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PACIFIC INDEXEDESTATE PRESERVER 2Last Survivor Indexed Universal Life Insurance
ESTATERETIREMENTBUSINESSFAMILY
16-6
Client Guide
Pacific Life Insurance Company
THE FLEXIBILITY OF CASH VALUE LIFE INSURANCE
02
FINANCIAL PROTECTION
A policy’s proceeds are
paid to policy beneficiaries
when both insureds die.
FINANCIAL POTENTIAL
A policy’s cash value
has the potential to grow,
less policy charges.
FINANCIAL FEATURES
A policy’s optional
features are available for
additional life insurance
and financial needs.
SHARE YOUR SUCCESS
You are proud of the life you’ve built together. The memories. The
stories. The cherished assets.
Now might be a good time to start thinking about how to share your success with the next generation.
Pacific Indexed Estate Preserver 2 is last survivor indexed universal life
insurance from Pacific Life Insurance Company. It can help provide your
policy beneficiaries with financial protection through policy proceeds
payable when both insureds have passed away.
After you are both gone, these policy proceeds can be used to help
pay estate settlement costs.
While one or both of you are living, the policy offers flexible features to
help you respond to changing life insurance and estate planning needs.
Policy form #P15SIL, S15IEP2 or ICC15 P15SIL, ICC15 S15IEP2, based on
state of policy issue.
03
ESTATE
Premiums, Charges, and Current Rates
POLICY PREMIUMS: Premiums are flexible. Policy-
owners choose the payment amount and timing. As
long as the policy’s cash value is sufficient to pay
ongoing policy charges, the policy will stay in force.
Indexed universal life insurance generally requires
additional premiums after the initial payment. If either
no premiums are paid or subsequent premiums are
insufficient to continue coverage, it is possible the
coverage will expire.
POLICY CHARGES: The cost of insurance and benefits
provided through the policy is deducted monthly in the
form of policy charges, which include an Administrative
Charge, Coverage Charge, Cost of Insurance Charge,
and any applicable rider charges. Additionally, a premi-
um load is deducted from each premium payment.
To understand how policy charges affect the policy’s
cash value, request a personalized illustration that
includes an Analysis of Charges. Policy charges will
reduce the policy’s effective rate of return.
POLICY SURRENDER CHARGES: If the policy
is surrendered within the first 10 policy years, a
surrender charge will apply. A surrender charge will
reduce the policy’s cash value payable at policy
surrender.
POLICY FACE AMOUNT CHANGES: The face
amount may be increased or decreased, subject to
restrictions, which may impact policy charges and
surrender charges.
NON-GUARANTEED ELEMENTS: Non-guaranteed/
current elements are not guaranteed by definition.
As such, Pacific Life Insurance Company reserves
the right to change or modify any of these elements.
This right to change these elements is not limited to a
specific time or reason.
04
LEAVE A LOVING LEGACYWhat of your legacy will live on? Your smile? Your eyes? Your sound
business sense?
How about your financial legacy? How much of what you’ve worked so hard to build will remain after the financial impact of settling your estate?
Your estate may be comprised of illiquid assets like real estate, rare
art, or other treasured heirlooms. Unless adequately planned, estate
settlement costs may force the liquidation of these prized assets.
Pacific Indexed Estate Preserver 2 may help your beneficiaries pay
any federal or state inheritance, income, or estate taxes and keep your
other assets intact.
05
ESTATE
06
STRATEGIES FOR ESTATES UNDER $10 MILLION
INSURE TWO LIVES MORE EFFICIENTLY
If you’re a married couple or two business owners
with a significant age difference, one of you may
be less insurable than the other. Buying one policy
insuring two lives may be easier to qualify for and
fund than buying two separate policies one on
each insured.
Even if one insured dies and the other lives for years
to come, the policy’s available accumulated value may
be accessed to offer the surviving insured financial
flexibility. At the death of the surviving insured, the
policy’s proceeds are paid to policy beneficiaries to
help preserve estate or business assets by paying
any estate settlement costs due.
OPTIONAL ONE-LIFE INSURED COVERAGE
Pacific Indexed Estate Preserver 2 policy proceeds
are not paid until both insureds have died. If only one
insured dies, premiums may still be due.
To help expand the policy’s flexibility, consider
the optional one-life insured term rider that pays a
separate death benefit at the named insured’s death.
This type of coverage can insure one or both of you
individually. The proceeds may be used to pay final
expenses or help keep the policy going after one of
you dies.
The Annual Renewable Term Rider-Individual must be
elected at policy issue for additional cost. Rider form
#R13ARI or ICC13 R13ARI, based on state of policy
issue. Riders will likely incur additional charges and
are subject to availability, restrictions and limitations.
When considering a rider, request a policy illustration
from your life insurance producer to see the rider’s
impact on your policy’s values.
Premiums, Payments, and Charges
ESTATES OVER $10 MILLION: Estates over $10
million ( joint) and $5 million (single), adjusted annually
for inflation, will be taxed at a maximum estate tax
rate of 40%, according to the American Taxpayer
Relief Act of 2012.
ESTATES UNDER $10 MILLION: These estates are
not likely to face a federal estate tax liability. However,
currently 20 states have estate and/or inheritance
taxes, some of which have rates as high as 20%,
according to the 2015 U.S. Census Bureau of state
statutes available at taxfoundation.org.
FLEXIBILITY IF NEEDS CHANGE
What if your life insurance or estate tax planning needs
change and you no longer need the policy in its
totality? Talk to your life insurance producer about
your policy’s options, which may include adjusting
your policy life insurance benefit.
If you and your life insurance producer decide
replacing your policy is in your best interest, your
policy comes with options that allow you to convert
your existing policy into a new one—one on both
lives—or split your existing policy into two new ones—
one on each insured.
These options are included with your policy at no
additional charge through the Conversion Rider (Form
#R13CON or ICC13 R13CON, based on state of policy
issue), Policy Split Option Rider (Form #R03PSO), and
Enhanced Policy Split Option Rider (Form #R03ESO).
Riders will likely incur additional charges and are
subject to availability, restrictions and limitations.
When considering a rider, request a policy illustration
from your life insurance producer to see the rider’s
impact on your policy’s values.
There are circumstances in which replacing your
existing life insurance can benefit you. As a general
rule, however, replacement is not in your best interest.
Your life insurance producer can provide you with
detailed information as to how a replacement may
affect your plan of insurance. You should make
a careful comparison of the costs and benefits,
including any applicable surrender charges, of your
existing policy and the proposed policy to determine
whether replacement is in your best interest.
07
ESTATE
08
STRATEGIES FOR ESTATES OVER $10 MILLION
BUILD AN ILIT WITH FLEXIBILITY
If your policy will be owned by an irrevocable life insurance trust (ILIT), adding the right
trust access provisions can build in future flexibility. Talk to your independent legal and tax
advisors about your circumstances.
For example, you may give the ILIT trustee the discretion to borrow or take withdrawals
from the policy’s available cash value. The proceeds may be used to lend the insureds,
or grantors, money as long as the loan bears adequate interest and security. Proceeds
may also be payable to the trust’s beneficiaries, which may be a way to provide care for
dependents with special needs.
By granting the ILIT trustee policy ownership rights, the ILIT trustee may also request policy
changes like lowering the policy’s face amount and premiums, surrendering the policy for
its cash surrender value, or exchange the existing policy for a newer, more recent product
if needs dictate.
BUY TIME TO ESTABLISH AN ILIT
An ILIT by definition is irrevocable. If you are considering establishing an ILIT to own your
policy, consider that, under current tax laws, a transfer of a life insurance policy to an ILIT
within three years of your death may be considered a gift and the amount of the policy’s
death benefit may be included in your estate for estate tax purposes.
You can help offset such a cost by electing the optional Estate Preservation Rider for
additional cost at policy issue. The rider pays an additional death benefit if both insureds
die within the first four policy years to help offset any applicable estate tax incurred.
Effectively, such a benefit gives you the flexibility to buy the policy now and take up to a
year to move the policy into a trust.
Estate Preservation Rider, form #R13EPR or ICC13 R13EPR, based on state of policy issue.
Riders will likely incur additional charges and are subject to availability, restrictions, and
limitations. When considering a rider, request a policy illustration from your life insurance
producer to see the rider’s impact on your policy’s values.
GRANT YOUR SPOUSE ACCESS TO THE POLICY’S CASH VALUE
If the ILIT is drafted as a Spousal Lifetime Access Trust, your nongrantor spouse may be a
beneficiary of the trust. As such, the ILIT trustee may use policy loans and withdrawals to
make distributions directly to your spouse.
09
ESTATE
10
Zero FloatsWhat goes up must come down. Or does it?
Indexed universal life insurance is a form of cash value life insurance. What makes it
different is the way it credits interest to your policy’s cash value if you allocate among
the indexed accounts. Imagine the interest rate your policy credits as a buoy riding
along the waves of stock market movements.
Your policy’s buoy is anchored, meaning it can only float up to a certain point. This
maximum is called the growth cap and it limits your interest crediting rate on the upside.
Your interest rate is guaranteed to be no less than 0%. If the market drops, your cash
value stays where it was, reduced only by policy charges and any distributions you take,
such as withdrawals and policy loans.
With 0% guaranteed, your policy’s cash value is protected against market-based losses.
Indexed accounts do not directly participate in any stock or equity investments, but they
do credit an interest rate based in part on the movements of stock market indexes.
11
THE POTENTIAL TO GROW
The cash value of a Pacific Indexed Estate Preserver 2 life insurance policy has the potential to accumulate and grow.
Each premium you pay, less a premium load, is applied to the policy’s
fixed account, where it will earn a current interest rate, less monthly
policy charges.
You may transfer your policy’s accumulated value from the fixed
account to any combination of available indexed accounts on the 15th
of each month. Each transfer into an indexed account creates a unit of
value called a segment. Any applicable interest is credited at the end
of each segment’s term, based in part on the performance of a major
stock market index, excluding dividends.
Talk to your life insurance producer about your financial goals
and the accounts that might match your current and
long-term needs.
ESTATE
Tax Considerations:
POLICY PROCEEDS: For federal income tax
purposes, life insurance death benefits generally
pay income tax-free to beneficiaries pursuant to IRC
Section 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 Section 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 Section 101( j).
POLICY LOANS AND WITHDRAWALS: For federal
income tax purposes, 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 72, 7702(f)(7)(B), 7702A. Any policy
withdrawals, loans, and loan interest will reduce policy
values and may reduce benefits.
12
13
POLICY PROCEEDS Your policy’s proceeds are paid tax-free to your policy beneficiaries
once both insureds have died. The proceeds might be used to pay
off the family home, satisfy debts, provide for business succession
planning, and/or help ensure efficient estate transfer.
You have three choices for your policy’s payout structure:
A Level Death benefit equals the policy’s face amount.
B IncreasingDeath benefit equals the policy’s face amount,
plus the policy’s accumulated cash value.
C Return of Premium
Death benefit equals the policy’s face
amount plus the sum of premiums paid,
less any withdrawals.
How you structure your policy will affect its charges and surrender
charges, so work with your life insurance producer to build the coverage
that meets your needs.
Accessing the Cash ValueAny available cash value accumulated in a Pacific Indexed Estate
Preserver 2 policy may be accessed through policy loans and
withdrawals tax-free.
ESTATE
Financial Features
Your policy offers optional features called riders for
additional life insurance and financial needs. Riders
help expand the flexibility and protection of your
policy. Some riders are automatically included with
eligible policies. Other riders must be elected at
policy issue for additional costs.
Ask your life insurance producer to provide you with
more details on the financial features available to
you through riders.
Riders will likely incur additional charges and are
subject to availability, restrictions and limitations.
When considering a rider, request a policy
illustration from your life insurance producer to see
the rider’s impact on your policy’s values.
14
15
PACIFIC LIFE THE POWER TO HELP YOU SUCCEEDWhen it comes to choosing the company you will trust with the purchase
of your life insurance policy, consider their treatment of the policyowners
who have purchased before you. Pacific Life has a history of passing along
savings to our policyowners in the form of over 120 pricing improvements to
our inforce policies since 1985.
When you buy a policy from Pacific Life, you become a voting member in our
mutual holding company structure. We make decisions that benefit you and
the long-term financial strength of the company.
You matter to us.
Buying life insurance is a long-term commitment. The company you choose matters.
ESTATE
16-6 15-44240-00 5/16
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, its affiliates, their distributors and 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 or attorney.
Pacific Life Insurance CompanyNewport Beach, CA
(800) 800-7681 • www.PacificLife.com
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 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 products are 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. Some selling entities may limit availability of some optional riders based on their client’s age and other
factors. Your broker-dealer or firm can help you determine which optional riders and investment options are available and appropriate for your clients.
Investment and Insurance Products: Not a Deposit Not Insured by any Federal Government Agency
Not FDIC Insured No Bank Guarantee May Lose Value