Best-Kept Secrets to Generate Business-Owned Life Insurance Sales

1. Best-Kept Secrets to Generate Business-Owned Life Insurance Sales

2. James Hahn Vice President, Sales

3. Best-Kept Secrets to Generate Business-Owned Life Insurance Sales Michael Gunnar Advanced Marketing Senior Consultant

4. Goals for Today’s Call Identify opportunities Provide practical concepts Ask some “disturbing” questions Offer a useful marketing tool

5. Some Interesting Statistics *U.S. Census Bureau www.census.gov/epcd/www/smallbus.html **Personal Financial Planning September/October 1999 • 99% of businesses are small businesses • One location • Less than 10 employees* • 50% of businesses that successfully transitioned had life insurance in place • 87% worked with attorney • 78% worked with accountant • 43% worked with financial advisor/insurance agent**

6. Interesting Statistics *Wharton Center for Applied Research Richard Hamm Risk Mgmt. Assoc. 2004 Only 35% of businesses survive the first generation* • Failure to plan for transition to next generation • Lack of funds to pay estate taxes

7. Why Business Owners? Higher-net-worth clients Variety of needs to be addressed Excellent source of referrals and networking opportunities

8. Business Owners’ Critical Issues Each issue represents a question/goal of the business owner SuccessionPlanning • Estate Planning • Questions Each concern represents an opportunity to provide solutions and build sales • Retirement Planning

9. Value of Comprehensive Planning Opportunity to address clients’ critical issues Lessens the amount of business “left on the table”

10. Case Study • Group of Nursing Homes / Assisted Living Facilities • Owned by three brothers • Ages 55, 52, 42 • Salaries ranging from $200-500k • President, VP, Marketing Director • 20+ full-time employees • 10+ contracted employees

11. Disturbing Questions What are your back-up plans in the event one of the brothers is no longer around? Are any of your heirs prepared to take over the family business? How much income could be lost as a result of a key employee’s death? Are you prepared to run your business with your brother’s spouse? What is your plan?

12. Plan of Action…Phase 1 • Cross-purchase buy/sell agreement funded with life insurance • Concerns addressed • Who will take care of my family upon my death? • How will our business get the cash to buy the business from our brother’s family?

13. Objectives Achieved…with Life Insurance • Available cash for business to buy out deceased partner • Income for family to pay estate taxes and/or • Surviving partners can decide who they want to own and run business

14. Plan of Action…Phase 2 • Key person coverage funded with life insurance • Concerns addressed • How much income could be lost as a result of a key employee’s death • Is your business capable of absorbing such a loss?

15. Objectives Achieved… with Life Insurance • Immediate infusion of cash • Extra funds can be used to • Stabilize business during time of lost revenue • Aggressively recruit and train replacement

16. Plan of Action…Phase 3 & 4 • Retirement planning • Individual • Qualified plans • Non-qualified deferred compensation • Individual estate planning

17. Business Valuation…SPARDATA • Brad Davidson President SPARDATA

18. Business Valuation… Why raise the issue? • Disturb business owners to action • Uncover multiple sales opportunities

19. Valuation Issue How to raise the issue? • Do it your way (in your own words) • Do it our way (using the ‘Diagnostic Tool’) • Let us do it for you (What is your business worth? and Why do you need to know?)

20. Does a Valuation Issue Exist? Diagnostic Tool Identifies three different values for a business: • How much owner thinks it is worth • How much it is worth expressed as a ‘cash equivalent’ • How much it would fetch in a forced liquidation

21. Next Steps • Make list of existing business owner clients • Contact them and ask two or three disturbing questions • Contact your Transamerica representative for materials, illustrations, case consultation • Contact SPARDATA (800) 895-4100 for help ‘raising the valuation issue’

22. Save the Date: December 14 Next Kick-Off to Sales End-of-Year Tax Strategies

23. 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. Transamerica Insurance & Investment Group (“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.

24. Best-Kept Secrets to Generate Business-Owned Life Insurance Sales OLA 2055 K 1110