Million Dollar Baby
Lee Duncan
Vice President & National
Training Director
678.969.9000
lduncan@anallianceforlife.com
Agenda
• Why “Million Dollar Baby” using
IUL is so Important
• Quick overview of IUL portfolio
• Case Study
• Illustrating the concept
• Underwriting and completing the
application
• Each premium payment they make
funds their death benefit and also
helps build cash value.
• Cash value can be used to help pay
for college tuition and expenses,
buying a home, retirement and
everything in between.
• Living Benefits in case of an
illness.
• Death benefit protection –
protecting their insurability.
What It Costs to Go to
College
• Can vary widely depending on
institution; public vs. private
• College costs are rising at
twice the rate of inflation
• Average annual tuition plus
expenses at a private four-year
college is about $35,000 (U.S.
News, August 2010)
The College Debt
Crisis
• Americans now owe more on their
student loans than they do on their
credit cards.
• College debt will surpass $1
trillion in 2012 – growing at a
rate of $2,853 per second.
• As of 2009, 67 percent of graduates
had debt, averaging $24,000 per
student (this does not include
loans taken out by parents)
• Student loan defaults have doubled
since 2005
Cost of Buying a Home
• Varies widely across the U.S.
• Average sales price of new
homes sold in U.S. was $272,900
in 2010.
• 20% down would translate to
over $54,000
(Census.gov)
Cost of Retirement
• Saving $1 million will only amount to
about $40,000 per year for the average
retiree (assuming you limit your
withdrawals to 4% of your savings during
your first year in retirement).
• 41% of women and 32% of men believe they
will have to work after retirement just
to make ends – retirement has become a
luxury.
• When the stock market was soaring people
became obsessed with their nest egg
number; now the focus is shifting to a
more important number: how much
retirement income your savings will
provide.
Retirement saving is not just
about accumulating a big pile of
money!
The OTHER Living Benefit
• Tax Free Retirement
• Cash Value
Accumulation
• College Education
Expenses
• Be Your Own
Banker!!!!!
Why Tax-Free?
If you were a farmer would you
rather pay tax on the seed…
…or the harvest?
LSW Indexed UL Products
SecurePlus® Provider
• Middle market
• Upside potential without the risk of
losses
• Issue ages 0-85
• Minimum face amount - $25,000
• 4 interest crediting strategies
• 1.25% Annual Account Value Enhancement
starting at year 10
• 10-year surrender charge period
LSW FlexLife ®
• 4th Generation IUL
• Business or affluent/emerging affluent
clients
• Issue ages 0-85
• Minimum Face: $100,000
(Base Face Amount + APB* Face Amount)
• 5 interest crediting strategies
• Price banding at $250k, $1MM, and $3MM
• *Additional
Lifetime
Income
Benefit
Rider
Protection
Benefit
Rider.
Riders are optional, may require an
additional premium and may not be available
in all states.
Case Study: John Smith
• LSW FlexLife
• Newborn baby (at least 15 days
old); male
• Parents each have $500,000 of
life insurance in force; are
both in early 30s
• Face Amount: $200,000,
Increasing Death Benefit for 50
years
• Interest Strategies Allocation:
50% strategy 1, 50% strategy 2;
Case Study: John Smith
• Initial premium of $50 per
month
• In 5 years they increase
premium to $75 per month
• In 10 years they increase
premium to $100 per month
Case Study: John Smith
• Child takes out max loan at age
23 to repay college loans –
four years $10,000 per year.
Total of $40,000 to repay
college loans.
• At age 27 child takes over
ownership of the policy and
begins paying $100 per month.
• By age 33 career has taken off;
increased premium to $150 per
month.
Case Study: John Smith
• At age 36 continues to pay $150
per month.
• At age 40 increases to $200 per
month.
• Retires at age 67 and begins
taking retirement income from
policy at age 70 – projected
$289,420 per year for 35 years!
• John Smith dies at age 93 and
his children receive over $1.5
Summary of Benefits
• Total paid in premium: $101,700
over lifetime
• Total “income” paid to child
during lifetime: $6,556,660!
• Death Benefit Paid to family:
$1,582,873!
• Total benefits paid from
policy: $8,239,533!
Juvenile Applications
Start saving from day one.
The sooner you start, the
better.
Encourage loved ones to
give the gift that keeps on
giving.
When family members and
friends celebrate your child’s
birth, subsequent birthdays,
holidays, and religious
events, tell them about your
child’s college savings
account. Every monetary gift
they give will be part of a
legacy of learning.
Turn to your parents.
Often, grandparents are the
ones who are most aware of how
difficult it is for parents to
manage the financial burden
Juvenile Applications
Because college is seen as the immediate expense, parents often focus on
saving for education and leave retirement funding solely to their children.
However, what we are experiencing RIGHT NOW is the risk of OUTLIVING
your money.
Think about it this way - Most children are eligible for financial aid for
education in a way that they are not eligible for in saving for retirement.
Parents focus:
Education…
NOT RETIREMENT
However, what we are
experiencing RIGHT NOW
is the risk of OUTLIVING
YOUR MONEY
ANOTHER WAY TO LOOK AT IT
WILL FINANCIAL AID BE
AVAILABLE FOR:
EDUCATION
YES
RETIREMENT
NO
Juvenile Applications
Will Consider face amount of coverage on a minor applicant EQUAL to
that of the coverage on either parent (or legal guardian); unless
state law dictates otherwise.
Ownership / Premium Payers for minors can be parents/legal guardians
or grandparents ONLY.
Larger face amounts for a juvenile should include a detailed outline
of the family / household income, net worth, premium funding sources,
and any other supporting information.
HIPAA form is required for each child.
Signatures are required at age 15 and over, as well as an HIV form.
When all is said
and done, a huge
head start on
their financial
security could
be the best gift
you could
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