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Securing Your Clients Financial FutureFebruary 16, 2017

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What Would Your Clients Like to Have? Security of Principle?

Tax-Deferral?

Liquidity?

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Security of PrincipleGuaranteed Interest Rate*

Access to funds**

Know the cost of getting your money

*May be penalty for early withdrawal than in contract **Based on contract limits

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** The principle use of an annuity is the "scientific liquidation of capital."

1. A sum is deposited and allowed to accumulate.

2. A series of payments is then available to the owner (annuitant) that may be withdrawn over a period of time, for a lifetime, or a combination of the two.

3. Annuity payouts are based on the mortality of the individual, an expected return on the deposit, and the law of large numbers.

As life insurance is designed to protect against dying too soon, annuities are designed to protect against living too long.

ANNUITIES

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Tax-DeferralTheir Interest Grows Tax-Deferred, giving them theValue of Triple Compounding

Interest on Principle

Interest on Interest

Interest on Tax Savings the money they would have paid in taxes

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LiquidityPartial withdrawals are available for any reason, typicallyafter the first policy year*

The Cash They Need..

To TravelTo Visit FamilyFor Sudden EmergenciesTo Live Life

*Based on withdrawal privileges of the contract, surrender charges may apply. If client is under 59 , IRS penalty will apply

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The Real Rate of ReturnWhat happens without triple compounding?

Many people put their money in a conservativeinstruments such as a CD* or money marketaccount because they arent sure what to do.

This money in their CD or Money Market Accountmay be reduced by taxes and inflation and couldactually decrease in value.*CDs are FDIC insured

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The Real Rate of Return**This is a hypothetical example

Deposit Amount$100,000(4.50% Interest Rate) +4,50033% Taxes -1,485Amount after Tax$103,0153.50% Inflation -3,605Amount Left $99,410Net Loss $590

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Taxable Equivalent YieldsInterest rate required on ataxable investment toequal the yield of tax-deferredinterest in accumulation.

For example, a person in the35% tax bracket must earn7.69% taxable to matchthe 5% Tax-Deferred Yield.Annuity earnings will be taxed in the pay out or distribution phase

Tax-Deferred Interest18% Taxable28% Taxable35% Taxable4.5%5.49%6.25%6.92%5.%6.10%6.94%7.69%5.5%6.71%7.64%8.46%6%7.32%8.33%9.23%6.5%7.93%9.03%10%7%8.54%9.72%10.77%7.5%9.15%10.42%11.54%8%9.76%11.11%12.31%

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What is their Risk Tolerance?

*Lets evaluate your current risk tolerance to see where your finances would fit best.Would you consider a CD a conservative investment for your money?

Lets take a look at what a CD offers:What is the best thing a CD offers, safety?What has your experience been with your current yield on a CD? 2/3 or 4%?

2. Lets look at alternatives, in your opinion what is the most aggressive investment? Would you agree that individual stocks would be an aggressive investment?

What do you see is the benefit of stocks? Would it be the upside market potential?Then obviously, the downside would be 100% risk to your principle, right?

Now, if we could help you participate in the growing your principle and provide the protection from the risk of stocks, plus ensure safety, you would be interested in checking interest rates, right?

We can do this by repositioning the assets that have created a tax on your Social Security. Of the money you have left how much do you not want to risk anymore?

What is yourRisk Tolerance?CD







What is yourRisk Tolerance?CDSafety







What is yourRisk Tolerance?CDSafety2/3/4+%?







What is yourRisk Tolerance?CDSafety2/3/4+%?STOCK







What is yourRisk Tolerance?CDSafety2/3/4+%?STOCKUpsideMarketPotential







What is yourRisk Tolerance?CDSafety2/3/4+%?STOCKUpsideMarketPotential100%Loss







What is yourRisk Tolerance?CDSafety2/3/4+%?STOCKUpsideMarketPotential100%LossAnnuityDeferred or Immediate







The Taxing of Social Security

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Social Security History

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Social Security Became LawIn 1935, President Roosevelt signed into law the most significant legislation of our timeThe Social Security Act.

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Social Security Became lawBy 1940, Social Security began making benefit payments to beneficiaries.

The U.S. Treasury ruled that benefit payments were gifts and would not be subject to tax.

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Brattleboro, Vermont.

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Tax Law Was ChangedIn 1983 Congress changed the law and allowed up to 50% of Social Security Benefits to be subject to tax!!

In 1993 the law was changed again, now up to 85% may be taxed!!!

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What Causes Social Security to be Taxed?

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What Causes Social Security to be Taxed?The taxation of Social Security is based on the amount of income you received in a calendar year.

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Provisional Income How it Works - SingleFor a single person Social Security can become taxableafter your income plus (+) of the amount received fromSocial Security exceeds $25,000:

Up to 50% of Social Security Benefits can be taxed!

If the amount exceeds $34,000:

Up to 85% of Social Security Benefits can be taxed

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Provisional Income How it Works - MarriedFor Married or head of household Social Security canbecome taxable after your income plus (+) of theamount received from Social Security exceeds $32,000:

Up to 50% of Social Security Benefits can be taxed!

If the amount exceeds $44,000:

Up to 85% of Social Security Benefits can be taxed

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If you are single, Social Security is taxed when your threshold income exceeds $25,000Income(Threshold)

Over $34,000Up to 85% of Social Security is taxed$34,000to $25,000Up to 50% of Social Security is taxed$25,000 and UnderNo tax on Social Security

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If you are married, Social Security is taxed when your threshold income exceeds $32,000Income(Threshold)

Over $44,000Up to 85% of Social Security is taxed$44,000to $32,000Up to 50% of Social Security is taxed$32,000 and UnderNo Tax on Social Security

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Provisional Income

What is Provisional Income1099 Income fromSavings & InvestmentsProvisional IncomeContributes toTaxing Social Security

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What is Provisional Income?Income from these accounts may be the reason you pay more taxes including the tax on your Social Security!

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There May be a Better WayIts not so important about the amount of interest you earn on your money..

but how your money earns its interest!

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There May be a Better WayIs the interest on your Certificates of Deposits, Money Market accounts or other plans affecting the taxation of your Social Security Benefits?

Are you paying income taxes on interest or money earned but do not currently need?

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Reduce Provisional Income When income is deferred instead of taxed it reduces provisional income and may lower amounts below the allowed thresholds.

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Section 72Section 72 of the Internal Revenue Codeallows income credited on a deferredannuity contract is not currently includableas income.Based on Section 72, income credited inside an annuity will not create a tax on Social Security!

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Combo Leads

The benefit of combination leads is that they allow you to easily customize your message to your preferred product types

Mix and Match to find the perfect prospect for your business

These are ideal lead pieces for the perpetual cross-sellerAnnuities, LTC and Combo Leads

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JM6: Combo Sample

National Average: 1.43%Annuities, LTC and Combo Leads

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BP-CP10: Annuity Sample

National Average = 1.24%Annuities, LTC and Combo Leads

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Sam Q. ProspectSam is retired and living comfortably.

He receives a Pension and Social Security.

His savings are in CDs, Mortgage Certificates, Money Market Accounts.

He doesnt need the interest so he reinvests theinterest back into his certificates

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Sam Q. Prospect* Estimated Income Tax

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Sams Social Security ThresholdTriggered a tax on Sams Social Security!!

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Sams Tax on Social Security*Estimated based on tax table

Social Security$11,400Social Security (subject to tax)$9,690Tax on Social Security$2,665*

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An Annuity would have stopped the tax on Sams Social Security Income*Assumes the interest paid by the Annuity is the same as paid by the Certificates of Deposit and Money Market Accounts.*With Annuity*Without Annuity

Total Threshold Income$41,700$41,700*Annuity (Deferred interest)$0Threshold income$24,900$41,700Threshold limit (single)$25,000$25,000Over or Below ThresholdBelowOverSocial Security taxed$0$9,690Tax on Social Security$0$2,665Federal tax due$1,598$6,828

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An Annuity is the only interest producing asset that will not create a tax on Social Security Yes No

Annuity DeferredCertificates of DepositsMoney Market AccountBonds including Tax FreeDividends Mutual FundGains-Mutual Fund

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Net Retirement income would have increased!Why pay tax on interest you dont use?Pension-$19,200 + $11,400 SS

Tax paid from Pension and SS

Net Retirement income aftertaxPct% increase in retirementincome*Assumes the Annuity interest rate to be the same as the taxable interest accounts with no withdrawals taken from the annuity. Taxable interest assumed to be reinvested back into savings.

*With Annuity*Without Annuity$30,600$30,600

1,5986,828$29,002$23,77218%0%

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JESSE SLOME

$1,598$3,480$6,828Summary of Tax Savings0%50%100%$2,665$6230Reduced tax amounts based on a percentage of taxable income ($16,800) illustrated as deferred income$7,000$6,000$5,000$4,000$3,000$2,000$1,000$0

Total Federal TaxTax on Social Security

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Gary and LisaGary and Lisa are retired and travel quite a bit.

Gary and Lisa receive a Pension and a distribution from an IRA.

They also receive 1099 income and Social Security.

They dont need the 1099 income so they reinvest the interest.

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Gary and Lisa

Pension/IRA Distribution$24,4501099 Income$20,000Social Security$15,000

Total Income$59,450

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Gary and Lisa Tax on Social Security*Estimated based on tax table @ 15%

Social Security$15,000Social Security (85% subject to tax)$12,750Tax on Social Security$1,913*

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Gary and Lisa Tax on Remaining Income*Estimated based on tax table @ 15%

Pension/IRA Income$24,4501099 Income$20,000Tax on Remaining Income$3,073*

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Gary and Lisa Potential Tax Liability*Estimated based on tax table @ 15%

Social Security$15,00085% subject to tax$12,750Tax on Social Security$1,913*

Pension/IRA Income$24,4501099 Income$20,000Tax on Remaining Income$3,073*

Total Tax Potential$4,986

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*With Annuity*Without AnnuityThere May be a Better Way*Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions

Total Threshold Income$59,450$59,450*Annuity (Deferred interest)$0Threshold income$39,450$59,450Threshold limit (married)$44,000$44,000Over or Below ThresholdBelowOverSocial Security taxed(assuming qualified deductions)$0$12,750Tax on Social Security$0$1,913*Federal tax due$555.00*$3,073*

Total Tax Potential$555.00*$4,986

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There May be a Better WayBy repositioning Gary and Lisas 1099 assets (that created taxable income) into a Deferred Annuity, the tax of $1,913 on their Social Security was eliminated!Potential total tax savings$4,431*Without Annuity*With Annuity1099 AssetCreated Income $1,913*Assumes earnings from an annuity are not withdrawn and left to accumulate. Assumes standard deductions

Total Threshold Income$59,450$59,450*Annuity (Deferred interest)$0Threshold income$39,450$59,450Threshold limit (married)$44,000$44,000Over or Below ThresholdBelowOverSocial Security taxed$0$12,750Tax on Social Security $0Federal tax due$555.00*$3,073*

Total Tax Potential$555.00$4,986

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There May be a Better WayGary and Lisa did not withdraw the $20,000 taxable interest theyearned from their 1099 assets, rather they had the earnings rollback into the assets.

They were forced into taking money from their *monthly retirementchecks to pay the tax on this 1099 income that they did not access.NET RETIREMENT INCOME*Retirement income is Pension and Social Security combined*$39,450*$39,450$38,895$34,464With a Deferred AnnuityWithout a Deferred Annuity

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There May be a Better WayInterested earned within a Deferred Annuity (and not withdrawn)may stop or reduce the income tax on Social Security and couldincrease Net Retirement Income!NET RETIREMENT INCOME*Retirement income is Pension and Social Security combinedWith a Deferred Annuity*$39,450$38,895*$39,450$34,464Without a Deferred Annuity

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Questions to uncover their needs!

**Effective QuestioningDid you have to pay taxes on your Social Security last year?

Did you have to pay Federal Taxes on your Social Security last year?

What percent of your Social Security was taxed.

Is the interest that caused you to go over the Social Security threshold, resulting in this tax, something you need to live on?

What benefits would you see in comparing rates of interest on income without receiving a 1099 that is reportable to the IRS?

Would not having to report this interest on your 1040 have helped reduce or eliminate the taxes you paid on your Social Security?

Of the money you have left, how much do you not want to risk in the market so you can feel more comfortable trying to get upside gain on the rest of your money?

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To reduce the income taxes you pay on your Social Security while increasing the return you get on your money lets compare your current rate of return?

Annuity Values Accumulate Tax DeferredYour money grows faster with an Annuity becauseyou earn interest on dollars that would otherwisebe paid as taxes.

The principle earns interest, the interest compounds, and the money saved in taxes earns interest.

With this tax-deferred status, you can accumulate more money over a shorter period of time and consequently earn a greater return.

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Example:

Example cont.

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We can do this by repositioning the assets that have created a tax on your Social Security. Of the money you have left how much do you not want to risk anymore?*Lets evaluate your current risk tolerance to see where your finances would fit best.Would you consider a CD a conservative investment for your money?


















































We can do this by repositioning the assets that have created a tax on your Social Security. Of the money you have left how much do you not want to risk anymore?*

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