Determining your
family’s financial needs
Live life your way.
Family
Legacy
Lifestyle
Career
Retirement
Education
How do you get started?
• 40% of U.S. adults have no
life insurance *
• 67% of adults have no
individual life insurance
protection *
And…
• 50% of U.S. Households
believe they are
underinsured *
*LIMRA International, 2011, Person-Level Trends in U.S. Life Insurance Ownership
Life insurance: pain or promise?
• What would you rather do…
– Go to the DMV?
– Have a root canal?
– Baby sit sextuplets?
– Talk about life insurance?
The flexibility of life insurance
• Protect loved ones with what is generally an income
tax free death benefit
• Potentially transfer wealth without federal estate
taxes if life insurance is purchased within a properly
structured irrevocable life insurance trust
• Accumulate a tax-deferred cash value, with certain
policies*
*Distributions are generally treated first as tax-free recovery of basis and then as taxable income, assuming the policy is not a
Modified Endowment Contract (MEC). However, different rules apply in the first fifteen policy years, when distributions
accompanied by benefit reductions may be taxable prior to basis recovery. Non-MEC loans are generally not subject to tax
but may be taxable when the policy lapses, is surrendered, exchanged or otherwise terminated. In the case of a MEC, loans
and withdrawals are taxable to the extent of policy gain and a 10% penalty may apply if taken prior to age 59 1/2. Always
confirm the status of a particular loan or withdrawal with a qualified tax advisor. Cash value accumulation may not be
guaranteed depending on the type of product selected. Investments in variable life insurance are subject to market risk,
including loss of principal.
Please note: this document is designed to provide introductory information on the subject matter. You should consult
your attorney and/or tax advisor before making financial investment or planning decisions.
How much life insurance do I need?
• Human Life Value
- analyzes your economic contribution to the family
• Capital Needs Analysis
- analyzes your family’s future financial needs
Human Life Value
How does it work?
Estimate the amount of income you will provide to your
family before retirement
Include the cost of fringe benefits
Subtract taxes
Subtract your own personal expenses
Estimate the rate of return on the death benefit amount
Case Study – David and Brenda
Hypothetical Example of Human Life Value
David’s current age - 40
Anticipated retirement age - 67
Annual income - $85,000
Percent of income to protect – 85%
Number of years to provide income - 25
Amount of life insurance needed - $1,140,693
This Example Is For Illustration Purposes Only. Actual Results Will Vary.
Capital Needs Analysis
How does it work?
Determine the primary breadwinner’s total income
contribution
Add the other spouse’s income, if applicable
Multiply the total family income by the percentage of
income necessary to support the family if the primary
breadwinner dies
Subtract the surviving spouse’s income from the
assets required to support the family to determine
the income gap to be replaced
Case Study – Chris and Jennifer
Hypothetical Example of Capital Needs Analysis
Married Couple of 7 years:
$150,000
+
$50,000
$200,000
x
80%
$160,000
–
$50,000
$110,000
Chris’ salary - age 35
Jennifer’s salary – age 34
Total annual income
Percentage of income necessary to
continue standard of living
Actual income needed to maintain
standard of living
Jennifer’s salary
INCOME GAP TO BE REPLACED
This Example Is For Illustration Purposes Only. Actual Results Will Vary.
Case Study – Chris and Jennifer
Hypothetical Example of Capital Needs Analysis
NO LIQUIDATION APPROACH
LIQUIDATION APPROACH
Set aside funds, preserve principal, survivors live
off earnings
Income Gap to be replaced 2,200,000
(Add one time expenses) + $570,000
Liquidate assets over a period of years
Income Gap to be replaced 1,439,385
(Add one time expenses) + $570,000
$2,770,000
(Less existing assets) – $780,000
$2,009,385
(Less existing assets) – $780,000
DEATH BENEFIT $1,990,000
DEATH BENEFIT $1,229,385
This hypothetical is for illustration purposes only, actual results will
vary. These calculations assume a 5% return on assets. Growth rate
is a hypothetical growth rate, selected by clients and based on what
they believe is a reasonable rate of return for their risk tolerance.
The Liquidation Approach in this example uses a 20 year timeframe.
Which formula should you use?
Human Life Value:
- Goal is to replace lost financial contribution; doesn’t take into
account actual income needs, existing assets or a spouse’s
income; total life insurance recommendation will typically be
higher than Capital Needs Analysis calculation.
Capital Needs Analysis:
- Focuses on income needs of surviving family members; takes
assets and other sources of income into account; life
insurance recommendation will generally be lower than the
Human Life Value calculation
Types of Life Insurance
Term vs. Permanent
TERM
Whole Life
Universal Life
Variable
Universal Life1
Guaranteed level
premiums for life.
Flexible premiums
for life.
Flexible premiums
for life.
Yes
Yes
Yes2
Yes
Yes
Yes
Life
Life
Life
None
Insurance company
bears risk.
Insurance company
bears risk.
Policy owner
bears risk.
Income replacement
Income replacement/
supplemental income
strategy
Estate planning/
legacy planning
Supplemental
income strategy
Term Life
Premiums
Level premiums for
term of policy.
Cash Value
No
Loans/Withdrawals3
No
Coverage4
Investment Risk
Commonly Used For
1 Investments
PERMANENT
Specific term is defined
by the policy selected.
Generally 10, 15, 20 or
30 years.
in variable life insurance are subject to market risk, including loss of principal.
value accumulation of variable life insurance is not guaranteed.
3 Loans and withdrawals will decrease the cash value and death benefit. Tax-favored distribution assumes that the life insurance policy is
properly structured and not classified as a Modified Endowment Contract (MEC). Withdrawals are made up to the cost basis and policy
2 Cash
Term Life Insurance
TERM
Term Life
Premiums
Level premiums for term
of policy
Cash Value
No
Loans/Withdrawals
No
Coverage
Investment Risk
Commonly Used For
Specific term is defined
by the policy selected.
Generally 10, 15, 20 or
30 years.
None
Income replacement
Low cost death benefit protection
Purchased for a specified period of time
Annual premium typically remains level
No cash value feature
Conversion privileges
Level premium versus yearly increasing
Whole Life Insurance
PERMANENT
Guaranteed level premiums
Whole Life
Premiums
Guaranteed level premiums
for life.
Cash Value
Yes
Loans/Withdrawals
Yes
Coverage
Life
Investment Risk
Commonly Used For
Guaranteed cash values*
Guaranteed death benefits
Insurance company bears risk.
Income replacement/
supplemental income
*Guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company
Coverage is subject to adequate policy funding. Policy dividends are not guaranteed.
Universal Life Insurance
PERMANENT
Universal Life
Premiums
Flexible premiums for life.
Cash Value
Yes
Loans/Withdrawals
Yes
Coverage
Life
Investment Risk
Commonly Used For
1 Subject
Insurance company bears
risk.
Estate planning/ legacy
planning
Flexible premium payments and
death benefit1
Tax-Advantaged access to cash
values
-Through Loans and Withdrawals2
Potential for guaranteed3 death
benefit2
Permanent death benefit coverage for
- Wealth Transfer
- Income Protection
to certain restrictions and limitations. Coverage is subject to adequate policy funding.
2
Loans and withdrawals will decrease the cash value and death benefit. Tax-free distributions assume that the life insurance policy is
properly structured, is not a Modified Endowment Contract (MEC) and distributions are made up to the cost basis and policy loans thereafter.
If the policy has not performed as expected, distributions may need to be reduced, stopped and/ or premium payments may need to be
resumed to avoid a policy lapse. There may be tax consequences.
3
If guaranteed Universal Life coverage is purchased loans and withdrawals could negatively impact the policy's duration.
Variable Universal Life Insurance
PERMANENT
Variable Universal Life1
Premiums
Flexible premiums for life.
Cash Value
Yes
Loans/Withdrawals
Yes
Coverage
Life
Investment Risk
Commonly Used For
1Investments
Death benefit coverage with
equity based investment options
Premium and death benefit
flexibility
Tax-advantaged access to cash
values through policy loans and
withdrawals.2
Policy owner bears risk.
Supplemental income
in variable life insurance are subject to market risk, including loss of principal. Cash value accumulation is not guaranteed.
Coverage is subject to adequate policy funding.
2Loans and withdrawals will decrease the cash value and death benefit. Tax-free distributions assume that the life insurance policy is
properly structured, is not a Modified Endowment Contract (MEC) and distributions are made up to the cost basis and policy loans
thereafter. If the policy has not performed as expected, distributions may need to be reduced, stopped and/ or premium payments may
need to be resumed to avoid a policy lapse. There may be tax consequences.
Tax-Advantaged Access to Cash Values
Non Modified Endowment Contract
• Withdrawals are subject to income tax to extent that they exceed basis in
the policy
• Generally tax free loans
Modified Endowment Contract
• Distributions and loans subject to Federal income tax to extent of gain
• If withdrawn before age 59 ½, subject to a 10% penalty tax
• May be penalties associated with loans/ withdrawals
Loans and withdrawals will decrease the cash value and death benefit. Tax-free distributions assume that the life insurance policy is
properly structured, is not a modified endowment contract (MEC), and distributions are made up to the cost basis and policy loans
thereafter. If the policy has not performed as expected and to avoid a policy lapse, distributions may need to be reduced, stopped and/or
premium payments may need to be resumed. Should the policy lapse or be surrendered prior to the death of the insured, there may be
tax consequences.
What are your goals?
Protecting your family
Accumulating funds
Supplementing your income
Transferring wealth
Reducing estate taxes
Continuing a business
Action Steps:
Identify your motivations/ goals for purchasing
insurance
Calculate how much insurance you might need
Determine the type of insurance policy to
purchase
Apply for insurance
Review annually with a financial professional
Where to find help?
Seek professional advice
Reputable insurance company
Carrier ratings are important
Consider MetLife
MetLife Brand
• One of America’s largest financial companies
with roots as far back as 1863
• Serves over 90 of the top one hundred
FORTUNE 500® companies*
• Recognized as the Nation’s Largest
Life Insurer**
*MetLife. Quick Facts: Full Year 2009
**About MetLife. www.metlife.com October 2011
Primary Factors to Consider
Is your need for insurance temporary?
Do you ever anticipate accessing the policy’s cash value?
How long do you want to pay premiums?
Do you want the premiums to stay the same for the life of
the policy?
Do you want the flexibility to increase your death benefit?
Do you feel more comfortable with a guaranteed death
benefit?
How much investment risk are you willing to bear?
Important Information
Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in
this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports
the promotion and marketing of insurance products. Your clients should seek advice based on their particular
circumstances from an independent tax advisor.
MetLife, its agents, and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this
document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is
subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific
taxpayer may vary depending on the facts and circumstances. You clients should consult with and rely on their own
independent legal and tax advisers regarding their particular set of facts and circumstances.
Prospectuses for Equity Advantage Variable Universal Life, and for the investment portfolios offered thereunder,
are available from MetLife. The policy prospectus contains information about the policy’s features, risks, charges
and expenses. Investors should consider the investment objectives, contract features, risks, charges and
expenses of the investment company carefully before investing. The investment objectives, risks and policies of
the investment options, as well as other information about the investment options, are described in their
respective prospectuses. Clients should read the prospectuses and consider this information carefully before
investing. Product availability and features may vary by state.
Important Information
MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. There is
no guarantee that any of the variable investment options in this product will meet their stated goals or objectives. The account value is
subject to market fluctuations so that, when withdrawn, it may be worth more or less than its original value. Guarantees are based on the
claims-paying ability and financial strength of the issuing insurance company.
Guarantee Advantage Universal Life is issued by MetLife Investors USA Insurance Company on Policy Form Series 5E-34-07 and in New
York, only by Metropolitan Life Insurance Company on Policy Form Series 1E-34-07-NY. Legacy Advantage Survivorship Universal Life is
issued by MetLife Investors USA Insurance Company on Policy Form Series 5E-32-05 and in New York, only by Metropolitan Life
Insurance Company on Policy Form Series 1E-32-05-NY. Equity Advantage Variable Universal Life is issued by MetLife Investors USA
Insurance Company on Policy Form Series 5E-46-06 and in New York only by Metropolitan Life Insurance Company on Policy Form
Series 1E-46-06-NY-1. MetLife Promise Whole Life is issued by MetLife Investors USA Insurance Company on Policy Form 5E-12-10 and
in New York only by Metropolitan Life Insurance Company on Policy Form 1E-12-10-NY. Guaranteed Level Term is issued by MetLife
Investors USA Insurance Company on Policy Form Series 5E-21-04 and in New York, only by First MetLife Investors Insurance Company
on Policy Form Series 5E-21-04-NY. All are MetLife companies. All guarantees are subject to the claims-paying ability and financial
strength of the issuing insurance company. Variable products are distributed by MetLife Investors Distribution Company, 5 Park Plaza,
Suite 1900, Irvine, CA 92614. Variable products are offered through MetLife Securities, Inc. and New England Securities Corporation;
both at 1095 Avenue of the Americas, New York, NY 10036 (member FINRA/SIPC). February 2012
• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency
• Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value
CLVL22404 L0412250283[0414]
2012 METLIFE, INC.
PEANUTS @ 2012 Peanuts Worldwide