Code Section 79 Group Term Life Insurance Permanent Benefit Plan

For Internal Use Only. Not For Public Distribution

Code Section 79

Group Term Life Insurance

Permanent Benefit Plan

PRESENTED BY:

Douglas L. Dombey, President

Southwest Financial Group, Inc.

2990 E. Northern Avenue, Suite D-103

•

A master Contract and / or A Group of Individual Life

Insurance Policies

•

Comprised of ten or more full time employees and / or

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

•

Premium for the personally owned Section 79 policy is 100%

deductible to the corporation

•

Employees must pay tax on the Economic Benefit of the death

benefit above $50,000 based on Table 2-2 rates

•

Employees must pay taxes on the Permanent Cost of the policy as

determined by the Deemed Death Benefit Formula (Treas. Reg.

1.79-1 ((D)(2)(D)(3))

•

All permanent cost calculations are based on the Safe Harbor Fair

ATTRIBUTES AND BENEFITS OF A SECTION 79 PLAN¹

*

Deductible To Corporation

*

Reduced Taxable Income To Participant

*

Tax-Deferred Growth

*

Tax-Free Life Insurance Policy Distributions for Supplemental Retirement Income

⁵

*

In Some States It Is An Asset Protected Vehicle²

Pacific Indexed Performer LT³

⁴

Mr. Client, Age 45, $2,105,000 Death Benefit, $100,000 Annual Contribution For 5 Years

Annual

Deductible Contribution

W-2 to

Net Cost in 40%

Year

Funding

By Corporation

Executive

Tax Bracket

1

100,000

100,000

62,829

25,132

2

100,000

100,000

62,039

24,816

3

100,000

100,000

64,969

25,988

4

100,000

100,000

66,319

26,528

5

100,000

100,000

67,799

27,120

500,000

323,955

129,582

Annual Income Tax-Free Retirement Distribution

⁵

103,925

Annual Taxable Equivalent*

173,208

(Age 65-84)

20 X Years

Total 20-Years Tax-Free Retirement Distributions

⁵

2,078,500

Total 20-Years Taxable Equivalent

3,464,167

*Taxable equivalent from a Qualified Plan in a 40% Tax Bracket

Disclosures on

Slides 15 & 16 of 17

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

Section 79 Program¹

Take the Money and Invest It

Year Age Expendable Income Deductible Corporate Premium Executive Taxable Income Executive After Tax Outlay¹ Life Insurance Accumulation Value¹ @ 7.50% Section 79 Life Insurance Expenses Annual Bonus

Tax Due on Bonus

After Tax Income

Executive After Tax Outlay for Section 79

Plan

After Tax Amt available for investment in

Outside Acct Investment Account @ 10.24% Gross* minus Taxes and Fees² Mgmt Fee 1% of acct

balance

Tax Expense @ 30% of

earnings

1 45 100,000 100,000 62,829 25,132 60,854 42,785 100,000 40,000 60,000 25,132 85,132 90,382 851 2,615 2 46 100,000 100,000 62,039 24,816 122,734 38,121 100,000 40,000 60,000 24,816 84,816 186,003 1,752 5,382 3 47 100,000 100,000 64,969 25,988 189,449 33,285 100,000 40,000 60,000 25,988 85,988 288,765 2,720 8,355 4 48 100,000 100,000 66,319 26,528 259,474 29,975 100,000 40,000 60,000 26,528 86,528 398,439 3,753 11,528 5 49 100,000 100,000 67,799 27,120 332,973 26,502 100,000 40,000 60,000 27,120 87,120 515,505 4,856 14,915 6 50 - - - - 359,466 18,772 - - - - - 547,298 5,155 15,835 7 51 - - - - 384,426 16,814 - - - - - 581,053 5,473 16,812 8 52 - - - - 423,708 12,845 - - - - - 616,889 5,811 17,849 9 53 - - - - 476,469 10,985 - - - - - 654,935 6,169 18,949 10 54 - - - - 500,887 10,875 - - - - - 695,327 6,549 20,118 11 55 - - - - 542,081 364 - - - - - 738,211 6,953 21,359 12 56 - - - - 586,649 408 - - - - - 783,740 7,382 22,676 13 57 - - - - 634,844 477 - - - - - 832,077 7,837 24,075 14 58 - - - - 686,971 542 - - - - - 883,394 8,321 25,559 15 59 - - - - 743,345 619 - - - - - 937,877 8,834 27,136 16 60 - - - - 804,285 727 - - - - - 995,720 9,379 28,809 17 61 - - - - 870,174 831 - - - - - 1,057,131 9,957 30,586 18 62 - - - - 941,411 947 - - - - - 1,122,328 10,571 32,472 19 63 - - - - 1,018,432 1,070 - - - - - 1,191,547 11,223 34,475 20 64 - - - - 1,101,719 1,192 - - - - - 1,265,035 11,915 36,601 21 65 - - - (103,925) 1,083,227 1,281 - - - - (103,925) 1,232,721 11,611 35,666 22 66 - - - (103,925) 1,063,116 1,362 - - - - (103,925) 1,198,414 11,288 34,674 23 67 - - - (103,925) 1,041,254 1,439 - - - - (103,925) 1,161,991 10,945 33,620 24 68 - - - (103,925) 1,017,502 1,512 - - - - (103,925) 1,123,321 10,581 32,501 25 69 - - - (103,925) 991,705 1,582 - - - - (103,925) 1,082,267 10,194 31,313 26 70 - - - (103,925) 956,155 1,711 - - - - (103,925) 1,038,680 9,783 30,052 27 71 - - - (103,925) 917,903 1,745 - - - - (103,925) 992,406 9,348 28,713 28 72 - - - (103,925) 876,801 1,728 - - - - (103,925) 943,277 8,885 27,292 29 73 - - - (103,925) 832,699 1,648 - - - - (103,925) 891,119 8,394 25,783 30 74 - - - (103,925) 785,454 1,490 - - - - (103,925) 835,743 7,872 24,181 31 75 - - - (103,925) 734,927 1,238 - - - - (103,925) 776,953 7,318 22,480 32 76 - - - (103,925) 680,424 1,418 - - - - (103,925) 714,536 6,730 20,674 33 77 - - - (103,925) 621,621 1,622 - - - - (103,925) 648,270 6,106 18,756 34 78 - - - (103,925) 558,169 1,852 - - - - (103,925) 577,917 5,443 16,721 35 79 - - - (103,925) 489,702 2,097 - - - - (103,925) 503,225 4,740 14,560 36 80 - - - (103,925) 415,805 2,381 - - - - (103,925) 423,927 3,993 12,266 37 81 - - - (103,925) 336,033 2,701 - - - - (103,925) 339,738 3,200 9,830 38 82 - - - (103,925) 249,907 3,057 - - - - (103,925) 250,356 2,358 7,244 39 83 - - - (103,925) 156,908 3,455 - - - - (103,925) 155,463 1,464 4,498 40 84 - - - (103,925) 56,472 3,900 - - - - (103,925) 54,716 515 1,583

Disclosures on

Slide 6 of 17

_{Section 79¹}

_{Outside Investments²}

Comparison Disclosures:

Year Age Program Expenses

Tax Due on Funding

Management

Fee Tax Expense

Tax Due on Funding

1 This example is based on the purchase of a Pacific Life Insurance Company's Pacific Indexed Performer LT ((Form #P11PIP / ICC11 P11PIP) form number based on product and state in which policy is issued), Indexed Universal life insurance product with 100% of the accumulated value allocated to the Fixed indexed account in year 1, then 100% reallocated to the High Par 5 Year indexed account from years 2-5, and lastly 100% reallocated to the 1 Year High Par years 6+. An annual premium of $100,000 for 5 years and a $2,105,000 death benefit for a Male age 45 in the Preferred Non-Smoker underwriting class with an assumed crediting rate of 4.90% (guaranteed rate 2%) in year 1, 7.50% (guaranteed rate 0%) in years 2-5, and 7.50% (guaranteed rate 0%) in years 6+. Death Benefit Option B years 1-5, Option A years 6+. Policy distributions start at insured age 65 and continue to age 84.

1 45 42,785 25,132 851 2,615 40,000 2 46 38,121 24,816 1,752 5,382 40,000 3 47 33,285 25,988 2,720 8,355 40,000 4 48 29,975 26,528 3,753 11,528 40,000 5 49 26,502 27,120 4,856 14,915 40,000 6 50 18,772 - 5,155 15,835 - 7 51 16,814 - 5,473 16,812 - 8 52 12,845 - 5,811 17,849 - 9 53 10,985 - 6,169 18,949 -

10 54 10,875 - 6,549 20,118 - 2 The Outside Investment assumes total fees of 1% and a 30% long term / short term capital gain tax rate.

11 55 364 - 6,953 21,359 - 12 56 408 - 7,382 22,676 -

13 57 477 - 7,837 24,075 - Over time, the policy's actual non-guaranteed elements, and perhaps your actual use of the policy's options, are likely to vary from the assumptions used in the illustration. For these reasons, actual policy performance will either be more or less favorable than shown in this illustration. Please refer to the Basic illustration for guaranteed values and other important information.

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 fixed subaccount 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 Home Office is located in Newport Beach, CA.

Indexed universal life insurance products do not directly participate in any stock or equity investment. Indexed universal life insurance generally requires additional premium payments after initial premium. If either no premiums are paid, or subsequent premiums are insufficient to continue coverage, it is possible that coverage will expire.

Non-guaranteed elements are not guaranteed by definition. As such, Pacific Life Insurance Company reserves the right to change or modify any non-guaranteed element. This right to change non-guaranteed elements is not limited to a specific time or reason.

Southwest Financial Group, Inc. is a Third Party Administrator and is not an affiliated company of Pacific Life Insurance Company.

14 58 542 - 8,321 25,559 - 15 59 619 - 8,834 27,136 - 16 60 727 - 9,379 28,809 - 17 61 831 - 9,957 30,586 - 18 62 947 - 10,571 32,472 - 19 63 1,070 - 11,223 34,475 - 20 64 1,192 - 11,915 36,601 - 21 65 1,281 - 11,611 35,666 - 22 66 1,362 - 11,288 34,674 - 23 67 1,439 - 10,945 33,620 - 24 68 1,512 - 10,581 32,501 - 25 69 1,582 - 10,194 31,313 - 26 70 1,711 - 9,783 30,052 - 27 71 1,745 - 9,348 28,713 - 28 72 1,728 - 8,885 27,292 - 29 73 1,648 - 8,394 25,783 - 30 74 1,490 - 7,872 24,181 - 31 75 1,238 - 7,318 22,480 - 32 76 1,418 - 6,730 20,674 - 33 77 1,622 -

Section 79¹ 6,106 18,756 - Outside Investments²

34 78 1,852 - 5,443 16,721 -

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 promotion or marketing of the

transaction(s) or matter(s) addressed by this material. Pacific Life

Insurance Company, its distributors and their respective representatives

do not provide tax, accounting or legal advise. Any taxpayer should seek

advice based on the taxpayer's particular circumstances from an

independent tax advisor.

35 79 2,097 -

Total Expenses

4,740 14,560 -

Total Expenses 36 80 2,381 - 3,993 12,266 -

37 81 2,701 - 416,937 3,200 9,830 - 1,324,744

38 82 3,057 -

40 yr annual average

2,358 7,244 -

40 yr annual average 39 83 3,455 - 1,464 4,498 -

40 84 3,900 - 10,423 515 1,583 - 33,119

Sub

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

S

ECTION

79

REGULATION

R

EQUIREMENTS

FOR

GROUPS

OF

10 +

FULL

TIME

EMPLOYEES

•

Must cover at least 10 employees

•

Group must be comprised of 85% non-key employees or cover 70%

of all full time employees

•

Death benefit must be based on a formula that precludes

individual selection and on something related to employment –

years of service, income, job description, location, etc.

•

All life insurance applications are fully underwritten

S

ECTION

79

REGULATION

REQUIREMENTS

FOR

GROUPS

OF

LESS

THAN

10

FULL

TIME

EMPLOYEES

•

Coverage must be offered to all full time employees with 6 months

or more of service; and coverage must be provided as a multiple of

income or a flat death benefit amount

•

All underwriting is based on a non-medical questionnaire only.

•

Pacific Life Insurance Company can issue up to $2,750,000 of death

benefit for Doctors and Dentists through age 60, up to $2,250,000

for all other occupations through age 60, and $1,250,000 for ages

61-65, for Section 79 only, on a non-medical questionnaire only.

•

All non-medical underwriting policies will be issued as standard

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

Full Permanent Insurance

Full Term Insurance

$50,000

Group Term

All full-time employees, between 21 & 65, with 6

months of service are eligible to receive a death

benefit of 10x their annual income in addition to

$50,000 of coverage provided through a group term

policy.

Employee

Age

Annual

Salary

Maximum Death

Benefit In Addition

to $50k Group Term

Corporate

Premium

Total

Employee

W-2 Taxable

Income

Corporate

Premium

Table 2-2

Corporate

Premium

Mr. Client

45

$210,500

$2,105,000

$100,000

$62,829

$4,785

$3,789

$120

Dennis

30

$59,000

$590,000

$20,060

$13,606

$566

$567

$120

Shannon

35

$25,000

$250,000

$8,573

$5,842

$260

$270

$120

Ryan

40

$34,000

$340,000

$16,153

$10,908

$532

$408

$120

Amanda

45

$17,680

$176,800

$8,430

$5,798

$378

$319

$120

Sylvia

44

$21,000

$210,000

$9,698

$6,556

$411

$252

$120

Kirk

32

$20,000

$200,000

$7,268

$4,916

$246

$192

$120

Meaghan

49

$40,000

$400,000

$21,640

$14,786

$1,067

$720

$120

Ariel

23

$15,000

$150,000

$3,446

$2,330

$121

$90

$120

Curtis

54

$36,000

$360,000

$26,777

$18,399

$1,859

$994

$120

$222,044

$10,225

$1,200

Disclosures on

Slide 17 of 17



_D

UE

TO

2% B

ENEFIT

L

IMITATION

R

ULES

,

THE

CORPORATION

MUST

BE

TAXED

AS

A

C

IF

+2%

OWNERS

WISH

TO

PARTICIPATE



_T

REAS

. R

EG

.§ 1.707-1 ©; R

EV

. R

ULE

91-26, 1991-1 ©(B)

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

E

STABLISHING

A

C C

ORPORATION

WITH

A

P

ASS

-T

HROUGH

E

NTITY



Must have a legitimate business purpose: management services, sales,

marketing, billing, collections, Asset Protection etc.



Is subject to the Affiliated Service and Control Group Rules as defined in

IRC Code Section 414



W2 compensation for key people must be received from the C

corporation



Section 79 Plan premium must be paid out of the C corporation



Must provide coverage to at least 10 employees

S – Corporation

Colorado Surgical Group

Four Surgeons

•20 employees

•Provides

•Staff

•Collections

•Administration

•401(k)

•Other employee benefit plans

Each Surgeon has their own C Corporation

The S- Corporation pays each Surgeon

for services performed

Each Surgeons’ C Corporation is responsible for:

•Asset Protection

•Section 79 Plan

•Disability coverage

•Long Term Care

•125 Plan

•And all allocated expenses



The S Corporation and C Corps

are a Controlled and Affiliated

Service Group



Employees of all Corporations are

included in all Qualified and

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

•

Pre Sale Consultation

•

Point of Sale Conference Calls

•

Conference Calls with Advisors

•

Plan Design

•

Proposals

•

Annual Taxable Income Report for CPA

•

Enrollment of Employees

•

Ongoing Administration, Including Annual Compliance

Checks



Doug graduated from Arizona State University with a Bachelor of Science degree and has been

in the financial field since 1982. Doug is a past Board Member of the United Way Volunteer

Bureau; past President of the Christ Lutheran School Board; Past President of the Arizona

Family Business Alliance; and Board member of the Steamboat Springs Winter Sports Club

Foundation. Doug has been the featured speaker at a number of industry conventions and

national meetings, to name a few:

–

The National Glass Convention in Orlando Florida

–

In Lausanne, Switzerland he spoke to Liberty Life Insurance Company’s top sales people

at their national convention regarding “Succession Planning for the Family Owned

Business”

–

A Featured speaker at the Arizona State Bar Association annual meeting, presenting “The

Dynamics of a Successful Family Business”.

–

The Pacific Life University has featured Mr. Dombey on several occasions presenting

:The History, Structuring and Benefits of a Section 79 Permanent Benefit Plan”; as well at

several Pacific Life Symposiums

–

In addition to public speaking, Mr. Dombey taught at the Arizona State University Center

for Executive Development on the uses of insurance in successful estate, succession and

business planning.

Rick A. Jaye

Director of Sales, Eastern

407-496-0205

[email protected]



Rick A. Jaye has been in the financial services industry for 27 years providing financial

services to high Net Worth business owners through his affiliation with several national

planning and investment advisory organizations. Mr. Jaye served as a Chief Financial

Strategist for Advanced Equities, A national recognized broker dealer. Rick also serves on the

Board of Directors of Doctors Bank, LLC, a bank holding company in Manhattan Beach, CA.

Mr. Jaye earned an economics degree from the University of California, San Diego.

Sharon Parrish

Vice President of Operations

602-241-1279 x302

[email protected]

Alexis Soto

Sr. Case Manager

602-241-1279 x303

[email protected]

Sara Turner

Case Manager

602-241-1279 x300

[email protected]

Kyle Fouse

Case Manager

602-241-1279 x307

[email protected]

Douglas L. Dombey

President

970-291-9626

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

D

ISCLOSURES

FROM

S

LIDE

4,

¹ 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 §§

7702(f)(7)(B),

7702A. And policy withdrawals, loans and interest will reduce policy values and may reduce benefits.

²

State law may provide life insurance and annuities with certain asset protection benefits. As a general rule, a debtor may not transfer

property with the intent to avoid debt due to his creditors. The laws governing asset protection, however, are complex and the consequences

of poor planning may be both civil and criminal penalties. Anyone contemplating an asset protection plan should not undertake such without

the advice of legal counsel.

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 fixed subaccount 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 this

product is 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 Home Office is located in Newport Beach, CA. Southwest Financial

Group, Inc. is a Third Party Administrator and is not an affiliated company of Pacific Life Insurance Company.

Over time, the policy's actual non-guaranteed elements and perhaps your actual use of the policy's options, are likely to vary from

the assumptions used in this illustration. For these reasons, actual policy performance will either be more or less favorable than

shown in this illustration. Please refer to the Basic Illustration for guaranteed values and other important information.

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 distributors and their 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.

D

ISCLOSURES

FROM

S

LIDE

4,

¹Taxable income to participants in a Sec. 79 Permanent Benefit plan is comprised of two parts: (1) the life insurance benefit; and (2) the permanent benefit.

Calculation of taxable income is not performed by Pacific Life, and is not a part of any sales material or illustration prepared by Pacific Life. Taxable income

calculations are typically performed by independent third party administrators based on their understanding of the Sec. 79 regulations. Pacific Life makes no

representation as to the appropriateness of these taxable income calculations. You should obtain whatever advice you deem necessary and appropriate form your

independent tax and legal counsel as to the reasonableness of those calculations performed by such third parties.

²This example is based on the purchase of a Pacific Life Insurance Company's Pacific Indexed Performer LT (Form #P11PIP / ICC11 P11PIP), Indexed Universal

life insurance product with 100% of the accumulated value allocated to the Fixed indexed account in year 1, then 100% reallocated to the High Par 5 Year

indexed account from years 2-5, and lastly 100% reallocated to the 1 Year High Par. An annual premium of $100,000 for 5 years and a $2,105,000 death benefit

(with the initial Base of $1,471,825 and ARTR of $633,175) for a Male age 45 in the Preferred Non-Smoker underwriting class with an assumed crediting rate of

4.90% (guaranteed rate 2%) in year 1, 7.50% (guaranteed rate 0%) in years 2-5, and 7.50% (guaranteed rate 0%) in years 6+. Death Benefit Option B years 1-5,

Option A years 6+. Policy distributions start at insured age 65 and continue to age 84. Premier Living Benefits Rider (Form # R12CII or ICC12 R12CII) has

been purchased with the policy - known in the contract as the Accelerated Living Death Benefit Rider. Form number based on state in which policy is issued.

Clients should be shown policy illustrations with and without rider to help show the rider's impact on the policy's value. Non-guaranteed elements are not

guaranteed by definition. As such, Pacific Life Insurance Company reserves the right to change or modify any guaranteed element. This right to change

non-guaranteed elements is not limited to a specific time or reason. Indexed universal life insurance does not directly participate in any stock or equity investments.

Indexed Universal Life Insurance generally requires additional premium payments after the initial premium. If either no premiums are paid, or subsequent

premiums are insufficient to continue coverage, it is possible that coverage will expire. Overloan Protection Rider (Form #R08OLP) has been purchased with the

policy. Riders will likely incur additional charges and are subject to state availability, restrictions and limitations.

³Any discussion of tax free policy distributions assumes the following: (1) withdrawals do not exceed 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 Section 7702A. Any policy withdrawals, loans and loan

interest will reduce policy values and may reduce benefits.

In the case of a Section 79 plan, basis may be less than premiums paid and generally be limited to amounts that were included in income during the period the life

insurance was under the Section 79 Plan plus premiums paid if any after the policy is no longer under the Section 79 Plan. This would result in greater amounts

of income as a result of distributions from the policy in excess of this lower basis.

For Internal Use Only. Not For Public Distribution

Case studies are for illustrative purposes only. Individual results may vary.

D

ISCLOSURES

FROM

S

LIDE

7,

Taxable income to participants in a Section 79 Permanent Benefit plan is comprised of two parts: (1) the life insurance benefit; and

(2) the permanent benefit. Calculation of taxable income is not performed by Pacific Life, and is not a part of any sales material

or illustration prepared by Pacific Life. Taxable income calculations are typically performed by independent third party

administrators based on their understanding of the Section 79 regulations. Pacific Life makes no representation as to the

appropriateness of these taxable income calculations. You should obtain whatever advice you deem necessary and appropriate

from your independent tax and legal counsel as to the reasonableness of those calculations performed by such third parties.

*Corporate Premium represents the amount to be paid by the Corporation.

Safe Harbor Permanent Benefit represents the economic benefit for the permanent portion of the policy to be placed on the

employees W-2 as additional income.

Table 2-2 represents the economic benefit for the death benefit above $50,000 to be placed on the employees W-2 as additional

income, per Treasury Regulation 1.79-3

Permanent Policies will be provided through Pacific Life Insurance Company's Pacific Indexed Performer LT (Form #P11PIP /

ICC11 P11PIP)

Full Term Insurance coverage will be provided by another carrier.

The first $50,000 of group term insurance will be provided through Lincoln Financial.

Over time, the policy's actual non-guaranteed elements, and perhaps your actual use of the policy's options, are likely to vary from

the assumptions used in the illustration. For these reasons, actual policy performance will either be more or less favorable than

shown in this illustration. Please refer to the Basic Illustration for guaranteed values and other important information.

ALL NUMBERS ARE APPROXIMATE, EXACT NUMBERS WILL BE PROVIDED UPON COMPLETE CENSUS AT TIME

OF ENROLLMENT.