For Business Owners

8/14/2019 For Business Owners

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Programs for:

Business Owners


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Programs for: Business Owners

What the Programs are: Financed Planning for Business retirement

How the Programs work: Overview of the Programs

Case Study: Paul Smith

Todays Agenda


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47% of Business Owners surveyedindicated that they do not believe thatthey are financially prepared for their

retirement1

68% of Business Owners believe that theywill live below their current lifestyle whenthey retire2

1 Harris Interactive on behalf of Sharebuilder 401(k)2 LIMRA, 2006

So, whats the challenge?

The Business Owners Challenge


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Startup

Growth

Expansion

Maturity

LimitedExcessMoney

ExcessMoney

Reinvested

ExcessFunds

Available

CashingOut

Phase

Phases of the Entrepreneurial Business


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Most Business Owners believe thatthey will sell their businessto fund their retirement

if they retire, that is

Unfortunately

Selling the Business: The Perception


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Approximately 1.2 millionviable businesses go on themarket for sale each year

Nearly 3/4 of these fail in theirefforts to sellMost of the businesses soldend up selling for much lessthan their expected MarketValue, and in many cases,below their Asset Value

Source:2005 Business Reference Guide, 13th Edition (West)

Selling the Business: The Reality


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Government Mandated Restrictions

Retirement Health

The Entrepreneurs Dilemma: Restrictions


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Programs: designed solely for you, the Business Owner,

that use your business checkbook,

that allow for large sums of money to growtax deferred,

that are tax efficient and cost effective, and

that will create less risk and more stability inyour portfolio

The Answer


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What the Programsare:

Financed Planning


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Note:Hypothetical results for illustrative purposes only and not a representation of past

or future results.

$500K0 Years

$500K10 Years

$500K20 Years

$500K30 Years

$500K$1M

$2M

$4M

The Rule of 72How long does money take to double?Divide 72 by the assumed rate, the result isthe number of years until a sum doubles.

Assumptions: Net Book Value of Business - $500K

Rule of 72

Interest Rate 7.2%


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Note:A hypothetical crediting rate of 7%. Represents approximations and should not be relied upon as tax or investmentadvice. The performance of financial products fluctuate over time. The actual time to achieve any result cannot bepredicted with certainty.

Choice 3 - $500,000 only once X Today = $500,000

Choice 2 - $ 50,000 per year X 10 years = $500,000

Choice 1 - $ 16,667 per year X 30 years = $500,000

Accelerated Funding

$2,860,393$50,000$3,808,127$500,000

$1,684,584$16,667

Today 30 Years

Compressed Time Frame Concept


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Compounding with Real Estate

Asset Value = $500,000

$500k Mortgage7%

Interest-Only$35,000 annual cost

7%average annual growth

over 20 years

$500k Mortgage

Asset Value = $1,934,842

$1,434,842 gross gain - $700,000 interest cost = $734,842 Net Gain

Point A Point B

Note:This is a hypothetical example, not indicative of actual results. Actual results will vary.


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Allows client to participate in market upsideNo downside risk to principal and prior period

earnings

$1,000,000

AnnualCrediting

8%

$1,080,000

Market Down Turn- 8%

$993,660

AnnualCrediting

5%Annual Crediting0%

$1,134,000

Needed toCatch Up14.12%

The Stability of Equity Indexed Products

Keep in mindIf you received the 5% as shown in this example on the $993,660, you wouldhave a total of $1,043,343. That is a $90,657 difference because of the

guaranteed floor.


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How the

Programs Work:An Overview


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Program Overview

Client Business

Global One Financial

Commercial Loan

Step 1

Asset Funding

Universal Lifeand/or

AnnuityProducts

Step 3

Transfer Method

Client Business

Step 2
http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/


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Recent Cases

Furniture $200,000

Dentist $600,000 Doctor $2,400,000

Nuts & Bolts $1,000,000 ***Almost all Business***

Industry Case Size


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Case Study:ABC Company


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Case Study ABC Company


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Summary Paul Smith


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Solution Paul Smith

ABC Company implements a Financed Planning program in the

amount of $600,000.

The $600,000 is placed into an Equity Indexed Annuity, owned by

Paul Smith (assumed annual tax deferred earnings of 7%).

ABC Company makes interest payments of approximately

$40,500 annually (assumed interest rate of 6.75%).

After 13 years, Pauls annuity value will have grown to $1,445,907,which gives Paul an income in the amount of $115,957 per year

for

25 years.

(This example assumes that the loan is repaid at retirement using assets that are not part of the programs


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Equivalent Yield Paul Smith

ABC Company makes interest payments for the Programof approximately $40,500 annually.

If the company were to distribute this amount to Paul directly, hewould have to pay income tax at 35%, leaving him with $26,325

peryear to invest.

Pauls investment of $26,325 per year for 13 years would have toearn an annual rate of return of 19.26% in order to provide thesame annual income of $115,957 for 25 years.


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Provides alternative to traditional retirementplans

Allows catching up on retirement planning Provides asset protection opportunities

Value and Benefits

Program Structure Asset


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Program Structure - AssetProtection

Individual LevelThe product is owned by the individual, not thecorporation. If the corporation is sued, this is notits asset.

Corporate LevelIn order to make a loan with no personal guarantee,we lend directly to the corporation and place a lienon certain corporate assets. This may limit theattractiveness for a potential law suit.

Product LevelThis level depends on the state you sell in. State lawdefines the level of protection regarding cash valueand policy attachment by creditors.
http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/http://www.nongnu.org/orinoco/documentation/


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For more information contact

John A WeisenbergSenior Finance Manager

[email protected]

The Next Step

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