Universal Life (UL) vs. Various Financial Alternatives For: Valued Client Example II
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 II
Comparison of Values Annuity Yield 7.50%
Equity Account Growth 7.50%
TDRP Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 9,138,071
After Tax Values of Identical Allocation to Various Financial Alternatives
Female Yr Age
(1)
(2a)
Life Insurance Premium
After Tax Cash Flow from Annuity
(2b)
(3a)
Annuity
After Tax Cash Flow from Equity Account
(3b)
(4a)
Equity Account
After Tax Cash Flow from TDRP
(4b) Year End After Tax Value of TDRP if Distributed
TBD (5a)
(5b)
(5c)
After Tax Policy Loan Proceeds
Year End Cash Value*
Death Benefit
1 2 3 4 5 6 7 8 9 10
41 42 43 44 45 46 47 48 49 50
36,818 39,447 42,077 44,707 47,337 49,967 52,597 55,226 57,856 60,486
0 0 0 0 0 0 0 0 0 0
38,513 81,599 129,526 182,580 241,071 305,328 375,710 452,597 536,403 627,572
0 0 0 0 0 0 0 0 0 0
39,271 83,765 133,673 189,225 250,683 318,335 392,494 473,494 561,693 657,467
0 0 0 0 0 0 0 0 0 0
39,579 84,954 136,559 194,861 260,362 333,604 415,165 505,671 605,791 716,248
0 0 0 0 0 0 0 0 0 0
31,017 317,184 622,737 948,980 1,297,614 1,392,248 1,493,311 1,601,548 1,717,856 1,843,230
9,138,071 9,138,071 9,138,071 9,138,071 9,138,071 9,138,071 9,138,071 9,138,071 9,138,071 9,138,071
11 12 13 14 15 16 17 18 19 20
51 52 53 54 55 56 57 58 59 60
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
660,555 696,012 734,128 775,102 819,150 866,502 917,405 972,126 1,030,951 1,094,187
0 0 0 0 0 0 0 0 0 0
693,896 731,773 771,340 812,797 856,316 902,055 950,164 1,000,790 1,054,082 1,110,191
0 0 0 0 0 0 0 0 0 0
769,967 827,714 889,793 956,527 1,028,267 1,105,387 1,188,291 1,277,413 1,373,220 1,476,211
0 0 0 0 0 0 0 0 0 0
618,257 693,132 774,947 864,271 961,718 1,067,864 1,183,457 1,309,277 1,446,173 1,594,997
7,757,411 7,688,378 7,615,894 7,539,785 7,459,871 7,375,960 7,287,855 7,195,344 7,098,208 6,996,215
21 22 23 24 25 26 27 28 29 30
61 62 63 64 65 66 67 68 69 70
0 0 0 0 0 0 0 0 0 0
0 0 0 0 335,000 335,000 335,000 335,000 202,008 0
1,162,167 1,235,244 1,313,803 1,398,254 1,128,913 839,372 528,115 202,008 0 0
0 0 0 0 335,000 335,000 335,000 335,000 88,155 0
1,169,272 1,231,488 1,297,009 1,366,011 1,071,755 761,843 435,444 91,680 0 0
0 0 0 0 335,000 335,000 335,000 335,000 335,000 335,000
1,586,927 1,705,947 1,833,893 1,971,435 1,759,167 1,530,980 1,285,678 1,021,978 738,501 433,764
0 0 0 0 335,000 335,000 335,000 335,000 335,000 335,000
1,756,673 1,932,193 2,122,614 2,329,160 2,201,501 2,075,423 1,952,176 1,832,938 1,719,157 1,612,634
6,889,122 6,776,674 6,658,605 6,534,631 6,052,709 5,546,691 5,015,372 4,457,487 3,871,708 3,256,640
486,518
1,542,008
1,428,155
2,010,000
2,010,000
See the accompanying reports for year-by-year details: Details of the: Equity Account; Portfolio Turnover Annuity Details Tax Deductible Retirement Plan (TDRP) Details Note: Annuity values do not reflect surrender charges or market rate adjustments, if any.
*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
Annuity is assessed: Income tax each year. Column (2b) values are after tax.
Page 1 of 5
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example II
Comparison of Values Annuity Yield 7.50%
Equity Account Growth 7.50%
TDRP Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 9,138,071
After Tax Values of Identical Allocation to Various Financial Alternatives
Female Yr Age
(1)
(2a)
Life Insurance Premium
After Tax Cash Flow from Annuity
(2b)
(3a)
Annuity
After Tax Cash Flow from Equity Account
(3b)
(4a)
Equity Account
After Tax Cash Flow from TDRP
TBD
(4b) Year End After Tax Value of TDRP if Distributed
(5a)
(5b)
(5c)
After Tax Policy Loan Proceeds
Year End Cash Value*
Death Benefit
31 32 33 34 35 36 37 38 39 40
71 72 73 74 75 76 77 78 79 80
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 0
335,000 106,171 0 0 0 0 0 0 0 0
106,171 0 0 0 0 0 0 0 0 0
335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000
1,515,586 1,430,709 1,358,477 1,299,120 1,255,033 1,225,943 1,213,750 1,220,447 1,248,176 1,299,244
2,610,818 2,380,677 2,193,304 1,996,609 1,790,285 1,800,953 1,831,423 1,883,892 1,960,716 2,064,431
41 42 43 44 45 46 47 48 49 50
81 82 83 84 85 86 87 88 89 90
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 0
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000 335,000
1,375,959 1,480,716 1,616,134 1,784,990 1,990,016 2,234,126 2,520,272 2,851,265 3,229,797 3,658,278
2,197,581 2,362,804 2,562,984 2,801,172 3,080,383 3,403,829 3,774,771 4,196,325 4,671,495 5,202,999
51 52 53 54 55 56 57
91 92 93 94 95 96 97
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
335,000 335,000 335,000 335,000 335,000 335,000 335,000
4,164,141 4,761,392 5,467,710 6,304,597 7,291,142 8,403,750 9,654,478
5,488,695 5,826,702 6,229,827 6,713,861 7,291,142 8,403,750 9,654,478
486,518
1,542,008
1,428,155
2,451,171
11,055,000
See the accompanying reports for year-by-year details: Details of the: Equity Account; Portfolio Turnover Annuity Details Tax Deductible Retirement Plan (TDRP) Details Note: Annuity values do not reflect surrender charges or market rate adjustments, if any.
*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
Annuity is assessed: Income tax each year. Column (2b) values are after tax.
Page 2 of 5
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example II
Matching Values at Age 97 (Year 57)
Annuity Yield 7.50%
Equity Account Growth 7.50%
TDRP Yield 7.50%
Income Tax Rate 38.60%
TBD Interest Rate 7.50%
Initial Death Benefit 9,138,071
Yield/Growth Required by Various Investments to Match TBD Policy Values over 57 years
Investment
Yield/Growth
Annuity Annuity
12.71% 12.71%
Cash Value $9,654,478 Death Benefit $9,654,478
Equity Account Equity Account
14.92% 14.92%
Cash Value $9,654,478 Death Benefit $9,654,478
TDRP TDRP
10.86% 10.86%
Cash Value $9,654,478 Death Benefit $9,654,478
Annuity
TBD
Equity Account
$9,654,478
$9,654,478
1271.15% Required To Match CV
12.71% Required To Match DB
$9,654,478
$9,654,478
1491.65% Required To Match CV
14.92% Required To Match DB
TDRP
$9,654,478
$9,654,478
1086.49% Required To Match CV
10.86% Required To Match DB
Income Tax Considerations 1. Annuity: Interest is tax deferred. (Values assume tax is assessed in year shown only) 2. Equity Account: Capital gains tax calculations are taxed based on a ratio of asset value to remaining cost basis in any given year. 3. TDRP: Interest is tax deferred. 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
Various Financial Alternatives vs. TBD Presented By: Daniel Wachs
Insured: Valued Client Example II
Flow Chart
Various Financial Alternatives
Annuity
Equity Account
TBD
TDRP
TBD
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 II
A Look at Year 57
Various Financial Alternatives
TBD
Cumulative Payments
486,518
486,518
Cumulative After Tax Cash Flow 11,055,000 1,542,008
1,428,155
2,451,171
AN
EQ
TD
9,654,478 EQ Value
0
0
Cash Value
9,654,478
0 Death Benefit AN Value
TD Value
AN - Annuity EQ - Equity Account TD - Tax Deductible Retirement Plan (TDRP)
Date: 11/08/2017
Page 5 of 5