Clc.1025 life insurance and you covering the basics of life insurance consumer seminar (1)

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  • Thank you for being here today. I am so glad you were able to join us so we can talk about the importance of life insurance. Even if you already have life insurance, it’s important to review your policy annually to make sure it’s still in line with your long-term goals.
    Whatever the case, I can help you cut through the complexities of life insurance and help get you on your way to a more balanced and secure financial future.
  • Let’s start today by watching this short video from The Balancing Act. The Balancing Act is a daily morning show for women on Lifetime, and they touch on some really important topics. Here you’ll see Protective Life Chief Operating Officer and Executive Vice President Carolyn Johnson when she recently had the opportunity to go on the show to talk about women and financial and retirement planning. Take a look.
  • Planning for your life insurance needs should be considered just as important as other insurance needs you plan for in your life, such as your auto, home or health insurance.
    It’s hard for most of us to find the time today to do the sort of planning that’s really needed to ensure long-term financial security. Tending to the concerns of the moment and the issues of the day understandably takes priority.
    Without careful planning, your family may be inadequately prepared should something happen to you. In going about your long-term financial planning, you should ask yourself some critical questions about how your absence would impact those most important to you.
  • If you’re married, you share everything including your financial obligations. All too often, it takes the income of both spouses to meet those obligations and create the lifestyle we desire. However, many people mistakenly believe they don't need to think about life insurance until they have children. Not true.
    Would your surviving spouse's income alone be sufficient to cover the monthly rent or mortgage payment; utility bills; pay off debts like credit-card balances and car loans; let alone funeral costs and final expenses. And if you DO plan on having children, you will want to buy life insurance right away and not wait until pregnancy to purchase.
  • Now, you have kids.
    As you bring a new person into the world, you also bring a major financial responsibility into your life. If something happens to you, where's the money going to come from to help provide the kind of upbringing you want your child to have?
    You have big plans for your kids and want to see them realize their hopes and dreams. It's hard enough to make that happen with you IN the picture. But what if you were suddenly OUT of the picture? (CLICK) From diapers to diplomas, would there be enough income to pay for day care, a college education, and everything in between?Our children are our greatest responsibility, and life insurance can help them to grow up in a stable environment; one in which they are physically safe and financially secure if something were to happen.
  • What if you are, or became, a single parent. That means you're not only mom, you’re the caregiver, breadwinner, cook, chauffeur, and so much more. Yet nearly four in ten single parents have no life insurance whatsoever, and many with coverage say they need more than they have. With so much responsibility resting on your shoulders, you need to make sure that you have enough life insurance to safeguard your children's financial future.
  • If you’re a stay at home mom, the fact that you don't earn a salary doesn't mean you don't make a financial contribution to your family. Childcare, transportation, cleaning, cooking and other household activities are all important tasks, the replacement value of which is often severely underestimated. (CLICK) Surveys have estimated the value of these services at over $40,000 per year. Could your spouse afford to pay someone for these services? With life insurance, your family can afford to make the choice that best preserves their quality of life.
  • Now more than ever women should be concerned about safeguarding their financial future. Declines in owning life insurance has left many households vulnerable if either wage-earner dies.
    The good news is that it’s never too late to get started with a strategy. Even if you already have one in place, it’s important to review your strategy annually to make sure it’s still in line with your long-term goals.
  • Today we’re going to spend time discussing the basics of what you need to know about life insurance, including the types of life insurance policies available and their benefits as well as talk a little about beneficiary designations. We will conclude with a discussion on the benefits of annual life insurance policy reviews and frequently asked questions.
  • Life insurance is about protection. It helps provide security for your loved ones when they need it most. Protecting your family with life insurance can help ensure that they do not face the added burden of financial pressures, should the unexpected happen. Think about your mortgage payments, car payments, credit card bills, daily living expenses, and utilities. By providing income for your family in the event you are unable to do so, you are protecting the financial future of the people you love.
    Death proceeds are generally free from income tax, making it possible to ultimately provide more benefits to your beneficiaries. You can designate that death proceeds be paid directly to your beneficiaries, making it possible to avoid probate delays. And many states have enacted laws that make life insurance safe from creditors, also.
    A life insurance plan may also be tailored to provide financial protection to cover business needs. Protecting your business interest with life insurance can include covering business debt, funding buy-sell agreements, or providing key person coverage.
    Life insurance is a valuable planning tool that can easily be a part of an overall financial plan or stand-alone as a single source of protection. Properly planning for your life insurance needs today can provide a lifetime of financial security tomorrow.
  • No one wants to burden loved ones with an uncertain financial future in the event of an untimely death. It just makes sense to take the steps you can to help protect your family or business. Life insurance can help provide the security needed to meet your personal financial obligations or your family’s future financial needs.
    Life insurance can cover many different needs:
    Supporting dependent family members
    Providing income for basic living expenses
    Maintaining mortgage payments
    Providing for educational expenses, such as college
    Covering childcare expenses
    Providing care for dependent elder family members, such as a parent
    Paying for final expenses
    Paying estate or inheritance taxes
  • Did you know 40% of American businesses now owned by women?
    Life insurance can also be used in business continuation plans by funding buy-sell agreements, covering debts, or providing key-person coverage. An untimely death may cause a severe financial strain on the business and ultimately your family.
    Everyone has different needs. Based on your financial obligations and your long-term protection needs, your
    insurance professional can help you determine the amount and type of life insurance that may be of benefit
    to you and your family or your business.
  • With so many types of life insurance policies available, it is important to consult with your insurance professional about any potential life insurance purchase, to ensure that you’re choosing a policy that best meets your needs.
    Level Term Life - Fully guaranteed level premiums for the initial premium period. When the guaranteed level premium period is complete, you have the option to renew the policy at a higher premium rate (the premium will increase every year thereafter)
    Universal Life - Level or adjustable premium and coverage with cash values. Cash value increases based on the performance of certain assets held in the company’s general account. Suitable for long-term obligations or sinking-fund needs: estate growth, estate liquidity, etc.
    Variable Life and Variable Universal Life - Level or adjustable premium with level coverage and cash value. Suitable for long-term obligations and those who are more active investors and for estate growth and death tax liquidity.
    Single Premium Variable Universal Life - Entire premium is paid at purchase, while giving level coverage and building cash value. Provides protection as well as being an outstanding asset accumulation vehicle.
  • Life presents all of us with various types of financial risks. When you consider purchasing a product to help protect against these risks there are many factors that must be considered to ensure you get the protection you need.
    This is a life insurance flow chart, which may help you determine the appropriate type of life insurance. It will help you determine whether you need Term, Fixed, or Variable life insurance.
    Is there an insurance need?
    If no, current insurance is sufficient.
    If yes, “Is the insurance need greater than 15 years?”
    If no, look at Term insurance
    If yes, look at permanent insurance
    For permanent insurance, “Are you interested in maximizing cash value in anticipation of using it in the future?
    If yes, look at variable insurance
    If no, look at fixed insurance
    For fixed insurance, ask “Do you desire premium payment and death benefit flexibility?”
    If yes, look at universal life
    If no, look at whole life
  • Term life insurance is designed to provide pure death benefit protection for a specific period of time, usually 10, 15, 20, 25 or 30 years. Generally, it’s less expensive than permanent insurance, making it an affordable way to provide financial security for your personal or business needs. You can choose the amount of coverage needed and the length of the protection period based on your specific needs. Typically it can also be renewed upon completion of the initial term period selected.
  • Universal life insurance is a versatile type of life insurance designed to help solve a variety of long-term needs. Its flexible features can be useful for many different financial planning purposes. With careful planning and expert financial advice, you may find that universal life insurance can help you address both immediate and long-term financial protection and security needs.
  • Universal Life insurance offers you flexibility in both premium payments and the death benefit your family receives.* You can adjust the death benefit and your premium payments, within certain limits, to fit your financial situation.
    While universal life is designed to help solve a long-term need, it is not an investment in the strictest sense
  • [Walk through how UL policy works using the chart on the slide]
    PREMIUMS are applied to the policy, less any premium expense charge, when they are received.
    INTEREST is credited to the policy value once a month on the “monthaversary” of the policy issue date. The current interest rate is credited to unloaned policy values, while the guaranteed rate is credited to loaned policy values.
    PREMIUM EXPENSE CHARGE is the percentage amount deducted from each premium payment, before the remaining amount is applied to the policy.
    ADMINISTRATIVE EXPENSES are deducted monthly from the policy value on most plans.
    COST OF INSURANCE deductions are taken from the policy value each month for the death benefits, riders, and supplemental benefits.
    SURRENDER CHARGE, which varies in length and amount by plan, reduces the value available if the policy is surrendered or if loans or partial withdrawals are made. The cash surrender value is the policy value minus any applicable surrender charge and any policy debt.
  • Because VUL blends both protection and investment features, it provides the potential for long-term accumulation of policy values which may be used for a variety of needs.
    Before we discuss the practical aspects of Variable Universal Life Insurance with you, it’s important for us to point out that because of the investment features associated with VUL policies, there is the associated risk of investing in equity securities, including market risk and the risk of loss of principal.
    When considering the purchase of a VUL policy, you should always ask to see a prospectus which will outline all of the product’s risks that you might want to consider before your purchase.
  • Variable Universal Life (VUL) policies contain a combination of features found in both “variable life” and in “universal life” policies. VUL insurance is a unique tool that blends protection, flexibility, and investment options. It is a permanent, flexible life insurance product that can protect your loved ones in the event of your death, while providing the long-term opportunity for tax-deferred accumulation of cash values that can be used while you’re living.
    As with universal life contracts, the owner of the policy can, within certain guidelines, modify the policy death benefit and change the amount and timing of premium payments to meet varying circumstances.
    The most prominent feature of the variable universal life contract is the policyholder’s ability to direct where net premiums will be invested. Once the costs for insurance protection and company expenses are met, the balance of the premium goes directly into investment options selected by the policyholder. Typically he or she can choose among a number of options, such as growth stock accounts, bond accounts, balanced accounts, real estate accounts and money market accounts.
    The ultimate value of the account at either death or retirement will depend on the performance of the investment options chosen. Growth is not guaranteed. Advisory fees and other expenses apply to investments in the variable sub-accounts.
    As with other permanent life insurance contracts, the owner can borrow against the cash value of the policy. The interest rate charged on borrowed funds is generally lower than open market rates. There is no requirement for a credit check. Any loans or withdrawals will reduce the cash value of the policy and the death benefit.
  • When considering loans and withdrawals, it’s important, again, to remember that VUL policies are part insurance and part investment. As such, you would want to consider any fees, expenses, investment performance, and impact of loans and withdrawals on your death benefit and policy value.
  • [Walk through how a VUL policy works using the chart on the slide]
  • When you consider purchasing a life insurance product there are many factors that must be considered to ensure you get the protection you need. Some permanent life insurance products emphasize low premium cost, while others emphasize policy value accumulation. Term and term-like products emphasize death benefit coverage for a specific period of time. Your licensed insurance professional can help you make determine the right coverage for your individual needs.
  • You already recognize the importance of life insurance in your overall financial plans. By conducting a regular
    review of your life insurance protection with a licensed insurance professional, you can identify your long-term
    goals, ensure that your current life insurance coverage meets your current protection needs, and obtain
    information about new life insurance policies and features that may be of benefit to you.
    Many seemingly minor events in your life may warrant a re-evaluation of your life insurance coverage. The following list of life changes and events can signal the need to complete a new policy review:
    Needs continuously change, you may be under insured or over insured
    Beneficiary designations may need to be updated
    Ownership may need to be changed
    Policy may be under funded to meet its intended use
    Policy may no longer be efficient
    If these or other notable changes have occurred since you purchased your policy or had your last policy review,
    now is probably the right time for a Life Check-up. Your insurance professional can help you discover how changing life events may affect your policy’s ability to reach your long-term goals. Even without these sorts of changes, it’s important to conduct regular policy reviews.
  • Let’s take a moment to go over some frequently asked questions.
    Frequently Asked Questions
    Why not buy term instead of universal life?
    Universal life is designed to help solve a long-term need. Term insurance is designed for a relatively short-term need (hence the name “term” insurance). You should discuss these options with your financial professional to help you purchase the type of insurance that best meets your needs.
    Can premiums for my universal life insurance plan be tax deductible?
    Premiums for personally-owned life insurance are not tax deductible. However, employers may be able to deduct premiums as part of a Section 162 Bonus Plan for certain employees. For information regarding your personal situation, please contact your professional tax advisor.
    What if I want to change my death benefit?
    This flexibility is one of the features of universal life. The face amount can be increased or decreased within plan limits, but medical evidence of insurability may be required. Consult the policy contract for details.
    What if I want to change my premiums at any time?
    It depends. All of our universal life products provide certain lapse protection which requires payment of a Minimum Premium. After the lapse protection period it may be necessary to pay more than the Minimum Premium to keep your policy in force. Premium flexibility is one of the main features of UL. Your premiums can be increased up to certain IRS guidelines or reduced within the limits of the required minimum premium. It is important to note that the reduction of your planned premiums may cause your policy to lapse. Your universal life contract can stay in force only if there is policy value in excess of surrender charges and this may not occur if premiums are reduced.
    Should I consider universal life insurance as an investment?
    No. While Universal Life certainly has an investment element, it is not an investment in the strict sense.
    Should I expect my current credited interest rates to change?
    Yes. The current interest rate credited to your policy value is not guaranteed. Interest rates may change at any time. While they are influenced by the overall economic environment, interest rates are not indexed to any national standard and are subject to change at the discretion of the insurer. The policyholder will be advised of any interest rate changes in the previous year in the annual report to the policyholder. The current credited interest rate for a particular plan may never be less than a guaranteed interest rate shown in the policy contract.
  • Thank you for attending the presentation. Does anyone have any questions?
  • Clc.1025 life insurance and you covering the basics of life insurance consumer seminar (1)

    1. 1. Covering the Basics of Life Insurance Life Insurance and You! Not a Deposit Not Insured by Any Federal Government Agency No Bank Guarantee CLC.1025 (10.10) Not FDIC Insured May Lose Value
    2. 2. CLC.1025 (10.10) 2
    3. 3. Planning for your Financial Future CLC.1025 (10.10) 3
    4. 4. You’re Married Life insurance can cover many different needs: Providing income for basic living expenses Maintaining mortgage payments Utility bills Credit-card debt Car loans Paying for final expenses CLC.1025 (10.10) 4
    5. 5. Married With Kids  College funding  Long term financial goals  Income protection  Day care CLC.1025 (10.10) 5
    6. 6. Single Parents Nearly 40% of single parents have no life insurance. Many with coverage say they need more than they currently have. Source: “Trillion Dollar Baby” Report, LIMRA International, June, 2005. Updated information is not available as of 2010. CLC.1025 (10.10) 6
    7. 7. Stay At Home Parents On average, $40,000 a year in services provided by a stay at home parent The LIFE Foundation- www.lifehappens.org CLC.1025 (10.10) 7
    8. 8. The Reality… 2010Facts from LIMRA Life Insurance Awareness Month, September 2010 CLC.1025 (10.10) 8
    9. 9. Agenda • Life Insurance – What you need to know • Types Of Life Insurance Policies • Life Insurance Policy Reviews • Frequently Asked Questions CLC.1025 (10.10) 9
    10. 10. Life Insurance: What You Need to Know  Provides financial security for dependent family members  Income tax free death benefits  Proceeds direct to beneficiaries CLC.1025 (10.10) 10
    11. 11. Life Insurance: What You Need to Know Life insurance can cover many different needs, including: Family CLC.1025 (10.10) Mortgage Living Expenses Graduation 11
    12. 12. Life Insurance: What You Need to Know If you’re a business owner, you have just as many to consider:     Planning for business continuation Funding a buy-sell agreement Covering a key employee Providing for bonus plans Did you know 40%1 of American businesses now owned by women? 1 Source: Small Business Administration July 2009 CLC.1025 (10.10) 12
    13. 13. Types Of Life Insurance Policies     CLC.1025 (10.10) Term or Term-Like Universal Life Variable Universal Life Single Premium Variable Universal Life 13
    14. 14. Life Insurance Flow Chart Is there an insurance need? Yes No Is the insurance need greater than 15 years? Current insurance is sufficient No Yes Term Insurance Permanent Insurance Are you interested in having the potential to maximize cash value in anticipation of using it in the future, thus willing to accept a higher degree of risk? Yes No Variable Insurance Fixed Insurance Do you desire premium payment and death benefit flexibility? Yes Universal Life CLC.1025 (10.10) No Whole Life 14
    15. 15. About Term or Term-Like Life Insurance  Term or Term-like life insurance is designed to provide pure death benefit protection for a specific period of time, usually 10, 15, 20, 25, or 30 years.  Less expensive than permanent insurance.  Choose the amount of coverage needed and the length of the protection period based on your specific needs.  Typically it can also be renewed upon completion of the initial term period selected. CLC.1025 (10.10) 15
    16. 16. About Universal Life Insurance Universal life insurance is a versatile type of life insurance designed to help solve a variety of long-term needs. Features of universal life include:  Flexible premium payments  Adjustable death benefit coverage Proceeds payable directly to your named beneficiaries  Tax-deferred growth on policy values  Access to policy values through policy loans and withdrawals CLC.1025 (10.10) 16
    17. 17. Benefits of Universal Life Insurance  Universal Life insurance offers you flexibility in both premium payments and the death benefit your family receives. You can adjust the death benefit and your premium payments, within certain limits, to fit your financial situation.  While universal life is designed to help solve a long-term need, it is not an investment in the strictest sense. CLC.1025 (10.10) 17
    18. 18. How Universal Life Works CLC.1025 (10.10) 18
    19. 19. About Variable Universal Life Insurance Because VUL blends both protection and investment features, it provides the potential for long-term accumulation of policy values which may be used for a variety of needs. Variable universal life insurance involves the risk of investing in stocks, bonds and other securities, including market ,interest rate and credit risk and loss of principal. If the investment performance of underlying investments is poorer than expected (or if sufficient premiums are not paid), the policy may lapse or not accumulate sufficient value to fund the intended application. Investments in variable universal life insurance policies are subject to fees and charges from both the insurance company and the managers of underlying investments. Loans and withdrawals may negatively impact policy value, investment performance, death benefit and any lapse protection. CLC.1025 (10.10) See prospectus for complete information. Investors should carefully consider the investment objectives, risks, charges, and expenses of a variable universal life insurance policy and its underlying investment options before investing. This and other information is contained in the prospectus for variable universal life insurance options. Investors should read the prospectus carefully before investing. 19
    20. 20. Benefits of Variable Universal Life Insurance  Variable Universal Life (VUL) insurance combines protection for beneficiaries through an income tax free* death benefit with significant flexibility for investors.  Permits investors to structure policies to help meet their personal or business objectives through flexibility in premium payments, investment options, and death benefits.  Provides the potential for long-term accumulation of policy values. * The tax treatment of life insurance is subject to change. Neither Protective Life nor its representatives offer legal or tax advice. Purchasers should consult their attorney or tax advisor regarding their individual situations. CLC.1025 (10.10) 20
    21. 21. Variable Universal Life As An Investment CLC.1025 (10.10)  Advisory fees and other fund expenses apply to investments in the variable sub-accounts.  In most policies, loans and withdrawals are available after the first policy year. Just keep in mind that loans and withdrawals may negatively impact policy value, investment performance, death benefit, and any lapse protection features.  Whether loans and/or withdrawals (or other amounts deemed to be distributed) constitute income depends, in part, on whether the policy is considered a Modified Endowment Contract (MEC).  Loans and withdrawals from MECs may be subject to income tax and may be subject to a 10% IRS penalty tax if taken prior to age 59 ½. Taxation may occur upon withdrawal, surrender, lapse, or maturity. See prospectus for more complete information. The death benefit is subject to the claims paying ability of the issuing insurance company. 21
    22. 22. How a VUL Policy Works Premium payment is made Premium Expense Charge is deducted Policy’s surrender value is accessible after the first policy year Loans or withdrawals CLC.1025 (10.10) Balance of premium payment (net premium payment) is allocated to owner’s choice of investment options. Monthly deductions Any earnings grow tax-deferred while in the policy. Income-tax free death benefit is paid upon death of insured Cost of Insurance, Mortality and Expense Risk Charge and any other charges are deducted at issue and monthly thereafter from the policy value 22
    23. 23. Determining the Right Type of Life Insurance For You • Some permanent life insurance products emphasize low premium cost, while others emphasize policy value accumulation. • Term and term-like products emphasize death benefit coverage for a specific period of time. CLC.1025 (10.10) Note: A family’s financial needs, ownership, beneficiary, and replacement issues must be considered when choosing the proper life insurance policy. 23
    24. 24. Life Insurance Policy Reviews  Why it is so important to have a life insurance policy review? Your insurance professional or financial advisor can help! CLC.1025 (10.10) 24
    25. 25. Frequently Asked Questions ? CLC.1025 (10.10) The tax treatment of life insurance is subject to change. Neither Protective Life nor its representatives offer legal or tax advice. Purchasers should consult their attorney or tax advisor regarding their individual situation. 25
    26. 26. Questions? Your insurance professional or financial advisor is available to set up an appointment to discuss your personal needs in further detail. Variable universal life policies issued by Protective Life Insurance Company (PLICO). Securities offered by Investment Distributors, Inc. (IDI). Both located at 2801 Highway 280 South, Birmingham, AL 35223.PLICO and IDI are each subsidiaries of Protective Life Corporation. Protective Life Corporation is a separate company and is not responsible for the financial condition or contractual obligations of PLICO or IDI. Investors should carefully consider the investment objectives, risks, charges, and expenses of a variable universal life insurance policy and its underlying investment options before investing. This and other information is contained in the prospectuses for a variable universal life insurance policy and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses may be obtained by contacting PL ICO at (800) 265-1545. Not a Deposit Not Insured by Any Federal Government Agency No Bank Guarantee CLC.1025 (10.10) Not FDIC Insured May Lose Value 26

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