2020 Projected Debt Current Debt $12 Trillion $1.3 Trillion $21 Trillion Source: The Budget and Economic Outlook: Fiscal Years 2010 to 2020, Congressional Budget Office as of January 2010

  7. The Federal Debt Rate of Spending = $1 per second 12 days to spend $1 Million • 32 years to spend $1 Billion • 32,000 years to spend $1 Trillion

  8. A Legacy of Government Debt Federal Obligation: $546,668 per household Source: “Leap in U.S. debt hits taxpayers with 12% more red ink,”USA Today, May 28, 2009

  9. State Revenues Worsening Center on Budget and Policy Priorities Sales Tax Income Tax Revenues

  10. State Budget Cuts Center on Budget and Policy PrioritiesAt least 39 states have cut programs: Public Health Elderly /Disabled K-12 Education Higher Education State Workforce

  11. The Myth of Averages “The biggest myth is that the stock market returns, on average, about 10% a year.” • S&P® 500 (total returns, %) as of 12/31/2009 2.5% +0.4 0 -0.9 -2.5% -5.6 -5% 3 Years 5 Years 10 Years Source: “Let's Bury The Myth Of Averages,” Forbes, February 23, 2009 Chart Source: Standard & Poor’s Index Services, Monthly Returns

  12. Client Mindset Today’s Clients Should they keep working longer? Scale back their standard of living now to conserve money for later? What standard of living will their grandchildren have? Will their grandchildren have access to quality education? Future Generations • Lower income • Higher taxes • Fewer entitlements • Less purchasing power • Fewer opportunities • “Leave less to your heirs. Or even nothing at all.” Source: “Baby Boomers To Kids: Kiss Your Inheritance Goodbye,” The Wall Street Journal, July 2009

  13. The TransSecuritySMSolution Creating Opportunitiesfor Future Generations

  14. The TransSecurity Solution Cash available to loved ones to sustain desired lifestyle

  15. The TransSecurity Solution Cash available to loved ones to sustain desired lifestyle

  16. The TransSecurity Solution Independent of external factors Taxes Investments Economic Conditions Career Choices

  17. The TransSecurity Solution • A GuaranteedPolicy • GuaranteedIncomeStrategy • InnovativeFinancialUnderwriting

  18. The TransSecurity Solution A Guaranteed Policy

  19. Meet Mork and Mindy • Mork, age 65, married to Mindy, age 60 • 2 adult children, 2 grandchildren • Wants to provide for children and grandchildren

  20. Like many, Mork has struggled trying to “time the market.” The results have been less than favorable….

  21. The TransSecurity Solution A Guaranteed Policy • Male, Age 65Female, Age 60 • Standard Non-Smokers • TransACE Survivor® • Premium: $25,636 • Death Benefit: $2,000,000

  22. The TransSecurity Solution A Guaranteed Policy Year Net Death Benefit Internal Rate of Return 15 $2,000,000 18.88% 20 $2,000,000 11.73% 25 $2,000,000 7.92% 30 $2,000,000 5.61% * Original issue ages: Male, 65; Female, 60

  23. The TransSecurity Solution A Guaranteed Policy

  24. The TransSecurity Solution • A GuaranteedPolicy • GuaranteedIncomeStrategy • InnovativeFinancialUnderwriting

  25. Dangers of Sudden Wealth “70% of those who come into sudden money end up losing it all because of their inability to deal with the practical, financial and emotional issues involved.1” 30% 70% • 44% of lottery winners spent their winnings within five years2 • Nearly one-third of lottery winners become bankrupt3 • 1 MSN.com as quoted in http://www.pacificawealth.com/financial_planning_services/sudden_money_recipients.asp (2010) • 2 Camelot Group Plc (2003) • 3 Certified Financial Planner Board of Standards, Inc (2003)

  26. Initial Lump Sum The TransSecurity Solution Guaranteed Income Strategy Income Protection Option (IPO) Back-End Lump Sum Guaranteed Monthly Income Stream $10,000 min. $10,000 min. 5 – 25 years / $100 min. • Available at no additional cost • May include multiple beneficiaries

  27. Meet Joanie and Chachi • Chachi, age 55, married to Joanie, age 53 • 3 adult children, 2 grandchildren • Wants to provide for Joanie and his children • Wants to maintain control and flexibility over his legacy

  28. Chachi’s Plan $100,000= $75,000 + $25,000 Mortgage Payoff Chachi'sFinal Expenses $4,000 • $50,000College Expenses for Al's Children Mortgage Private School Tuition $25,000Dream Wedding $1,000 • $50,000Business Expansion Medical Bills $1,000 • $50,000Post-grad Degree Living Expenses 000 • *A portion of each monthly payment and a portion of the final lump sum are reportable as interest income. The policy illustration provides the tax-reportable percentage for each monthly income payment and the final lump sum based on a 3% guaranteed minimum interest rate and the illustrated face amount. Upon the insured’s death, the actual taxable portion of each monthly payment will be calculated and communicated to the beneficiary(ies) based on the actual payout amounts. The taxable portion of the final lump sum payment will be determined when the payment is made.

  29. IPO Offers Flexibility $100,000= $75,000 + $25,000 Mortgage Payoff Chachi'sFinal Expenses $4,000 $4,500 • $50,000College Expenses for Al's Children Mortgage Private School Tuition $25,000Dream Wedding $1,000 0 • $50,000Business Expansion Medical Bills $1,000 • $25,000Start-up Capitalfor business $500 • $50,000Post-grad Degree Living Expenses

  30. IPO Offers Control $125,000 $100,000= $75,000 + $25,000 $150,000 $6,000 Chachi'sFinal Expenses • 0 $4,500 • 0 • $50,000College Expenses for Al's Children Mortgage Private School Tuition $25,000Dream Wedding $1,000 • 0 • 0 0 • $50,000Business Expansion Medical Bills • 0 • 0 • 0 $500 • $25,000Start-up Capitalfor business • $50,000Post-grad Degree Living Expenses

  31. IPO Calculator on TransWare Death Benefit: $1,094,716 Annual Lifetime Premium: $13,612* *Male, 55, Preferred, Non-smoker

  32. The TransSecurity Solution • A GuaranteedPolicy • GuaranteedIncomeStrategy • InnovativeFinancialUnderwriting

  33. NEWGuidelines • 50% of current net-worth • Growth factor: 7% • Multiple of salary • Current in-force policies The TransSecurity Solution Innovative Financial Underwriting Previous Guidelines • Estate Tax liability • Multiple of salary • Current in-force policies

  34. The TransSecurity Solution Innovative Financial Underwriting Example Female Standard Age 65 Male Standard Age 65 Net Worth: $4.0 Million Qualify: $5.5 Million Death Benefit

  35. Calculating Net Worth • Age • Growth Rate • Number of Years

  36. Under New Underwriting Guidelines • Virginia would qualify for $2.85 Million in coverage • Virginia Upton • Age 70 • Net worth = $2 Million • Annual income = $150,000

  37. The TransSecurity Solution • A GuaranteedPolicy • A GuaranteedPolicy • GuaranteedIncomeStrategy • GuaranteedIncomeStrategy • InnovativeFinancialUnderwriting • InnovativeFinancialUnderwriting

  38. The TransSecurity Solution Age 55-75 HIGH-NET-WORTH($5 Million +) MASS AFFLUENT($1 - $5 Million) MIDDLE MARKET(less than $1 Million)

  39. Possible Sources of Premium • Lazy asset rescue • Money markets/CDs • $3.3 trillion invested in money market funds* • $2.6 trillion invested in fixed-rate CDs** • Municipal bonds • Annuities • IRAs • Premium financing *Investment Company Institute (February 2010) **http://www.money-zine.com/Investing/Mutual-Funds/Money-Market-Mutual-Funds (February 2010)

  40. Annuity Max and IRA Max Tools Annuity Maximization IRA Maximization

  41. Top 10 Tools to Target a TransSecurity Sale

  42. Top 10 Tools Dual-format Tabletop Client Presentation Two-minute Client Video

  43. Top 10 Tools Consumer Guide and Worksheet Consumer Flyer CustomizableEmail templates

  44. Top 10 Tools Consumer Illustration IPO Calculator

  45. Top 10 Tools Producer Flyer Producer FAQ

  46. Top 10 Tools www.transamerica.com/transsecurity

  47. Top 10 Tools CustomizableEmail templates Two-minute client video Producer FAQ Dual-format TabletopClient Presentation Consumer Flyer Consumer Guide & Worksheet IPO Calculator www.transamerica.com/transsecurity Consumer Illustration Producer Flyer

  48. The TransSecurity Solution • A GuaranteedPolicy • GuaranteedIncomeStrategy • InnovativeFinancialUnderwriting

  49. 50s 70s 60s The TransSecurity Solution Financial Security for Children and Grandchildren

  50. This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here. TransACE® is a nonparticipating, flexible-premium universal life insurance policy issued by Transamerica Life Insurance Company, Cedar Rapids, IA 52499. Policy Form #1-12611107 (CVAT), Group Certificate #2-72336107 (CVAT) for certificates issued under a group policy issued to the Rhode Island National Consumer Protection Trust. Policy form and number may vary, and this policy may not be available in all jurisdictions. TransACE Survivor®is a nonparticipating, flexible-premium universal life insurance policy issued by Transamerica Life Insurance Company, Cedar Rapids, IA 52499. Policy Form #1-12111108 (CVAT), Group Certificate #2-72136108 for certificates issued under a group policy issued to the Rhode Island National Consumer Protection Trust. Policy form and number may vary and this policy may not be available in all jurisdictions. Transamerica Life Insurance Company (“Transamerica”) and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects. Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of November 2010. MISC 1365 1110

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