Life Insurance 101

How much should you have?

What kind of policy should you buy?

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Client Profile

A topic that should be discussed with ALL of your clients!

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The Problem

Any of us can die unexpectedly. Will our heirs have enough assets to maintain their lifestyle?

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How much do I need?

A simple estimate can be done using a one-page worksheet

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Two Typical Needs

Immediate expenses (cash needs) Maintaining family standard of living (income needs) 5

Cash Needs

Funds needed within 90 days of death 6 most common: – Final expenses – Debt liquidation – Childcare – Mortgage – Education – Emergency fund 6

Income Needs

Guideline – a family usually needs 75% of prior income upon the death of a spouse This assumes: – Mortgage has been paid off – Education funds have been established for the children “ 7

Income Need Questions

How much will your family need?

How long do you want to provide for them?

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The Life insurance Needs Worksheet

A simple approach to a complex situation. Intended to be thought provoking, not necessarily comprehensive.

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The Smiths Client Ages Number of Children Bob ’ s Income Jane ’ s Income Bob & Jane Smith 45 & 40 3 Ages 12, 8, 2 $200,000 $0 as homemaker

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Objectives if Bob Dies

Fund any cash needs Provide income to Jane so she will not HAVE to work or marry unless she chooses If she marries, do not want the kids to lose their inheritance to a second spouse 11

#1: Cash Needs Final Expenses Mortgage Fund Debt Liquidation Education Fund Child Care Fund Emergency Fund $ 10,000 $ 250,000 $ 25,000 $ 120,000 $ 0 $ 30,000

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#2: Income Needs

75% of $200,000 income is $150,000 per year.

Let’s assume you can earn a gross rate of 9%, but want to offset an inflation rate of 3%. This results in a net rate of 6%.

Divide $150,000 by 6%. Capital of $2,500,000 is needed to provide this income per year if you wish to preserve principal.

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#2: Total Insurance Need

Based upon the calculations on the previous slide, here are the needs: Cash Needs $ 435,000 Income Needs Total $2,500,000 $2,935,000 14

#3: Capital Available

Checking Account Brokerage Account Group Life Insurance $400,000 Personal Life Insurance $250,000 Bank CD $ 5,000 $100,000 $ 10,000 TOTAL $765,000 15

The Numbers

Total Need Capital Available Capital Shortage $2,935,000 $ 765,000 $2,170,000 16

The BIG Question



Do you have enough liquid capital to provide for your family’s cash and income needs if you die?

If you have a capital shortage, the product available to meet the shortage is life insurance!

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Forms of Life Insurance

Term Universal Life Variable Life 18

Choosing the Appropriate Insurance Product

What does customer want to achieve with this insurance?

What is the acceptable premium level and how will it be paid?

What is customer’s risk tolerance – what’s more important – guarantees, affordability or optimizing of performance potential?

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Customer Needs Risk Profile

Focus

Cost

Term

Flexibility

Universal

Investment Performance

Variable

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Term Life Insurance Features/Benefits

Affordable premiums and maximum temporary death benefits Various term periods available Coverage needs to be convertible

When to Recommend

When temporary affordable coverage is needed. Examples are: – Income protection – College tuition protection – Debt or other financial obligation 21

Universal Life Features/Benefits

Flexible premium A current interest rate Flexible death benefit options with emphasis on either cash build-up or protection Loans or withdrawal availability

When to Recommend

Prospect wants flexible coverage and wants to avoid fixed premium commitment When competitive cash value accumulation is emphasized When prospect has the ability and discipline to make flexible premium payments Has same insurance needs as other permanent policies 22

Variable Universal Life Features/Benefits

Policyowner controls investment element in the insurance policy Premiums are flexible and can be directed to any of the underlying investment accounts Policyowner can switch between investment accounts without current taxation Loan or withdrawal availability

When to Recommend

When cash growth potential is emphasized over guarantees When policyowner is investment oriented and will accept the risk in return for potential reward Policyowner wants maximum control over policy and will accept risk Has same insurance needs as other permanent policies 23

Why Venture® Variable Insurance?

Preferred available to age 90 Affordable no-lapse guarantees Some of the world’s leading investment managers Suitable for clients with supplemental retirement and estate planning needs using life insurance These guaranteed product features are dependent upon the claims-paying ability of The Manufacturers Life Insurance Company New of York.

VENTURE

®

Variable life insurance products are issued by The Manufacturers Life Insurance Company of New York (Manulife New York) and distributed by Manulife Financial Securities LLC through other broker/dealers appointed by Manulife Financial Securities Please call 1-800-743 5542, to obtain a prospectus containing more complete information including charges and expenses. Please read the prospectus carefully. VENTURE ® is a registered trademark of The Manufacturers Life Insurance Company (U.S.A.) and is used under license by The Manufacturers Life Insurance Company of New York.

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Why Venture Variable Insurance?

Flexible premium allows flexible contributions Dollar cost averaging* Automatic asset allocation Select from over 60 underlying investment options Dollar Cost Averaging (DCA) does not assure a profit or protect against loss in declining markets. Since DCA involves continuous investments in securities regardless of fluctuating price levels of such securities, a purchaser should consider his or her ability to continue such purchases through periods of low price levels.

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Manulife’s New York Investment Portfolio

Some of the world’s leading fund managers Wide range of investment options for every preference and risk tolerance Lifestyle portfolios available for easy diversification 26

Manulife New York Company Strengths

Competitive medical decisions Jumbo case team Older age specialist Informal query team Aggressive financial underwriting 27

For more information, please call your local Manulife New York Representative, or the Advanced Markets Group at (800) 743-5542, option 5

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