Universal Life (UL) vs. Various Financial Alternatives For: Valued Client Example
Presented By: Daniel P. Wachs CFP, ChFC, CLU 1431 Opus Place #630 Downers Grove, Illinois 60515 Phone: 630-445-1399 Email: dwachs@perpetualwm.com
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example
Comparison of Values Equity Account Growth 5.50%
Equity Account Dividend 2.00%
Dividend Tax Rate 20.00%
Tax Deferred Account Yield 7.50%
Annuity Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 18,274,033
After Tax Values of Identical Allocation to Various Financial Alternatives (1)
Life Male Insurance Yr Age Premium
(2a) After Tax Cash Flow from Equity Account
(2b)
(3a)
(3b)
Equity Account
After Tax Cash Flow from Annuity
Annuity
(4a) After Tax Cash Flow from Tax Deferred Account
TBD
(4b)
(5a)
(5b)
(5c)
(5d)
Tax Deferred Account
After Tax Policy Loan Proceeds
Year End Accum Value*
Year End Surrender Value*
Death Benefit
1 2 3 4 5 6 7 8 9 10
43 44 45 46 47 48 49 50 51 52
700,000 700,000 700,000 700,000 700,000 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
738,041 1,514,290 2,329,485 3,184,766 4,081,569 4,283,518 4,492,296 4,709,172 4,935,153 5,171,080
0 0 0 0 0 0 0 0 0 0
727,615 1,484,618 2,272,899 3,094,466 3,951,459 4,118,539 4,296,353 4,485,592 4,686,989 4,901,327
0 0 0 0 0 0 0 0 0 0
727,615 1,484,618 2,272,899 3,094,466 3,951,459 4,118,539 4,296,353 4,485,592 4,686,989 4,901,327
0 0 0 0 0 0 0 0 0 0
636,960 1,320,255 2,053,394 2,840,396 3,685,978 3,882,698 4,096,685 4,329,236 4,581,937 4,856,771
147,398 863,221 1,629,071 2,448,783 3,326,893 3,556,323 3,803,022 4,068,101 4,353,511 4,661,056
18,274,033 18,274,033 18,274,033 18,274,033 18,274,033 18,274,033 18,274,033 18,274,033 18,274,033 18,274,033
11 12 13 14 15 16 17 18 19 20
53 54 55 56 57 58 59 60 61 62
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
5,417,696 5,675,685 5,945,705 6,228,402 6,524,429 6,834,455 7,159,164 7,499,269 7,855,509 8,228,659
0 0 0 0 0 0 0 0 0 0
5,129,435 5,372,200 5,630,562 5,905,524 6,198,152 6,509,581 6,841,020 7,193,754 7,569,151 7,968,667
0 0 0 0 0 0 0 0 0 0
5,129,435 5,372,200 5,630,562 5,905,524 6,198,152 6,509,581 6,841,020 7,193,754 7,569,151 7,968,667
0 0 0 0 0 0 0 0 0 0
5,206,916 5,582,113 5,984,108 6,414,777 6,876,210 7,370,274 7,899,581 8,466,881 9,075,175 9,727,621
1,516,686 1,737,661 1,975,525 2,231,449 2,507,334 2,804,099 3,091,399 3,403,865 3,743,819 4,113,704
14,746,991 14,560,057 14,363,217 14,155,943 13,937,685 13,707,858 13,465,851 13,211,017 12,942,677 12,660,115
21 22 23 24 25 26 27 28 29 30
63 64 65 66 67 68 69 70 71 72
0 0 0 0 0 0 0 0 0 0
0 0 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
8,619,525 9,028,952 8,714,185 8,382,850 8,034,643 7,669,056 7,285,443 6,883,048 6,461,036 6,018,503
0 0 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
8,393,852 8,846,355 8,576,747 8,289,816 7,984,451 7,659,465 7,313,599 6,945,511 6,553,774 6,136,867
0 0 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
8,393,852 8,846,355 8,576,747 8,289,816 7,984,451 7,659,465 7,313,599 6,945,511 6,553,774 6,136,867
0 0 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
10,427,598 11,178,867 11,985,574 12,852,284 13,784,392 14,788,000 15,870,566 17,040,202 18,296,818 19,647,175
4,516,143 4,954,105 4,687,655 4,424,331 4,166,513 3,917,130 3,680,295 3,460,603 3,254,256 3,064,112
12,362,578 12,049,271 10,976,114 9,846,080 8,656,154 7,403,163 6,219,585 6,016,633 5,632,842 5,225,302
3,500,000
5,646,680
5,646,680
5,646,680
See the accompanying reports for year-by-year details: Details of the: Equity Account; Portfolio Turnover Annuity Details A Tax Deferred Account
Note: Tax deferred values do not reflect surrender charges or market rate adjustments, if any.
Management fees reflected in columns (2b), (3b) & (4b): EQ = 1.00%, AN = 1.00%, TDA = 1.00%
*This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a proposal from TBD.
Date: 11/08/2017
5,646,680
Tax deferred accounts are assessed: Income tax on withdrawals in col (1).
Page 1 of 5
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example
Comparison of Values Equity Account Growth 5.50%
Equity Account Dividend 2.00%
Dividend Tax Rate 20.00%
Tax Deferred Account Yield 7.50%
Annuity Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 18,274,033
After Tax Values of Identical Allocation to Various Financial Alternatives (1)
Life Male Insurance Yr Age Premium
(2a) After Tax Cash Flow from Equity Account
(2b)
(3a)
(3b)
Equity Account
After Tax Cash Flow from Annuity
(4a) After Tax Cash Flow from Tax Deferred Account
Annuity
TBD
(4b)
(5a)
(5b)
(5c)
(5d)
Tax Deferred Account
After Tax Policy Loan Proceeds
Year End Accum Value*
Year End Surrender Value*
Death Benefit
31 32 33 34 35 36 37 38 39 40
73 74 75 76 77 78 79 80 81 82
0 0 0 0 0 0 0 0 0 0
705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
5,554,484 5,067,955 4,557,836 4,022,990 3,462,224 2,874,284 2,257,854 1,611,556 933,942 223,496
705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
5,693,174 5,220,974 4,718,435 4,183,608 3,614,969 3,023,898 2,409,510 1,770,884 1,107,065 417,058
705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
5,693,174 5,220,974 4,718,435 4,183,608 3,614,969 3,023,898 2,409,510 1,770,884 1,107,065 417,058
705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
21,099,083 22,661,282 24,343,592 26,148,505 28,084,472 30,160,480 32,386,368 34,772,175 37,328,449 40,066,545
2,893,874 2,747,953 2,631,612 2,542,546 2,484,153 2,460,100 2,474,623 2,531,863 2,636,157 2,792,316
4,792,792 4,334,243 3,848,791 3,849,971 3,888,376 3,968,124 4,093,941 4,270,472 4,502,579 4,795,644
41 42 43 44 45 46 47 48 49 50
83 84 85 86 87 88 89 90 91 92
0 0 0 0 0 0 0 0 0 0
218,864 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
417,058 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
417,058 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835 705,835
42,997,621 46,132,627 49,482,377 53,058,497 56,872,000 60,933,347 65,252,723 69,838,124 74,773,632 80,105,006
3,004,615 3,276,747 3,611,891 4,013,630 4,484,511 5,026,077 5,639,124 6,321,760 7,147,657 8,151,609
5,154,496 5,583,378 6,086,010 6,666,555 7,328,111 8,072,745 8,901,760 9,813,666 10,138,602 10,554,759
51 52 53 54 55 56 57
93 94 95 96 97 98 99
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 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
705,835 705,835 705,835 705,835 705,835 705,835 705,835
85,892,528 92,212,932 99,128,808 106,563,375 114,555,534 123,147,106 132,383,045
9,382,357 10,904,477 12,767,761 14,881,949 17,271,748 19,964,035 22,988,027
11,100,207 11,826,607 12,767,761 14,881,949 17,271,748 19,964,035 22,988,027
3,500,000
12,923,894
13,122,088
13,122,088
See the accompanying reports for year-by-year details: Details of the: Equity Account; Portfolio Turnover Annuity Details A Tax Deferred Account
Note: Tax deferred values do not reflect surrender charges or market rate adjustments, if any.
Management fees reflected in columns (2b), (3b) & (4b): EQ = 1.00%, AN = 1.00%, TDA = 1.00%
*This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a proposal from TBD.
Date: 11/08/2017
24,704,225
Tax deferred accounts are assessed: Income tax on withdrawals in col (1).
Page 2 of 5
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example
Matching Values at Age 99 (Year 57) Equity Account Growth 5.50%
Equity Account Dividend 2.00%
Dividend Tax Rate 20.00%
Annuity Yield 7.50%
Tax Deferred Account Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 18,274,033
Yield/Growth Required by Various Investments in Addition to the Dividend Illustrated for the Equity Account to Match TBD Policy Values over 57 years
Investment
Yield/Growth
Equity Account Equity Account
7.97%* 7.97%*
Surrender Value $22,988,027 Death Benefit $22,988,027
Annuity Annuity
9.18% 9.18%
Surrender Value $22,988,027 Death Benefit $22,988,027
Tax Deferred Account Tax Deferred Account
9.18% 9.18% *Plus 2.00% dividend.
Surrender Value $22,988,027 Death Benefit $22,988,027
Equity Account
Annuity
$22,988,027 $22,988,027 797.05% Required To Match SV
$22,988,027 7.97%* Required To Match DB
917.74% Required To Match SV
$22,988,027 9.18% Required To Match DB
TBD
Tax Deferred Account
$22,988,027 917.74% Required To Match SV
*Plus 2.00% dividend.
Income Tax Considerations 1. Equity Account: Capital gains tax calculations are taxed based on a ratio of asset value to remaining cost basis in any given year. 2. Annuity: Interest is tax deferred. (Values assume tax is assessed in year shown only) 3. Tax Deferred Account: Interest is tax deferred. (Values assume tax is assessed in year shown only) 4. TBD: a. Death Benefit including cash value component is income tax free. b. Loans are income tax free as long as the policy is kept in force. c. Withdrawals and other non-loan policy cash flow up to cost basis (not in violation of IRC Section 7702) are income tax free as a return of premium. d. Cash values shown assume most favorable combination of b and/or c. This illustration assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable. This illustration is not valid unless accompanied by a proposal from TBD.
Date: 11/08/2017
Page 3 of 5
$22,988,027 9.18% Required To Match DB
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example
Flow Chart
Various Financial Alternatives
Equity Account
Annuity
TBD
Tax Deferred
TBD
Account
Net
Net
Payment
Payment
After Tax
Living
After Tax
Living
Death
Cash Flow
Values
Cash Flow
Values
Benefit
Comparative Analysis
Date: 11/08/2017
Page 4 of 5
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example
A Look at Year 57
Various Financial Alternatives
TBD
Cumulative Payments
3,500,000
3,500,000
Cumulative After Tax Cash Flow 24,704,225 12,923,894
13,122,088
13,122,088
EQ
AN
TD
22,988,027 AN Value
0
0
Surrender Value
22,988,027
0 Death Benefit EQ Value
TD Value
EQ - Equity Account AN - Annuity TD - Tax Deferred Account
Date: 11/08/2017
Page 5 of 5