financial tools comparison report

FINANCIALTOOLSCOMPARISONREPORT

Report as of: 09-22-2020

Prepared for: Client 1

Prepared by: Greg Gall

2

passions is to educate you One of my deepest passions is to educate you on the very best ways to build, the very best ways to build,

A NOTE

One of my deepest passions is to educate you on the very best ways to build, protect, spend, and pass on your wealth. There is no “silver bullet” when it comes to financial tools or strategies, but some are certainly better than others. This Comparison Tool is one way for you to discover which one is best suited for you.

Confidence is key to making sound financial decisions. I do not work alone. My team consists of industry professionals that support the ideas and concepts that we will cover in this report. My “back-office” consists of CFPs, CPAs, Ph.Ds.’, Attorneys, RICPs, and others that combine hundreds of years of industry experience. In other words, our wealth of research is being brought to you in the enclosed strategies.

Thank you for partnering with me in this process. I count it a privilege to serve you. To Your Massive Success,

YOUR SUPPORT TEAM

From Greg

Greg Gall563 Bielenberg Dr Ste 105

[email protected] | 651 245 5915

VIP Financial AssociatesClient Relationship Advisor

Retirement Wealth Advisors/Formula Folios Certified Financial Planners Team

Dear Client 1,

Woodbury, MN 55125

Product Agnostic team keeps me up to date on the financial tools that help reduce risk and solve problems.

Reseach and Development

Conservative Plans designed to minimize taxation and expenses for the long term

Professional Investment Management

3

TABLE OF CONTENTSNeeds vs. Wants Planning ...................................................................................................................Page 04

5 Potential Risks to Consider During Retirement ............................................................................Page 05

Summary Report ...................................................................................................................................Page 07

There is No Free Lunch ........................................................................................................................Page 08

Tax Options .............................................................................................................................................Page 10

Why Indexed Universal Life (IUL)? ......................................................................................................Page 13

IUL Comparison Breakdown ...............................................................................................................Page 16

Expenses Breakdown ...........................................................................................................................Page 21

How Indexing Works .............................................................................................................................Page 23

Micro vs. Macro Tax Awareness ........................................................................................................Page 28

Now What? .............................................................................................................................................Page 29

Important Disclosures ..........................................................................................................................0

4

NEEDS VS. WANTSPLANNING

PEACE OF MIND

FINANCIAL STABILITY

SPENDABILITY

The years ahead will come with ups and downs. Sleep well knowing that your plan has accounted for the many risks we all face.

At retirement, you want to rest assured knowing that your lifetime of work has paid off and that your hard-earned savings are safe and sound.

You’ve waited all these years to enjoy an income without continuing to work. Build your plan so you can live as though you were still working.

5

FIVE COMMON, BUT SIGNIFICANT, RISKS DURING RETIREMENT

Future Tax Costs

You have heard the saying, “pay me now or pay me later.” Ask yourself a question: Will the IRS want more or less of your tax dollars in the future? If you decide to pay Uncle Sam later, what will it cost you? Your answer to this simple question should guide you to financial tools and strategies that match your answer.

Bond/Interest Rate Uncertainty

Stock market volatility may help you while you are saving for retirement, allowing you to buy when markets are down. What happens when the market drops during your retirement years? Can your portfolio handle large losses while you are trying to live out of your investment account? What about just being more conservative? How much interest can you earn on bonds and CDs? How can you earn enough in conservative accounts to support your spending? There is a delicate balance between being too aggressive and too conservative.

0%1913 1933 1953 1973 1993 2013

20%

40%

60%

80%73%

25%

63%

78%

94%91%

70%

50%

28%

40%

35%

100%

U.S. Tax History

Average Top MarginalTax Bracket = 57.31%

Year 10 Year U.S. Treasury Yield

Income from $1 Million

1/1/1950 2.32% $23,200

1/1/1960 4.72% $47,200

1/1/1970 7.86% $78,600

1/1/1980 10.8% $108,000

1/1/1990 7.94% $79,400

1/1/2000 6.85% $68,500

1/1/2010 3.85% $38,500

1/1/2020 1.88% $18,800

5/1/2020 0.64% $6,400

Source: (left) Bloomberg, Beaumont Capital Management (BCM). Data is for the period 3/1/1962 through 4/1/2020. (right) U.S. Department of the Treasury, Resource Center. Past performance is no guarantee of future results.

https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates

6

Spending Capacity

Can you draw enough money out of your investment accounts to support your future spending? Before the recent stock market declines and before interest rates fell to historic lows, we had the “4% Rule.” This rule, simply stated, suggested you could spend about 4% per year and inflate it at 3% from a balanced investment portfolio and have a good likelihood that your nest egg would last as long as you are alive. Recent studies now suggest the rule of thumb be lowered to about 2.4%. That means on a $1million portfolio you should not spend more than $25K per year plus an annual cost of living increase of 3% per year.

Living Too Long

Medical advancements are helping us live longer and better during retirement. Unfortunately, this can create a math problem. In other words, the longer you live the more likely something bad will happen: stock market crashes, health pandemics, economic disasters, tax increases. Academics call our improved longevity a “risk multiplier” because it increases the likelihood that we will see more of the kinds of risks listed in this review.

Costs Are Going Up

Remember the price of a soda and candy bar when you were a kid? Did you ever dream of paying upwards of $2 on a cola at your local corner store? At current inflation averages, we find that the cost of things we buy every week will double over a 25-30 year retirement. A proper retirement plan accounts for these needed extra expenses.

https://www.thinkadvisor.com/2020/04/14/wade-pfau-virus-crisis-has-slashed-4-rule-nearly-in-half/#:~:text=Another%20crushing%20change%3A%20The%204,according%20to%20Pfau's%20latest%20calculations.

https://www.kiplinger.com/article/retirement/t003-c032-s014-solving-the-biggest-risk-in-retirement.html#:~:text=Longevity%20risk%2C%20however%2C%20is%20chief,can%20to%20remove%20longevity%20risk.

7

YOUR PERSONALIZEDPARISON SUMMARY

Pre-Retirement Tax Rate: Post-Retirement Tax Rate: Retirement Income Start Age: Retirement Income Amount:

Life Insurance illustrated rates are

covered on the bottom of pages 23 and 24. Past performance

has yielded a 100% probability of success over 10+ year periods

of time. We will go over indexing options

in details later.

Annual Interest Rate Assumed Expense %

Taxable

Tax Deferred

Tax Advantaged

Indexed Universal Life (IUL) Variable Page 19

Death Benefit

C NAT Income

Total Benefits

C Expenses Taxes Pd C. Exp +

Tax PdAge Acct

Bal = 0

Taxable

Tax Deferred

Tax Advantaged

IUL

Disclaimer —The IUL values are from the non-guaranteed illustration ledger. Please review the company illustration for full disclosures. Investment accounts are non-guaranteed examples.

COMAssumptionsAge:Annual Contribution*: Total Contribution:

See included: Life Insurenace hypothetical historical index report

(Net After Tax)ax)

27$6,000.00

$240,000.00

24.00%24.00%

67$85,000

8.00% / 6.00%

8.00% / 6.00%

8.00% / 6.00%

6.50%

0.50%

1.15%

1.15%

$0 $1,115,556 $1,115,556 $303,490 $388,984 80

$0 $1,885,468 $1,885,468

$85,495

$595,411 $1,027,154 89

$0 $1,885,468 $1,885,468 $328,125 $0 $328,125 89

$1,323,012 $3,065,000 $4,388,012 $332,678 $0 $332,678 N/A

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

Taxable Tax Def Tax Free IUL

C. NAT Income $- $- $- $1,323,012

Death Benefit $1,115,556 $1,885,468 $1,885,468 $3,065,000

C. N

AT

Inc.

+ D

eat

h B

en

efit

@ A

ge 9

5

Good/Better/Better/Best Asset Class

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

35 39 43 47 51 55 59 63 67 71 75 79 83 87 91 95

Account Values @ Age 95

Taxable Tax Adv Tax Def IUL

$431,744

Values @ Age 95

Income B: Start Year: End Year:

$185,00064

120

8

THERE IS NO SUCH THING AS A FREE LUNCH

UNINTERRUPTED COMPOUNDING VS. FEES VS. TAXES VS. FEES + TAXES

When it comes to places to store and invest your wealth, the choices are almost limitless. Unfortunately, we are provided with a very limited education on knowing how the various choices work, how they compare to one another, and what they cost. EVERY financial tool has a cost. In some cases, multiple costs. There is no FREE LUNCH, no matter what any marketing or advertising may tell you. The charts below seek to count the two major costs of investing: management fees and tax costs. Management fees are typically easier to identify up front, but tax costs are often not recognized until many years later.

$1 Doubling $1 Doubling with 2% Expenses $1 Doubling with 15% Taxation on Growth in Each Cycle $1 Doubling with Expenses + Taxation

$0.00

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

END OF EACH SEGMENT OF TIME

Never Kill CompoundingUninterrupted Net of Fees Taxed Annually Fees + Taxes

9

Given what you have just learned, taxation is important. Hopefully the above will help you understand why we spend so much time on tax awareness.

Year Uninterrupted Net of Fees Taxed Annually Combined Fees & Tax

123456789

1011121314151617181920

$2.00$4.00$8.00

$16.00$32.00$64.00

$128.00$256.00$512.00

$1,024.00$2,048.00$4,096.00$8,192.00

$16,384.00$32,768.00$65,536.00

$131,072.00$262,144.00$524,288.00

$1,048,576.00

$1.96$3.84$7.53

$14.76$28.93$56.69

$111.12$217.80$426.88$836.68

$1,639.90$3,214.20$6,299.83

$12,347.67$24,201.43$47,434.81$92,972.22

$182,225.56$357,162.09$700,037.70

$1.85$3.42$6.33

$11.71$21.67$40.09$74.17

$137.21$253.83$469.59$868.74

$1,607.17$2,973.26$5,500.53

$10,175.97$18,825.55$34,827.27$64,430.44

$119,196.32$220,513.19

$1.81$3.29$5.96

$10.80$19.59$35.51$64.39

$116.73$211.63$383.69$695.63

$1,261.17$2,286.50$4,145.43$7,515.66

$13,625.89$24,703.74$44,787.88$81,200.42

$147,216.36

10

EXPLANATION OF TAXATIONOPTIONS

THERE ARE 3 BASIC TYPES OF TAXATION ONINVESTMENT ACCOUNTS (BUCKETS)The key to tax efficiency in retirement is to establish an optimum balance in each bucket.

TAX-

ADV

AN

TAG

ED

TAX-

DEFE

RRED

TAXA

BLE

THE TAXABLE BUCKET

What is it?

After-Tax Contributions

Pay Taxes Each Year

1099

Capital Gains

Dividends

Examples

Stocks

Bonds

Mutual Funds

Savings

CDs

Advantages

Liquidity & Control

---

Disadvantages

Annual Tax/Multiple Times

May Cause Social Security to be Taxed

11

THE TAX-DEFERRED BUCKET

What is it?

Pre-Tax Contributions

No Taxes as Your Money Grows

Pay Taxes Upon Distribution

Tax-Deferred

Examples

401(k)

Traditional IRA

403(b)

457

Simple

SEP

Advantages

Tax-Deductible Contributions

Tax-Deferred Compounding

---

Disadvantages

May be in Higher Bracket Later

Withdrawal Restrictions

May Cause Taxable Social Security

COMMON ATTRIBUTES TO TAX-DEFERRED BUCKET

Contributions are Tax-Deductible

Example:

1. You make $100,0002. You contribute $10,000

3. Your taxable income is now $90,000

• Distributions taxed as ordinary income

• Distributions may cause Social Security to be taxed

• Penalty if withdrawn before age 59 1/2

• Required Minimum Distributions at age 72

12

THE TAX-ADVANTAGED BUCKET

What is it?

After-Tax Contributions

Tax-Deferred

Tax-Free Distributions if Tax Codes are Followed

Examples

Roth IRA

Roth 401(k)

Roth 403(b)

Roth Conversions

IRC 7702 (Life Insurance)

Advantages

Control of Future Tax Liability

Legacy Planning

---

Disadvantages

Qualifying Rules

COMMON ATTRIBUTES TO TAX-ADVANTAGED BUCKET

Examples of Tax-Advantaged Investments

Roth IRAs, Roth 401(k)s, Roth Conversions

Some properly structured cash value life insurance policies

Many investors mistake certain investments as tax-advantaged

• Municipal Bonds

• Oil and Gas

Tax-advantaged investments must pass two different tests:

• Free from all taxes (Federal Tax, State Tax,and Capital Gains)

• Distributions do not cause your SocialSecurity to be taxed

13

CO-DESIGNED WITH YOUR WANTS

IN MIND

Bonus Tax Benefits!

In addition to death benefit protection, IUL also offers

major tax benefits.

Understanding our current economic situation, and

the likelihood that future tax rates and costs may be

significantly higher than they are today, savvy Americans

choose IUL for three very important tax benefits:

1. Tax-free death benefit2. Tax-deferred accumulation

3. Tax-free distributions

WHY INDEXED UNIVERSAL LIFE (IUL)An IUL is ideally suited for the person who desires death benefit protection for their loved ones, as well as the added ability to earn interest based on a portion of the returns in the stock market, while also avoiding losses due to negative volatility.

IUL insurance is similar to traditional universal life insurance in that both the death benefit coverage and the premium are flexible components of the contract. However, the ability to earn index credits through the positive performance of various market indexes, makes IUL a very unique planning tool.

One of the best features is the downside market protection feature. If the market indexes decline, your cash value will not lose money as a result. And better yet, every time your account receives an index credit, the increase to your cash value will never be reduced due to a future market decline.

IUL insurance is a financial planning tool that incorporates a peace-of-mind death benefit with the potential for enhanced increases to your cash value. IUL is flexible enough to be used as an income replacement, a supplemental college fund, or as a supplemental retirement account.

14

Let’s compare ACCOUNT VALUES, Retirement CASH FLOW, and DEATH BENEFIT to your heirs or charity(ies).

This report is designed to offer a comparison between an IUL and other typical financial strategies. These summary comparisons illustrate hypothetical values.

Our comparison takes into account taxes, both pre and post-retirement, as well as reasonable fees and expenses within the investment accounts. The summary makes the following assumptions:

• IUL with a assumed interest crediting rate. The cash values are net of all expenses

•

•

•

Taxable Investment Account with a growth rate and in total fees/expenses. A Taxable Investment Account creates taxes on investment gains that must be paid every year. Example: savings account, CD, mutual fund.

Tax Deferred Account with a growth rate and in total fees/expenses. This account receives deposits of pre-tax dollars that then grow tax-deferred. The tax reckoning comes when the money is removed from the account in retirement. Example: IRA, 401(k), 403(b).

Tax-Advantaged Account with a growth rate and in total fees/expenses.This account receives deposits of dollars that have already been taxed. Deposits grow tax-deferred and can be removed tax-free in retirement. Example: Roth IRA, Roth 401(k).

• Assumed Pre-Retirement Marginal Tax Rate –

• Assumed Post-Retirement Marginal Tax Rate –

IUL SUMMARY

Disclaimer—The IUL values are from the non-guaranteed illustration ledger. Please review the company illustration for full disclosures.Investment accounts are non-guaranteed examples.

<<Merge Field>><<MF>>

<<Merge Field>>

including the cost of insurance. The account premium that has already been taxed.6.50%

8.00% / 6.00%

8.00% / 6.00%

24.00%24.00%

1.15%

1.15%8.00% / 6.00%

TOTAL INCOME AGE 96

$240,000TOTAL CONTRIBUTIONS AGE 96

$1,323,012SURRENDER VALUE AGE 96

$1,323,012DEATH BENEFIT AGE 96

$3,065,000

0.50%8.00% / 6.00%

15

Account or Surrender Values Total Income

Notes

Taxable Balance = $0 at age

Tax Deferred Balance = $0 at age

Tax Advantaged Balance = $0 at age

IUL Death Benefit @ 95 =

The example above shows projections of each account balance or cash surrender value. The cash surrender value represents the value received if you elected to surrender or terminate the IUL contract.

Notice that the IUL values are lower in the early years. However, as a long-term financial tool pay greater attention to the values further out.

This bar graph summarizes the spendable (after-tax) cash flow at a ge 9 5. T he I UL was able to produce a larger cash flow over time $<<Merge . The cash flow can be used for supplemental retirement, in addition to many other expenses before retirement.

Do not forget that the IUL also maintains an income tax-free death benefit of , in addition to the cash flow benefits. Alternative accounts only leave the remaining account balance to their beneficiaries.

At a proposed retirement age of <<Merg, notice how the IUL continues to improve in value. Your account values continue to participate in market gains while also generating cash flow. Alternative accounts are spending account gains to cover retirement expenses, causing the balances to decrease over time.


$823,777

$1,473,137

$1,119,584

$1,027,005

$0

$778,177

$591,415

$1,133,203

$0

$0

$0

$1,323,012

$1,115,556

$1,885,468

$1,885,468

$3,065,000

80

89

89

$1,323,012

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Taxable Tax Def Tax Free IUL

Death Benefit $- $- $- $1,323,012

C. NAT Income $1,115,556 $1,885,468 $1,885,468 $3,065,000

C. N

AT

Inco

me

+ D

eath

Ben

efit

@ A

ge 9

5

Good/Better/Better/Best Asset Class

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

35 39 43 47 51 55 59 63 67 71 75 79 83 87 91 95

Account Values @ Age 95

Taxable Tax Adv Tax Def IUL

$3,065,000

$1,323,012

67

Age 65 Age 80 Age 95 Age 95

Taxable Tax Defered TaxAdvantaged IUL

16

IUL COMPARED TO 3 TYPICAL ALTERNATIVES: ANNUAL BREAKDOWN

Age Cont. After Tax Income

Account Value

After Tax Income

Account Value Before

Tax

Account Value of

Net of Tax

After Tax Income

Account Value

After Tax Income

via Policy Loans

Accum. Value

Surrender Value

Death Benefit

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$6,333

$13,017

$20,073

$27,520

$35,380

$43,676

$52,433

$61,676

$71,432

$81,729

$92,598

$104,069

$116,178

$128,958

$142,448

$156,686

$171,714

$187,577

$204,320

$221,991

$240,644

$260,332

$281,112

$303,046

$326,197

$350,632

$376,424

$403,647

$432,381

$462,709

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$8,428

$17,426

$27,032

$37,287

$48,235

$59,923

$72,401

$85,722

$99,944

$115,126

$131,335

$148,638

$167,112

$186,833

$207,888

$230,365

$254,361

$279,979

$307,329

$336,526

$367,697

$400,974

$436,500

$474,427

$514,917

$558,144

$604,291

$653,558

$706,153

$762,303

$6,405

$13,244

$20,544

$28,338

$36,659

$45,542

$55,025

$65,149

$75,957

$87,496

$99,814

$112,965

$127,005

$141,993

$157,995

$175,077

$193,315

$212,784

$233,570

$255,760

$279,450

$304,740

$331,740

$360,565

$391,337

$424,189

$459,261

$496,704

$536,676

$579,351

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$6,405

$13,244

$20,544

$28,338

$36,659

$45,542

$55,025

$65,149

$75,957

$87,496

$99,814

$112,965

$127,005

$141,993

$157,995

$175,077

$193,315

$212,784

$233,570

$255,760

$279,450

$304,740

$331,740

$360,565

$391,337

$424,189

$459,261

$496,704

$536,676

$579,351

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$4,727

$9,807

$15,267

$21,130

$27,430

$34,195

$41,464

$49,276

$57,672

$66,945

$76,911

$87,623

$99,135

$111,508

$124,805

$139,750

$155,791

$173,002

$191,464

$211,263

$232,494

$255,264

$279,688

$305,889

$334,003

$364,158

$396,514

$431,229

$468,468

$508,416

$0

$4,616

$10,112

$16,012

$22,351

$29,158

$36,468

$45,114

$54,340

$64,447

$75,247

$86,792

$99,135

$111,508

$124,805

$139,750

$155,791

$173,002

$191,464

$211,263

$232,494

$255,264

$279,688

$305,889

$334,003

$364,158

$396,514

$431,229

$468,468

$508,416

$284,433

$289,513

$294,973

$300,836

$307,136

$313,901

$321,170

$328,982

$337,378

$346,651

$356,617

$367,329

$378,841

$391,214

$404,511

$419,456

$435,497

$452,708

$471,170

$490,969

$512,200

$534,970

$559,394

$585,595

$613,709

$643,864

$676,220

$710,935

$748,174

$788,122$6,000

A Special Note from Greg: Notice that the after-tax, spendable income is the same in all four until the account runs to $0. Pay close attention to the Tax-Deferred Account. See how Uncle Sam is involved during the retirement income phase.

Taxable Tax Defered TaxAdvantaged IUL

17


Age Cont. After Tax Income

Account Value

After Tax Income

Account Value Before

Tax

Account Value of

Net of Tax

After Tax Income

Account Value

After Tax Income

via Policy Loans

Accum. Value

Surrender Value

Death Benefit

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$494,720

$528,508

$564,171

$601,814

$641,545

$683,481

$727,744

$774,464

$823,777

$875,826

$834,714

$779,981

$723,039

$663,798

$602,165

$538,044

$471,335

$401,932

$329,727

$254,607

$176,454

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$822,248

$886,244

$954,564

$1,027,502

$1,105,369

$1,188,498

$1,277,245

$1,371,990

$1,473,137

$1,581,120

$1,539,524

$1,495,939

$1,450,271

$1,402,419

$1,352,279

$1,299,743

$1,244,694

$1,187,014

$1,126,575

$1,063,248

$996,892

$624,909

$673,545

$725,469

$780,902

$840,080

$903,259

$970,706

$1,042,712

$1,119,584

$1,201,651

$1,170,038

$1,136,914

$1,102,206

$1,065,838

$1,027,732

$987,804

$945,967

$902,130

$856,197

$808,068

$757,638

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$624,909

$673,545

$725,469

$780,902

$840,080

$903,259

$970,706

$1,042,712

$1,119,584

$1,201,651

$1,170,038

$1,136,914

$1,102,206

$1,065,838

$1,027,732

$987,804

$945,967

$902,130

$856,197

$808,068

$757,638

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$85,000

$551,263

$597,219

$646,514

$699,393

$756,108

$816,928

$882,143

$952,055

$1,027,005

$1,107,354

$1,187,645

$1,273,173

$1,364,290

$1,461,374

$1,565,037

$1,675,795

$1,794,227

$1,920,990

$2,056,831

$2,201,653

$2,356,018

$551,263

$597,219

$646,514

$699,393

$756,108

$816,928

$882,143

$952,055

$1,027,005

$1,107,354

$1,098,395

$1,090,211

$1,082,930

$1,076,696

$1,071,875

$1,068,724

$1,067,552

$1,068,732

$1,072,710

$1,079,076

$1,088,062

$830,969

$876,925

$926,220

$979,099

$1,035,814

$1,096,634

$1,161,849

$1,231,761

$1,306,711

$1,387,060

$1,312,171

$1,306,650

$1,301,216

$1,295,902

$1,275,329

$1,253,062

$1,229,033

$1,203,201

$1,175,552

$1,189,158

$1,205,863

78

79

80

$0

$0

$0

$85,000

$85,000

$10,556

$95,147

$10,556

$0

$85,000

$85,000

$85,000

$927,364

$854,512

$778,177

$704,797

$649,429

$591,415

$85,000

$85,000

$85,000

$704,797

$649,429

$591,415

$85,000

$85,000

$85,000

$2,520,514

$2,695,764

$2,882,381

$1,099,911

$1,114,880

$1,133,203

$1,225,937

$1,249,668

$1,277,322

81

82

83

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$698,193

$614,384

$526,569

$530,627

$466,932

$400,192

$85,000

$85,000

$85,000

$530,627

$466,932

$400,192

$85,000

$85,000

$85,000

$3,080,940

$3,292,089

$3,516,481

$1,155,053

$1,180,658

$1,210,229

$1,309,100

$1,345,263

$1,386,053

84

85

86

$0

$0

$0

$0

$0

$0

$0

$0

$0

$85,000

$85,000

$85,000

$434,554

$338,141

$237,119

$330,261

$256,987

$180,210

$85,000

$85,000

$85,000

$330,261

$256,987

$180,210

$85,000

$85,000

$85,000

$3,754,717

$4,007,361

$4,275,039

$1,243,902

$1,281,755

$1,323,903

$1,431,638

$1,482,123

$1,537,655


18

IUL COMPARED TO 3 TYPICAL ALTERNATIVES: ACCOUNT EXPENSES SUMMARYCosts matter. And there is no such thing as a “Free Lunch.” An IUL has policy administration charges along with costs of insurance. Alternative choices have investment management expenses, both implicit and explicit, and possible income taxes. The perception is that insurance, as a financial tool, is expensive. But compared to what? Let’s take a look and see what the numbers tell us.

This report is designed to offer a comparison between an IUL and other typical financial strategies. These summary comparisons illustrate hypothetical values.

Our comparison takes into account the fees, expenses and taxes inherent in each financial tool. The summary makes the following assumptions:

• IUL with a assumed interest crediting rate. The account values are net of all expenses including the cost of insurance. The account receives premium that has already been taxed.

• Taxable Investment Account with a growth rate and in total fees/expenses. ATaxable Investment Account creates taxes on investment gains that must be paid every year.Example: savings account, CD, mutual fund.

• Tax-Deferred Account with a growth rate and in total fees/expenses. This accountreceives deposits of pre-tax dollars that then grow tax-deferred. The tax reckoning comes whenthe money is removed from the account in retirement. Example: IRA, 401(k), 403(b).

• Tax-Exempt Account with a growth rate and in total fees/expenses. This accountreceives deposits of dollars that have already been taxed. Deposits grow tax-deferred and can beremoved tax-free in retirement. Example: Roth IRA, Roth 401(k).

• Assumed Pre-Retirement Marginal Tax Rate —

• Assumed Post-Retirement Marginal Tax Rate –

TOTAL TAXES PAID AT AGE 85

<<Merge Field>>CUMULATIVE EXPENSES AT AGE 85


6.50%

8.00% / 6.00% 0.50%

8.00% / 6.00% 1.15%

8.00% / 6.00% 1.15%

$0

$332,678

96

96

24.00%

24.00%

19

Chart of expenses at different ages/time frames, cost of policy loans have been netted out.

Total Expenses and Taxes Paid @ Age

Total Premium Expenses Taxes Pd Expenses

+ Taxes PdExpenses/Prem Pd Notes

Taxable Balance Went to $0 = <<MF>>

Tax Deferred Balance Went to $0 = <<MF>>

Tax Advantaged Balance Went to $0 = <<MF>>

IULDeath Benefit @

The chart above and the graph consider the total costs of the financial tools; expenses plus

income taxes.

Although the IUL appears to be “expensive” at first glance, you will

notice that it is more expensive early and then fees drop after the

early years.

Comparing the cumulative expenses on the next page you will notice that over time it is typically

one of the least expensive assets.

While IUL can be expensive if you live longer than life expectancy, age 85+, often the other options are out of funds by then which

doesn't give us a fair comparison.


Disclaimer—The IUL values are from the non-guaranteed illustration ledger. Please review the company illustration for full disclosures. Investment accounts are non-guaranteed examples.

$240,000 $85,495 $303,490 $388,984 162%

$315,789 $431,744 $595,411 $1,027,154 325%

$240,000 $328,125 $0 $328,125 137%

$240,000 $332,678 $0 $332,678 139%

80

89

89

$1,323,012

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

35 39 43 47 51 55 59 63 67 71 75 79 83 87 91 95

Annual Expenses

Taxable Tax Def Tax Adv. IUL

95

95

c

The IUL front loads its charges compared to other financial

tools. Notice how the IUL becomes less expensive over time

while the alternatives become more expensive over time. Do you want your expenses to be getting higher or lower when

you are ready to retire?

The total premium paid into your IUL account will be $<<Merge Fielthrough age <<M. The total costs will be $<<Merge Fielat age <<Mer. That is << of your total premium. Compared to other accounts, the Taxable account ends up being , Tax-Deferred account is , and Tax-Advantaged account is < % .IUL becomes an increasingly cost-effective tool because of its tax advantages and death benefit protection of over $<<Merge Fiat age and it will give you permission to spend down some or all of your other assets and still pass on a legacy to your family or charity.

Disclaimer—The IUL values are from the non-guaranteed illustration ledger. Please review the company illustration for full disclosures. Investment accounts are non-guaranteed examples.

20

$0

$500,000

$1,000,000

$1,500,000

40 44 48 52 56 60 64 68 72 76 80 84 88

Cumulative Taxes Paid + Expenses

Taxable Tax Def Tax Adv. IUL

$240,000.00$332,678 139%

325%137%

162%

6795

$1,323,012

A Special Note from Greg

95

Taxable Tax Defered TaxAdvantaged

IUL

21

EXPENSES AND TAXES FOR EACH FINANCIAL TOOL: ANNUAL BREAKDOWN

Age Cont. Mgmt. Expenses Taxes Paid

Total Expenses +

Tax

Mgmt. Expenses Taxes Paid

Total Expenses +

Tax

Mgmt. Expenses Total Charges

272829303132333435363738394041424344454647484950515253545556

$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000

$30$62$95

$130$168$207$248$292$338$387$439$493$550$611$675$742$813$889$968

$1,052$1,140$1,233$1,332$1,436$1,545$1,661$1,783$1,912$2,048$2,192

$115$236$363$498$640$791$949

$1,116$1,293$1,479$1,676$1,884$2,103$2,334$2,578$2,836$3,108$3,395$3,698$4,018$4,356$4,712$5,088$5,485$5,904$6,346$6,813$7,306$7,826$8,375

$145$297$458$628$808$997

$1,197$1,408$1,631$1,866$2,115$2,377$2,653$2,945$3,253$3,578$3,921$4,284$4,666$5,070$5,496$5,945$6,420$6,921$7,449$8,007$8,596$9,218$9,874

$10,567

$91$188$291$402$520$645$780$923

$1,077$1,240$1,415$1,601$1,800$2,013$2,239$2,481$2,740$3,016$3,311$3,625$3,961$4,319$4,702$5,111$5,547$6,012$6,509$7,040$7,607$8,212

$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0

$91$188$291$402$520$645$780$923

$1,077$1,240$1,415$1,601$1,800$2,013$2,239$2,481$2,740$3,016$3,311$3,625$3,961$4,319$4,702$5,111$5,547$6,012$6,509$7,040$7,607$8,212

$69$143$221$305$395$491$593$702$818$943

$1,075$1,368$1,530$1,702$1,886$2,082$2,292$2,516$2,755$3,010$3,010$3,283$3,574$3,884$4,215$4,569$4,947$5,351$5,781$6,241

$1,457$1,457$1,457$1,462$1,463$1,469$1,471$1,471$1,471$1,231$1,231$1,231$1,231$1,231$1,231$603$623$651$685$727$773$819$865$911$955

$1,014$1,065$1,122$1,190$1,262


Taxable Tax DeferedTax

AdvantagedIUL

22


Age Cont. Mgmt. Expenses Taxes Paid

Total Expenses +

Tax

Mgmt. Expenses Taxes Paid

Total Expenses +

Tax

Mgmt. Expenses Total Charges

57585960616263646566676869707172737475767778798081

$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000$6,000

$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0

$2,344$2,504$2,673$2,851$3,039$3,238$3,447$3,669$3,902$4,149$3,954$3,749$3,475$3,190$2,894$2,586$2,265$1,932$1,585$1,224$848$457$51$0$0

$8,954$9,566

$10,211$10,893$11,612$12,371$13,172$14,017$14,910$15,852$15,108$10,742$9,958$9,142$8,293$7,410$6,491$5,535$4,541$3,506$2,430$1,310$145

$0$0

$11,298$12,069$12,884$13,743$14,651$15,608$16,619$17,686$18,812$20,001$19,062$14,490$13,433$12,332$11,187$9,996$8,756$7,467$6,126$4,730$3,278$1,768$196

$0$0

$8,857$9,547

$10,283$11,068$11,907$12,803$13,759$14,779$15,869$17,032$16,897$16,418$15,917$15,392$14,842$14,265$13,661$13,028$12,364$11,669$10,941$10,178$9,379$8,541$7,663

$0$0$0$0$0$0$0$0$0$0

$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842$26,842

$8,857$9,547

$10,283$11,068$11,907$12,803$13,759$14,779$15,869$17,032$43,739$43,260$42,759$42,234$41,684$41,107$40,503$39,870$39,207$38,512$37,783$37,020$36,221$35,383$34,505

$6,732$7,255$7,815$8,412$9,049$9,730

$10,456$11,232$12,060$12,944$12,841$12,478$12,097$11,698$11,280$10,841$10,382$9,901$9,397$8,869$8,315$7,735$7,128$6,491$5,824

$1,345$1,436$1,528$1,625$1,737$1,866$2,013$2,182$2,363$2,559$1,894$2,110$2,340$2,580$2,633$2,632$2,552$2,359$2,013$2,376$2,804$3,313$3,911$4,645$5,599

82 $0 $0 $0 $0 $6,743 $26,842 $33,585 $5,125 $6,73783 $0 $0 $0 $0 $5,779 $26,842 $32,621 $4,392 $8,10384 $0 $0 $0 $0 $4,769 $26,842 $31,611 $3,625 $9,78785 $0 $0 $0 $0 $3,711 $26,842 $30,553 $2,821 $11,86986 $0 $0 $0 $0 $2,602 $26,842 $29,445 $1,978 $14,322


23

HOW INDEXING WORKSCAP AND FLOOR:

LOCKING IN INTEREST EARNED:

Unique Benefits:

• Linked to an Index

• No Market Losses/Floor

• Interest Potential/Cap

• Index Reset and Locking In of Interest Earned

• Fixed Participating Loans/Variable Loans w/Cap

Disclaimer—Example ignores annual expenses for both the Index and Hypothetical Index Product.

Cap (10.0%)

Floor (0.0%)

24

Annual Point-to-Point2 Contract Years Illustrated

$100,000 With Lock In & Reset$100,000 Hypothetical Index

0% Floor-31% Loss

$110,000$97,872

$100,000$69,149

940 920

650

550

650

750

850

950

600

700

800

900

1000

1050

Disclaimer—The IUL values are from the non-guaranteed illustration ledger. Please review the company illustration for full disclosures. Historical index performance is not guaranteed in the future. Investment accounts are non-guaranteed examples. The index values do not reflect dividends payable on the underlying stocks, any underlying fees or charges in any particular investment. Due to the overlapping of data, the percentile rates given should not provide a direct level of confidence of future index performance. The actual performance of a planning alternative will depend on many variables, some of which may not be fully accounted for in this presentation. This material does not constitute tax, legal or accounting advice. It is important to remember that these numbers are solely historical and do not and should not be used to predict future indexed performance. This calculator does not include a specific product’s fees and charges that may occur. You should view a personalized illustration from a specific insurance company before deciding to purchase any indexed product from that company.

Annu

al P

oint

-to-

Poin

t

42% Gain10.0% Cap

Annual Point-to-Point

INDEX RESET1100

Start of Yr 1 End of Yr 1 End of Yr 2

25

INDEX HISTORY AND ILLUSTRATED RATESThe chart below is an example of 7 different indexing strategies offered by a prominent insurance company. Notice how the indexing strategies limit the upside of the account performance with a “CAP”, but also limit the downside performance with a “FLOOR”. Historical rates for the strategies shown vary from 4.46% to 8.38% with today’s historically low CAP rates. We used 15% for this carrier, which has a long-term probability for success. The Chart below is from one carriers illustration software, Allianz Life.

S&P 500® Index Blended Index Nasdaq-100® IndexBloomberg US

Dynamic Balanced II ER Index

PIMCO Tactical Balanced ER Index

Year Ending

Actual Historical

Index Change

Annual Point-to-

Point with a Cap

Monthly Sum with

a Cap

Trigger Method

Actual Historical

Index Change

Annual Point-to-

Point with a Cap

Actual Historical

Index Change

Monthly Sum with

a Cap

Actual Historical

Index Change

Annual Point-to-

Point with Par

Actual Historical

Index Change

Annual Point-to-

Point with Par

12/31/1995 34.11% 8.75% 25.30% 6.25% 23.62% 16.00% 42.54% 18.44% N/A N/A N/A N/A

12/31/1996 20.26% 8.75% 11.51% 6.25% 16.41% 16.00% 42.54% 9.56% N/A N/A N/A N/A

12/31/1997 31.01% 8.75% 8.31% 6.25% 20.72% 16.00% 20.63% 0.00% N/A N/A N/A N/A

12/31/1998 26.67% 8.75% 3.90% 6.25% 14.73% 14.73% 85.31% 5.18% N/A N/A N/A N/A

12/31/1999 19.53% 8.75% 6.30% 6.25% 19.85% 16.00% 101.95% 8.68% N/A N/A N/A N/A

12/31/2000 -10.14% 0.00% 0.00% 0.00% 0.95% 0.95% -36.84% 0.00% N/A N/A N/A N/A

12/31/2001 -13.04% 0.00% 0.00% 0.00% -3.47% 0.00% -32.65% 0.00% N/A N/A N/A N/A

12/31/2002 -23.37% 0.00% 0.00% 0.00% -11.90% 0.00% -37.58% 0.00% N/A N/A N/A N/A

12/31/2003 26.38% 8.75% 11.65% 6.25% 17.97% 16.00% 49.12% 18.34% N/A N/A N/A N/A

12/31/2004 8.99% 8.75% 7.38% 6.25% 5.70% 5.70% 10.44% 2.31% N/A N/A N/A N/A

12/31/2005 3.00% 3.00% 1.53% 6.25% 5.23% 5.23% 1.49% 0.00% -0.83% 0.00% -2.18% 0.00%

12/31/2006 13.62% 8.75% 12.63% 6.25% 11.94% 11.94% 6.79% 0.00% 6.12% 9.48% 5.17% 8.01%

12/31/2007 3.53% 3.53% 1.14% 6.25% 5.77% 5.77% 18.67% 8.22% 2.86% 4.43% 2.95% 4.57%

12/31/2008 -38.49% 0.00% 0.00% 0.00% -22.36% 0.00% -41.89% 0.00% 0.37% 0.57% 5.86% 9.09%

12/31/2009 23.45% 8.75% 0.00% 6.25% 15.41% 15.41% 53.54% 12.79% 5.81% 9.00% 4.21% 6.52%

12/31/2010 12.78% 8.75% 0.00% 6.25% 7.52% 7.52% 19.22% 0.00% 8.46% 13.12% 11.32% 17.54%

12/31/2011 0.00% 0.00% 0.00% 0.00% 0.72% 0.72% 2.70% 0.00% 5.19% 8.04% 3.84% 5.96%

12/31/2012 13.41% 8.75% 8.86% 6.25% 8.24% 8.24% 16.82% 2.65% 6.92% 10.72% 6.81% 10.55%

12/31/2013 29.60% 8.75% 19.52% 6.25% 15.86% 15.86% 34.99% 22.00% 8.01% 12.42% 7.75% 12.01%

12/31/2014 11.39% 8.75% 8.66% 6.25% 5.31% 5.31% 17.94% 9.60% 6.88% 10.67% 1.53% 2.37%

12/31/2015 -0.73% 0.00% 0.00% 0.00% -0.39% 0.00% 8.43% 0.00% -1.33% 0.00% -2.33% 0.00%

12/31/2016 9.54% 8.75% 4.44% 6.25% 7.71% 7.71% 5.89% 0.00% 4.93% 7.64% 5.75% 8.92%

12/31/2017 19.42% 8.75% 17.02% 6.25% 12.63% 12.63% 31.52% 20.29% 14.73% 22.84% 14.46% 22.41%

12/31/2018 -6.24% 0.00% 0.00% 0.00% -6.05% 0.00% -1.04% 0.00% -0.66% 0.00% -2.10% 0.00%

12/31/2019 28.88% 8.75% 15.28% 6.25% 18.20% 16.00% 37.96% 15.03% 12.83% 19.89% 10.35% 16.05%

Historical 8.12% 5.79% 6.31% 4.46% 7.04% 8.36% 13.08% 5.87% 5.25% 8.38% 4.78% 8.08%

26

Note:

There are dozens of insurance companies that collectively offer hundreds of different

index strategies. Working with your financial

professional is critical to determine which

company and which index strategies are best suited for your individual needs.

Index Allocation Cap Floor Participation Rate Trigger Rate

Annual Point-to-Point Bloomberg US Dynamic Balance Index II ER, with Participation Rate Bonus

PIMCO Tactical Balanced ER Index Bonus

Annual Point-to-Point Blended Index

The values below show what percent of the time the Illustrated Rate selected was achieved:

Percent of the Time Illustrated Return of was achieved.

5 Year: 10 Year: 15 Year:

INDEX RETURNS VS. ACTUAL INDEXSee the comparison chart between the S&P500 Total Return versus the “Bloomberg US Dynamic Balance Index.” Between 2005 and 2019, each index “won” depending upon the time-frame in which you compared results. The goal of an indexing strategy is not to “win” a rate of return race, although it often does, but rather to smooth out the ups and downs of the strategy as compared to the actual index. By limiting the negative returns, while also limiting the upside potential, an indexing strategy achieves results that may be more predictable over time. And with retirement income planning, predictability is a big benefit!

The BUDBI values do not reflect dividends payable on the underlying stocks, any underlying fees, or charges in any particular investment. Due to the overlapping of data, the percentile rates given should not provide a direct level of confidence of future index performance. The actual consequences of a planning alternative will depend on many variables, some of which may not be fully accounted for in this presentation. This material does not constitute tax, legal or accounting advice. It is important to remember that these numbers are solely historical and do not and should not be used to predict future indexed performance. This calculator does not include a specific product’s fees and charges that may occur. You should view a personalized illustration from a specific insurance company before deciding to purchase any indexed product from that company.

Hypothetical $10,000 initial investment with no expenses.

34.00% N/A 0.00% 155.00% N/A

33.00% N/A 0.00% 155.00% N/A

33.00% 13.50% 0.00% 100.00% N/A

6.50%

85.60%100.00%100.00%

$-

$5,000.00

$10,000.00

$15,000.00

$20,000.00

$25,000.00

$30,000.00

$35,000.00

$40,000.00

2005 2007 2009 2011 2013 2015 2017 2019

BUDB II ER w/Par vs. S&P 500 Total Return

BUDBII w/Par S&P 500 TR

27

A Lesson on Capital Equivalent Values and Wall Streets 4% Rule for “Safe Withdrawal” rates:

The 4% rule of thumb for income withdrawal in retirement has shriveled to only 2.4% for investors taking “a moderate amount of risk,” according to Dr Wade Pfau’s latest calculations as of March 2020.

Regarding the 4% rule, Dr Phau said: “The probability that it would work is a lot lower now. It worked in the U.S. historically, but [previous years] never dealt with low interest rates and high stock market valuations at the same time. I did some updates in mid-March; and for an investor taking a moderate amount of risk, I put out 2.4% as my equivalent of the 4% rule. That’s still about the same today.”

The multi-award-winning retirement authority is a professor of retirement income and co-director of The New York Life Center for Retirement Income at The American College of Financial Services. Host of the blog Retirement Researcher (https://retirementresearcher.com/), the chartered financial analyst holds a doctorate in economics from Princeton University.

We are often taught that the account with the largest balance at retirement wins. However, depending upon the financial tools that are compared, this may or may not be true. Take Capital Equivalent Value (CEV) as an example. CEV is a calculation that helps us determine, given a specified amount of spendable cash flow, how large of an account balance is needed to generate the cash flow, or what rate of return is needed in a comparison account to generate the same amount of cash flow.

The Comparison account is an IUL with a cash value of that generates /yr tax exempt distributions. Refer to your assumptions on page #7.

Roth Example: To generate $<<Mer>> in tax free income increasing each year <<Mer>>% the Roth would require an account balance of $<<Mer>> at retirement. In order to have $<<ld>> in account balance at retirement the Roth would need to earn <<Me each year using the same contributions as the IUL.

IRA/401(k) example: To generate $<<Merge F in taxable income assuming a <<Merge tax rate ($<<Merge ) in tax free income the IRA/401(k) would require an account balance of $<<Merge at retirement. In order to have ge Field>> in account balance at retirement, the IRA/401(k) would need to earn e Field>>% each year using the same net after tax contributions as the IUL.

Income Inflated @ 3%/Year

Values # of Yrs Totals

Contributions Level Contributions

Tax Exempt Loans

Residual Death Benefit @ age 90

Total Distribution Upon Death @ age 90 C. Loans + Death Benefit

Net Lifetime Gain C. Loans + Death Benefit - C. Contributions

$ Pre-Tax Income CEV Needed ROR Needed

After Exp.

CEV (Capital Equivalent Value)

CEV - Rate of Return Needed to Match PLI Income

What About Taxes

CEV Accounting for Taxes

CEV ROR - Accounting for Taxes to Match PLI NAT Income

Assumed Effective Tax Rate

4% Rule Adjusted for 2020 Assuming 3% COLI

Accumulation Period (Years)

$1,107,354 $65,000

$65,000$2,708,333

9.72%

3%$2,708,333

24.00%$3,563,596

$85,526

$3,563,596$65,000

9.72%

$240,000

$3,742,186

$3,982,186

$1,744,465

$2,237,721

$6,000

$65,000

40

24

9.72%

9.72%

$2,708,333

$3,563,596

$85,526

$3,563,596

$2,708,333

2.40%

40

2.40%

76.00%

40

$65,000

$7,895

$85,526

$65,000

$6,000

24.00%

40

2.40%

28

MICRO VS. MACRO TAX CALCULATION

TAX AWARENESS CALCULATOR

Most professionals manage taxes at the Micro Level. Micro = Tax Costs this year. My specialty is Macro vs. Micro

tax awareness. For Optimal outcomes consider a Macro approach. Macro = Minimizing the total amount of taxes

paid over your lifetime.

Contribution Amount: Average Tax Rate During Accumulation: Average Tax Rate at Retirement: Investment Horizon (Years): Average Rate of Return:

$7,89524.00%34.00%

408.00%

$2,208,798$7,895

$6,000 $1,895 $220,880 $1,457,806$530,111

$75,789 $750,991

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Tax Deductions Tax Bill Due @Retirement

Available to Spend $1,457,806

Tax Bill @ Accumulation

Tax Rate$530,111

Add'l Tax Due to Increase in Taxation $220,880

Net Retirement Contribution$6,000

Uncle Sam's Bag$1,895

40 Years

29

NOW WHAT?Where do you go from here? What do you do with all of this new information? How can you use what you have learned to make good financial decisions?

Our job as advisors is to measure outcomes. We attempt to do so with an open mind. We realize that there is NO PERFECT financial or insurance product, strategy, or tool. Every financial decision has trade-offs and it wouldn’t be prudent to have all of your assets in one asset class. While the tax advantaged asset class does give us the most tax benefits, you also need to qualify. Qualify = The IRS limits who can contribute to Roth IRA’s and the insurance companies limit how much of your liquid net worth or income you can contribute. Of course, you will need to be medically underwritten, so even if you want to use this asset class you may not qualify. Our goal with this report is to measure one strategy that is often overlooked by the major investment firms, wire houses, and investment advisors. Many of these types of firms do not offer IUL so you will rarely see it properly measured against the options they offer.

IUL can be a great financial tool for many Americans. When used properly, and in coordination with some of the other choices, it addresses a major set of problems every investor and taxpayer will face.

IUL addresses the realistic concern that your tax rates may be higher in the future.

IUL addresses the concern that volatile markets may erode your investment portfolio.

IUL addresses the fear that your nest egg will not be able to generate enough income in retirement.

IUL addresses the fear that you may not leave a legacy to your loved ones.

IUL is not the only strategy, but it can be a great option when properly applied.

Discuss with your financial advisor how an IUL can best serve your specific goals!

30

HISTORICAL CASH ACCUMULATION IMPORTANT DISCLOSURESProjections and information in this report regarding potential outcomes are hypothetical and are not intended to reflect actual results nor guarantee future results. Results may be more or less favorable due to uncontrollable future data such as investment returns, inflation rates, tax rates and product expenses.

Please review all of the inputs and assumptions made in this report for accuracy. If you see the need to change these assumptions or have corrections, let me know and the report will be updated.

Some tax deferred and tax-exempt financial vehicles have limits on the amount that can be funded into an account or ages that there are penalties for withdrawing or not withdrawing funds. This report assumes that the same amount that can be added or withdrawn from the IUL policy can be added or withdrawn with the alternatives without penalty and that may not be the case. For the tax deferred account we are assuming the income necessary is equal to the IUL income plus the amount taxed at the marginal tax rate. All taxes shown are assumed to be the marginal tax rates and are merely hypothetical.

Historical index returns exclude dividends. You may not invest directly in an index.

This report is not valid unless accompanied by a personalized insurance carrier illustration from that specific insurance company. Past performance does not guarantee future results. The content of this report is not intended to provide legal, tax or accounting advice. Please consult your tax advisor for specific tax advice.

The information presented is not securities related and the topics presented do not participate in the stock market nor are stock market investments. Any guarantees are backed by the claims paying ability of the insurance company and are subject to change. The real life cases presented are for informational purposes for illustrative purposes only. They should not be deemed a representation of past or guarantee future results. The cases do not represent any specific product, nor does it reflect sales charges or other expenses that may be required for some policies. No representation is made as to the accurateness of the analysis.

The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional legal advice for applicability to your personal situation.In order to comply with certain U.S. Treasury regulations, please be advised of the following: unless expressly stated otherwise, any U.S. Federal tax advice contained in these materials is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

Investment Advisory Services offered through Retirement Wealth Advisors Inc. (RWA), an SEC Registered Investment Advisor. VIP Financial Associates Inc. and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision. Any References to protection benefits or lifetime income generally refer to fixed insurance products. They do not refer in any way to securities or investment advisory products or services. Fixed Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Retirement Wealth Advisors. Inc.

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