1. Pacific Life Insurance Company
Is Your Client’s
Portfolio an
Unfinished Work of Art?
Color It with a
Life Insurance Retirement Plan
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MKT12-6 For Life Insurance Producer Use Only. Not for Use with the Public.
2. Will There Be Enough?
2/3 of investors between age 21 and 50 doubt they
will have ENOUGH MONEY FOR RETIREMENT*
64% of Gen X and Gen Y investors expect that retirement
income will come FROM NON-RETIREMENT ACCOUNTS*
1/3 of small-business owners do not have a PERSONAL
OR BUSINESS-SPONSORED RETIREMENT **
*“Gen X and Y Investors Worry Retirement Savings Won’t Be Enough,” Michael S. Fischer, AdvisorOne, March 9, 2012.
**”Many Small-Business owners aren’t prepared for Retirement,” Laura Petrecca, USA Today, March 1, 2012. 2 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
3. Aspiring to Financial Independence
Client Portrait
Business
Owner
Joe Mitchell
Good Saver
Contributes yearly
maximum to 401(k) plan &
non-deductible IRA
Goals: Save more for retirement and
Balanced Approach protect family while saving for retirement.
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For Life Insurance Producer Use Only. Not for Use with the Public.
4. 3 Financial Challenges
Financial Vulnerability
Outliving Retirement Assets
Rising Taxes
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For Life Insurance Producer Use Only. Not for Use with the Public.
5. Is Your Client Using the
Right Mix?
ASSETS HELD INSIDE ASSETS HELD OUTSIDE THE OVERLOOKED
RETIREMENT PLANS RETIREMENT PLANS ASSETS
• Life Insurance
Retirement Plan (LIRP)
• 401(K) • Stocks Death Benefit*
• Pension Plan • Mutual Funds • Roth IRA Distributions
• Traditional IRA • Real Estate • Municipal Bond
Interest
Why failing to diversify tax liabilities at retirement could
potentially hurt your client’s retirement income…
*For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be
partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)(i.e. the
transfer-for-value rule); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j). 5 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
6. Failing To Use Tax Diversification
ASSETS HELD INSIDE
RETIREMENT PLANS What happens if Income Tax
Rates go up?
$100,000 35% Tax Rate* 50% Tax Rate*
Withdrawal: $100,000 $100,000
• 401(K)
• Pension Plan Less Taxes: -35,000 -50,000
• Traditional IRA
Net After Tax 65,000 50,000
Withdrawal:
Loss from Taxes: $15,000
*Based on the Top Current Federal Income Tax Rate. 6 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
7. Failing To Use Tax Diversification
ASSETS HELD OUTSIDE
RETIREMENT PLANS What happens if Capital Gains
Tax Rates go up?
$100,000 15% Tax Rate* 50% Tax Rate*
Taxable
$100,000 $100,000
Amount:
• Stocks
• Mutual Funds Less Taxes: -15,000 -50,000
• Real Estate
Net After Tax 85,000 50,000
Withdrawal:
Loss from Taxes: $35,000
*Based on the Top Current Federal Income Tax Rate. 7 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
8. Failing To Use Tax Diversification
THE
OVERLOOKED ASSETS What happens if Income Tax
Rates go up?
$100,000 35% Tax Rate** 50% Tax Rate**
• Life Insurance
Retirement Plan (LIRP) Withdrawal: $100,000 $100,000
Death Benefit*
• Roth IRA Distributions Less Taxes: -0 -0
• Municipal Bond
Interest Net After Tax 100,000 100,000
Withdrawal:
Has your client Loss from Taxes:
Overlooked this bucket? $0
* For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death
benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under
IRC Sec. 101(a)(2)(i.e. the transfer-for-value rule); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy
qualifies for an exception under IRC Sec. 101(j). 8 of 21
**Based on the Top Current Federal Income Tax Rate.
For Life Insurance Producer Use Only. Not for Use with the Public.
9. Characteristics of a LIRP
PLUS:
Premium Flexibility
&
Potential Creditor
More Tax Financial Protection***
Retirement Advantages Security
Tax-Free
Assets Tax-Free
Distributions* Death Benefit**
Tax-Deferred
Accumulation
*Tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not
occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC §§ 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will
reduce policy values and may reduce benefits.
** For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable.
Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)(i.e. the transfer-for-value rule); arrangements that lack an
insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).
***State law may provide life insurance and annuities with certain asset protection benefits. As a general rule, a debtor may not transfer property with the intent to avoid debt due to his creditors. The laws
governing asset protection, however, are complex and the consequences of poor planning may be both civil and criminal penalties. Anyone contemplating an asset protection plan should not undertake such without the 9 of 21
advice of legal counsel.
For Life Insurance Producer Use Only. Not for Use with the Public.
10. Framing the Details of LIRP
*Tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals
taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See
IRC Secs. 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 10 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
11. Personalize the Proposal
NEW Navigator Presentation Format
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For Life Insurance Producer Use Only. Not for Use with the Public.
12. Coordinate the Timing
of Policy Distributions with Other Retirement Sources
Qualified Plans & IRAs Life Insurance Retirement
Plan
Maximum Age to Defer 70 1/2 None
Distributions
Subject Minimum Yes No
Distribution Requirements
Death Benefit Proceeds Generally subject to Income tax-free*
income taxes*
Life insurance may be a more attractive asset to die with than a Qualified Plan or IRA.
*For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may
be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec.
101(a)(2)(i.e. the transfer-for-value rule); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j).
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For Life Insurance Producer Use Only. Not for Use with the Public.
13. LEVEL PREMIUM: $42,896 Annual Premium to Age 65
Total Premiums Paid: $986,618
What Joe’s Beneficiaries Potentially What Joe Potentially
Could Receive Could Receive
Illustrated Net Illustrated Hypothetical
Death Benefit* Distributions
Assumes Insured’s Assumes Insured’s
Age 65
Death At Retirement At
Age 42 $1,037,273 Distribution Amount: $163,860
Age 65 $2,873,264 Years Payable: 25
Age 85 $816,477 Total Distributions: $4,096,500
Assumptions: Male, age 42, Super Preferred Nonsmoker. Pacific Life Insurance Company’s indexed universal life insurance product Pacific Prime IUL, Policy Form #P11P1I or ICC11 P11P1I - Form
number based on state in which policy is issued, current policy charges, assumed indexed crediting rate 7.0%. Initial Face Amount: $1,000,000). Increasing death benefit option policy years 1 – 23 and level
thereafter. Initial Face Amount: $1,000,000. Increasing death benefit option policy years 1 – 23 and level thereafter.
*Net Death Benefit is the death benefit payable to the designated beneficiary after withdrawals and any outstanding policy loans are paid off.
Riders will likely incur additional charges and are subject to availability, restrictions and limitations. Clients should be shown policy illustrations with and without riders to help
show the rider’s impact on the policy’s values. 13 of 21
For Life Insurance Producer Use Only. Not for Use with the Public.
14. BENEFITS OF WAITING 3 OPTIONS for the
Life Insurance Retirement Plan
Pacific Prime IUL Illustrated Distributions* at
A Insured’s B Insured’s C Insured’s Age 70 with
Age 65 Age 70 2% Annual Increase
Annual Distributions $163,860 $228,653 Initially: $190,760
Amounts: Age 75: 210,614
Age 80: 232,535
40% increase in total amount Age 85: 256,738
from age 65
Years Payable: 25 25 25
Total Distributions: $4,096,500 $5,716,325 $6,110,088
Assumptions: Male, age 42, Super Preferred Nonsmoker. Pacific Life Insurance Company’s indexed universal life insurance product Pacific Prime IUL, current policy charges, indexed interest crediting rate 7.0%.
Initial Face Amount: $1,000,000. Increasing death benefit option policy years 1 – 23 and level thereafter.
*Tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the
first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC Sections 7702(f)(7)(B),
7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits.
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For Life Insurance Producer Use Only. Not for Use with the Public.
15. “By failing to prepare, you are
preparing to fail.”
--Benjamin Franklin
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For Life Insurance Producer Use Only. Not for Use with the Public.
16. Looking ahead…
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For Life Insurance Producer Use Only. Not for Use with the Public.
17. Start NOW…More Flexibility In the Future
START ASSESS ACCESS LEAVE
Ages: 35 - 48 LTC Need Ages: 50-55 In Retirement A Legacy
Life Insurance Use LIRP to Death Benefit (less
Death Benefit supplement withdrawals/policy
PROTECTION + income for loans) PAID INCOME
Tax-deferred INFLATION, TAX-FREE3 to the
GROWTH of Cash LONGEVITY, or beneficiary
DEFEND
Value RETIREMENT BOTH with
Asset-based INCOME TAX-
Policy Asset-
Withdrawal or
Long-Term Care FREE2 Distributions based
Loan1 (LTC) Insurance LTC
Insurance
Life Insurance Life Insurance
Retirement Plan Retirement Plan
1Distributions from a life insurance to purchase another life insurance policy is considered a replacement of the current life insurance policy under state insurance laws. Any policy withdrawals, loans and loan interest will reduce policy values and may
reduce benefits. There are circumstances in which replacing your client’s existing life insurance or annuity can benefit your client. As a general rule, however, replacement is not in your client’s best interest. You should make a careful comparison of the
costs and benefits of your client’s existing policy and the proposed policy to analyze how a replacement may affect your client’s plan of insurance. You should provide this detailed information to your client and discuss whether replacement is in your
client’s best interest.
2Tax-free income assumes, among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the
time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC §§ 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and
may reduce benefits.
3For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations
include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2)(i.e. the transfer-for-value rule); arrangements that lack an insurable
interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j). Additionally, a portion of the Pacific PremierCare’s Death Proceeds may be income taxable if the
policy was issued as part of an IRC Sec. 1035 income tax-free exchange. Clients should consult their independent tax advisor.
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Pacific PremierCare is a flexible premium adjustable life insurance policy with long term care insurance payable through reimbursements.
For Life Insurance Producer Use Only. Not for Use with the Public.
18. Visualize the BIG Picture …
… By Helping Your
Clients Complete Their
Retirement Picture
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For Life Insurance Producer Use Only. Not for Use with the Public.
19. The Art of Retirement Workbook
Portraits to help you identify
the right clients
Benefits of adding life
insurance as an asset to your
clients’ portfolios
Step-by-step guide to the
Life Insurance Retirement Plan
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For Life Insurance Producer Use Only. Not for Use with the Public.
20. Where Do I Start?
Request the
“Art of Retirement” Kit
Visit
www.paintingretirement.com
to order
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For Life Insurance Producer Use Only. Not for Use with the Public.
21. This material is not intended to be used, nor can it be used by any
taxpayer, for the purpose of avoiding U.S. federal, state or local
tax penalties. This material is written to support the promotion or
marketing of the transaction(s) or matter(s) addressed by this
material. Pacific Life Insurance Company, its distributors and their
respective representatives do not provide tax, accounting or legal
advice. Any taxpayer should seek advice based on the taxpayer's
particular circumstances from an independent tax advisor.
Pacific Life Insurance Company is licensed to issue insurance products in all states except New York. Product availability and features may vary by state.
Insurance products and their guarantees, including optional benefits and any fixed subaccount crediting rates, are backed by the financial strength and
claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these
guarantees are not backed by the broker-dealer, insurance agency or their affiliates from which this product is purchased. Neither these entities nor their
representatives make any representation or assurance regarding the claims-paying ability of the life insurance company.
Pacific Life Insurance Company’s individual life insurance products are marketed exclusively through independent third-party life insurance producers,
which may include bank affiliated entities.
Non-guaranteed elements are not guaranteed by definition. As such, Pacific Life Insurance Company reserves the right to change or modify any non-
guaranteed element. This right to change non-guaranteed elements is not limited to a specific time or reason.
Some independent third-party life insurance producers, which may include bank affiliated entities, may limit availability of some optional riders based on
their client’s age and other factors.
Investment and Insurance Products: Not a Deposit – Not FDIC Insured –
Not Insured by any Federal Government Agency – No Bank Guarantee – May Lose Value
Pacific Life Insurance Company
Newport Beach, CA
(800) 800-7681 * www.PacificLife.com 21 of 21
MKT12-6 For Life Insurance Producer Use Only. Not for Use with the Public.