How Can Investors with Fixed Income Investments Battle the Current Low Rate Market?

1. How Can Investors with Fixed Income Investments Battle the Current Low Rate Market? How about a GIC on Steroids?

2. Problem with tranditional solution • Client approaching/or entering retirement looking to shift to wealth preservation • Shift towards fixed income investment such as GICs or Bonds however returns are low • Interest income from such investments used to supplement after-tax retirement cash flow is not tax efficient.

3. Insured Annuity Concept • Ideal client between 60 and 75 • Good Health • Have investments largely in fixed income type securities which are taxed as interest income • Using interest income to supplement retirement income • Wants principle in-tact to pass on to heirs

4. How does the Insured Annuity Concept Work? • Consists of two separate but complimentary products • A life Annuity Contract • Portion of existing capital redirected to this product which provides a greater after tax guaranteed income than a GIC • An Exempt permanent life insurance contract • Death benefits equal to the redirected capital. Combination can provide superior after tax cash flow while preserving the capital!

5. While Living Income from annuity pays premium on life policy and provides income for retirement At Death Death benefit equal to original capital paid to beneficiaries tax free Benefits

6. Example • John Doe • Age 61 • Healthy • $250,000 Capital • Assume now invested in fixed income at 4% • Tax rate is 46%

7. Current GIC • Your Current GIC (@ 4%) • Income $10,000 • Taxable Income $10,000 • Income Taxes $4,600 • Net income $5,400 • Insurance Premium n/a • After-Tax Income $5,400 • Pre-TaxRate of Return 4% • Capital at Death $250,000

8. Insured Annuity ConceptGIC on Steroids • Annuity Payout $18,047.88 • Insurance Premium $5,823.98 • Income $18,047.88 • Taxable Income $5,122.36 • Income Taxes $2,356.29 • Net income $15,691.59 • Insurance Premium $5,823.98 • After-Tax Income $9,867.61 • Pre-TaxRate of Return 7.3% • Capital at Death $250,000

9. Comparision

10. Summary • The insured Annuity Concept Offers: • Guaranteed Cash Flow for Life • Preferential tax treatment of annuity income • Inter-generational wealth transfer through life insurance proceeds paid tax-free to the beneficiaries at death • Permanent life insurance protection • Flexibility to change policy beneficiary and coverage amount (subject to policy provisions) • Eliminates Probate fees on death benefit with a named beneficiary other than the estate Greater after tax income than traditional fixed income

11. Insured Annuity Concept Questions…