Wealth Strategies Core Stories for Life. Accumulate, Protect, Transfer LIFE INSURANCE

(1)

LIFE INSURANCE

Wealth Strategies

Core Stories for Life

Accumulate, Protect, Transfer

(2)

Life insurance sales

strategies to meet

your client’s needs

Life.

Core Stories for

The Life. your way selling system can take your business

to new heights with knowledge building solutions for

managing wealth in today’s marketplace. These tools help

provide the knowledge necessary to make life insurance

based strategies a productive part of your practice. The

selling system also provides consumer approved materials

to help you attract, educate and implement the strategies

with your clients.

Our selling system has organized potential solutions to help

you serve both individual and business owner clients. We

realize that finding a suitable strategy to meet your client’s

situation can be a challenge. Our interactive profiling tool

can help you narrow down potential strategies based on

your client’s individual needs. The prospecting tool can be

found on the electronic version of Core Stories for Life.

transfer

accumulate

protect

For Producer or Broker/Dealer Use Only. Not for Public Distribution.

(3)

Individuals typically state one of the following

as their primary financial concern:

1. Accumulating income for retirement

2. Protecting the financial needs of their loved ones in the event of disability or death

3. Providing a legacy for generations to come

Business owner clients generally follow the same objectives by

stating the following as their three primary concerns:

1. Accumulating retirement assets for key employees and themselves

2. Ensuring the business continues to generate income in the event of disability or death

3. Transferring or selling the business

Please note: All concept descriptions are partial and designed to provide introductory

information on the subject matter. MetLife does not provide tax and legal advice.

Clients should consult their attorney and/or tax advisor before making financial

investment or planning decisions.

solutions. knowledge building

MetLife offers a breadth of solutions-based materials designed

to help incorporate life insurance into your practice and to better

serve your clients.

(4)

2 For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Page 1 of 1 Untitled Document

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you promised to love and protect

1300 Hall Boulevard, 3F Bloomfield, CT 06002-2910 metlife.com

Success = Preparation + Opportunity

Talking to business owners about life insurance can help you achieve greater success

For Producer and Broker/Dealer Use Only. Not for Public Distribution.

Deferred Compensation Plans

Attract and Retain

Top Talent

LIFE INSURANCE

A Complete Selling System

Materials for every stage of the sale

The Core Stories for Life selling system has a broad array of marketing materials to help you share these

concepts with your clients.

For Consumers For Sales Partners or Your Own Use

Brochures: Fact Finders: Sales Starters: Postcards:

Seminars: Seminars:

Emails: Emails:

Postcards:

Illustrations: Sales Solutions:

Flyers/Pamphlets:

17.75 in.

16 in.

11 in.5 in.

8.5 in.

.5 in. RADIUS CORNER

8.5 in. .75 in.

Live Better, LeaveMore™ Preparing for the transition into retirement and beyond Life insurance products are issued by:

Metropolitan Life Insurance Company First MetLife Investors Insurance Company 200 Park Avenue New York, NY 10166 metlife.com 1211-3996 CLVL22661 L1212296503[1214]

MetLife Investors Distribution Company MetLife Investors USA Insurance Company 5 Park Plaza, Suite 1900, Irvine, CA 92614 Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. MetLife, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisers regarding their particular set of facts and circumstances. MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. Contact your financial professional for costs and complete details. Legacy Advantage Survivorship Universal Life is issued by MetLife Investors USA Insurance Company on Policy Form 5E-32-05 and in New York only by Metropolitan Life Insurance Company on Policy Form 1E-32-05. All product guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company.

Insurance Products:

• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value

Please wor k with y

our nal to ^{out M}fessio^{re ab} financial pro^{learn mo}

etLife’s Core Stories for Life.

LIFE InSUrAnCE

Sales Starters Business Succession — Cross Purchase Agreement

Business owners needing a formalized succession plan where surviving owners will purchase the interest of a deceased or retiring partner. The business should have very few owners or the plan becomes quite complex.

The owners may be seeking an orderly succession to the business ownership, a fair price for their interest in the business upon retirement or a means to make their own legacy more equitable to beneficiaries.

hOw thIS wORKS

client

the

solution

the

concern

the

For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Owner A’s Estate Owner B

StEP 2

StEP 3 StEP 3

Owner A Policy Insuring B’s Interest

Policy Insuring A’s Interest StEP 1 BusinessAgreement Business Succession Cross Purchase Plan

step 1 The owners enter into an agreement with each other to purchase their respective shares of the business upon the occurrence of a specified event such as disability, retirement or death. step 2 To fund the agreement, each owner purchases a life insurance policy insuring each of the other owners.

step 3 Once the specified event occurs, the life insurance may be used as a source of funds to each remaining owner to buy out the departing owner’s shares.

Life .

your way SM To complete this fact finder please work with your financial services representative who can help you determine the answers to these questions and provide details on the available options. This information will be used to create a life insurance illustration and other reports that are customized to your personal situation. Personal Information Name(s): Address: City, State, Zip Code:

Phone: Cell phone:

Financial Services Representative Information

Name: Company:

Address:

Email: Phone: Fax:

Existing Life Insurance Information Date of birth: __________________ General health:  Good  Average  Poor Smoker?  N  Y Date of birth: __________________ General health:  Good  Average  Poor Smoker?  N  Y What type of coverage should be considered?  single life coverage insuring your life

 single life coverage insuring your spouse’s/partner’s life

 survivorship coverage insuring both lives What type of product? ________________________________________________________________________________________ How much death benefit is needed? $ __________________________________ ________ level ________ increasing Do you want to consider: Death benefit guarantees?  N  Y Other product guarantees?  N  Y How will premiums be paid?  level premiums for life  level premiums for _______ years  level premiums for minimum years possible other (please describe __________________ ) Dynasty trust Fact Finder

This is a supplemental illustration designed solely to illustrate a concept and is not valid unless preceded or accompanied by a basic compliance illustration for the life insurance policy described. NOT VALID WITHOUT ALL PAGES. Supplemental Illustration

Prepared for:

Prepared by:

• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value Supplemental Income Strategy Using Promise Whole Life 120

Valued Client

MetLife Agent Financial Services Representative 200 Park Ave. New York, NY 10166

Concept Supplement Page 1 of 9 Date Prepared: June 7, 2013

L0413319177[exp0514][All States][DC]

July 2012

For Producer or Broker/Dealer Use Only. Not for Public Distribution. the wait and See Life Exchange Tip the Scale and Watch Clients Take Action From a transfer tax perspective, an historic window of opportunity remains open for those wishing to efficiently convey their wealth to the next generation. Under the law in effect on the date this article was written, the $5,120,000 federal lifetime gift tax exclusion is scheduled to remain in effect only for the remainder of 2012. Absent a change in the law, this exclusion is scheduled to decrease to $1,000,000 on January 1, 2013. It may seem self-evident that affluent clients should capitalize on this unique moment in time to efficiently transfer their assets while leveraging life insurance as part of their legacy plan. However, it is equally evident many affluent clients are sitting on the proverbial fence, hesitant to take action.

The rationale for this reticence is as varied as the manner they acquired their wealth but it boils down to a combination of uncertainty about the future and reservations regarding their own financial flexibility. The origin of this hesitancy revolves around the idea that future personal net worth or shifting tax law may preclude the need for current personal planning. This inflexibility is further exasperated by the perceived and real restrictions regarding traditional irrevocable life insurance trust arrangements. What is required for an affluent but hesitant client is a nuanced and subtle solution to tip the scales in favor of action. The Wait and See Life Exchange technique may provide such a counterweight. New IRS Ruling Adds Flexibility A recently published IRS Revenue Ruling known as 2011-28 may be the game changer that adds significant flexibility to arrangements involving irrevocable life insurance trusts (ILIT’s) designed as grantor trusts.1 The substance of this ruling is that in certain circumstances, a life insurance policy in an irrevocable trust is not included in the grantor’s estate for estate tax purposes despite the fact the grantor retains the right to substitute the policy with assets of equivalent value. This alone should spark planning ideas in the mind of the astute financial professional who interacts with affluent clients. First, however, a firm grasp of the specifics of this IRS pronouncement is necessary. To conform with this ruling, an ILIT must be drafted by legal counsel such that the insured grantor is precluded from serving as trustee. The insured may then retain the power to substitute non- trust assets of equal value for an insurance policy held within the trust without inclusion of the death proceeds in the grantor’s gross estate under Internal Revenue Code § 2042.2 This is the core of the Treasury pronouncement. It is important to note however, the ruling specifies three further interrelated requirements that must be met to prevent estate inclusion. First, the insured grantor’s power to substitute assets must be held in a nonfiduciary capacity. A fiduciary is loosely defined as someone who has a duty to manage and protect assets. Under the Ruling, this duty remains with the trustee at all times and may not be shifted to the insured grantor. The actual or implicit exercise of any fiduciary power by the grantor may cause immediate inclusion of trust assets in the gross taxable estate upon death.

Second, the trustee must have a fiduciary obligation (under local law or the trust instrument) to ensure the grantor’s compliance with the terms of the power by satisfying itself that the properties acquired and substituted by the grantor are in fact of equivalent value. The assets need not be of the same type, but rather of the same value. This means real estate, stock or cash may be exchanged for trust assets so long as this equivalency test is met. Lastly, the substitution power may not shift benefits among trust beneficiaries. At first glance this may seem an overly nuanced requirement so long as the previous more practical requirements are met. However, consider a scenario where the grantor could reacquire income producing property by substituting non-income producing property of equal value. This may give the grantor the power to control the portion allocated to an income beneficiary’s share that would trigger gross estate inclusion. The Ruling indicates that a substitution power cannot be exercised in a manner that can shift benefits if: (a) the trustee has both the power (under local law or the trust instrument) to reinvest the trust corpus and a duty of impartiality with respect to the trust beneficiaries; or (b) the nature of the trust’s investments or the level of income produced by any or all of the trust’s investments does not impact the respective interests of the beneficiaries, such as when the trust is administered as a unitrust (under local law or the trust instrument) or when distributions from the trust are limited to discretionary distributions of principal and income. Estate Planning

designing the legacy you envision LIFE INSURANCE

79214 A_CLVL21782.indd 1 10/12/11 7:14 PM

Sales Starters Key Person Insurance

Closely held business owners whose business is dependent on a small number of key employees for financial success. These clients are concerned that if a key employee dies, becomes disabled or resigns unexpectedly, the business

could suffer financially.

hOw thIS wORKS

step 1 Identify a key person and determine the economic value to the business. step 2 With the employee’s permission,1 the business applies for and pays premiums for a life insurance policy on the life of the employee. The business is policy owner and beneficiary. (The employee will be subject to the normal underwriting application and approval process of the issuing company.)

step 3 Permanent policies will have a cash value which accumulates tax deferred, and if needed, may be accessed by the business through withdrawals and loans.2

client

the

solution

the

concern

the

Premium Payments Identify Key Person

Policy Death Benefits Policy Cash Values Employee

Insurance Company

For Producer or Broker/Dealer Use Only. Not for Public Distribution. StEP 1

StEP 2 StEP 3 Business

1 To ensure that the death proceeds of an employer-owned policy retain income tax favorable characterization, it is essential to comply with the requirements of Internal Revenue Code §101(j).

2 Distributions are generally treated first as a tax-free recovery of basis and then as taxable income, assuming the policy is not a Modified Endowment Contract (MEC). However, different rules apply in the first fifteen policy years, when distributions accompanied by benefit reductions may be taxable when the policy lapses, is surrendered, exchanged or otherwise terminated. In the case of a MEC, loans and withdrawals are taxable to the extent of policy gain and a 10% penalty may apply if taken prior to age 59½. Always confirm the status of a particular loan or withdrawal with a qualified tax advisor. Cash value accumulation may not be guaranteed depending on the type of product selected. Investments in variable life insurance are subject to market risk, including loss of principal.

Life .

your way SM Please work with your financial professional to complete this fact finder. Your advisor can help you determine the answers to these questions and provide additional details on different options that are available. This information will be used to create a life insurance illustration and other reports that are customized to your personal situation. NOtE: The annuity funded life strategy is dependent upon having an existing annuity which will not be needed for retirement income for you or your spouse, and instead is intended to create a legacy. If you anticipate using the annuity for retirement income, this concept is probably not suitable for your situation. Client Information Name(s): Address: City, State, Zip Code:

Phone: Cell Phone:

Advisor Name: Advisor Company: Advisor Address: Advisor email:

Advisor Phone: Advisor Fax:

Life Insurance Information Date of Birth: __________________ General Health:  Good  Average  Poor Smoker?  N  Y Date of Birth: __________________ General Health:  Good  Average  Poor Smoker?  N  Y What type of coverage is required?  Survivorship — one policy insuring two lives

 Single life coverage insuring your life

 Single life coverage insuring your spouse’s life Annuity Funded Life Insurance Fact Finder

Business Succession Planning Can your business survive without you?

Live Better,

Leave More

SM Improve your clients’ retirement outlook today &enhance their wealth transfer tomorrow

Protecting

Income

For the ones you love

The Ten Questions

You Need to Ask Business Owners

For Producer or Broker/Dealer Use Only. Not for Public Distribution. For Producer or Broker/Dealer Use Only. Not for Public Distribution. A Sensible Approach to Planning Your Estate

For Producer or Broker/Dealer Use Only. Not for Public Distribution. Spousal Lifetime Access Trusts Transferring Wealth and Retaining Spousal Access

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Wondering if you really need life insurance?

Help your clients protect their business’ most important assets with

Key Person Life Insurance

For Producer or Broker/Dealer Use Only. Not For Public Distribution.

1300 Hall Boulevard, 3F

Bloomfield, CT 06002 Even with all the planning

you do —

_Life

Happens.

For Producer and Broker/Dealer Use Only. Not For Public Distribution. MetLife Investors Distribution Company

1300 Hall Boulevard, 3rd Floor Bloomfield, CT 06002

MetLife Offers Life Solutions for Your

Business Owner Clients.

This is a supplemental illustration designed solely to illustrate a concept and is not valid unless preceded or accompanied by a basic compliance illustration for the life insurance policy described. NOT VALID WITHOUT ALL PAGES. Supplemental Illustration

Prepared for: Prepared by:

• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value Live Better, Leave More Strategy Using Promise Whole Life 120

Valued Client

MetLife Agent MetLife Investors 1300 Hall Blvd Bloomfield, CT 06002 866-901-0002

L0313309063[exp0315]

REvISED APRIL 2013

For Producer or Broker/Dealer Use Only. Not for Public Distribution. The irrevocable life insurance trust (ILIT) has long been a traditional estate planning tool. It can be an effective way to own life insurance that provides liquidity at death while keeping the death benefit out of the estate of the decedent. ILITs can also be used to leverage the lifetime gift and generation-skipping transfer tax exemptions. While ILITs can be a very efficient method of owning life insurance, there are various considerations specific to ILITs of which one should be aware. In certain situations, there are alternative options to the ILIT clients should discuss with their legal and tax counsel, including using business entities as the owner of life insurance. ILIts Generally In order to exclude the life insurance proceeds from the estate, the insured cannot have any incidents of ownership in the policy. Therefore, the ILIT is drafted as an irrevocable trust and the insured/grantor has virtually no control over the policy owned in the trust. The ILIT can be drafted to provide some flexibility, such as providing a spouse or domestic partner access to trust principal and income, or by allowing the trust to make arms length collateralized loans to the grantor. But, generally, the grantor is giving up direct access to the policy in exchange for estate exclusion.

“Crummey” notices must be used in order to qualify any transfers or gifts to the ILIT for the gift tax annual exclusion. Since a gift to an irrevocable trust that does not immediately provide benefits to the beneficiaries is not considered a gift of a present interest, those gifts do not qualify for the gift tax annual exclusion. Consequently, the beneficiaries must be given, via written notification, a right to withdraw the gifts for a short window of time. This can pose problems with the funding of the policy if the beneficiaries actually exercise their rights to withdraw the gifts. In situations where there are concerns about spendthrift beneficiaries, annual exclusion gifts may not be desired and the gift exemption will be applied or gift taxes paid instead. In addition, there are some concerns about the IRS position on Crummey gifts. Specifically, the IRS may challenge whether these gifts qualify for the annual exclusion if there is an implied agreement that the withdrawal rights will not be exercised. Finally, in most situations, purchasing life insurance in an ILIT requires cash gifts. Using a client’s gift exemption and annual

exclusions for cash gifts may not be as beneficial as gifting other types of assets, like business interests where estate freeze techniques and valuation discounts can make the gifts more effective.1 While all of the issues outlined above certainly do not offset the benefits of an ILIT, there may be alternatives to the ILIT that might be more effective in certain situations. Entity Owned Life Insurance For clients who have ownership interests in operating business entities, those entities may provide a possible alternative to the ILIT. The entity would be the applicant, owner and beneficiary of the policy. Upon the death of the insured, the proceeds are paid to the business entity and can then be used to purchase the client’s business interest, make distributions to the owners or fund other objectives such as key person replacement, stay bonuses or executive benefits to heirs in the business. By using the death proceeds to fund a redemption of the client’s business interest, estate liquidity can be provided in a manner similar to that of an ILIT. Benefits of Entity Owned Life Insurance Business entities such as C corporations, S corporations, limited and general partnerships and LLCs can all be purchasers of life insurance instead of an irrevocable trust. Using a business entity to purchase life insurance can provide the following possible benefits over an ILIT:

• Having a business entity purchase the insurance may provide more flexibility and control for the client than using an ILIT.

• Having the entity purchase the insurance may eliminate the need for Crummey notices.

• Gifting ownership interests in the business entity to the trust instead of cash for life insurance premiums may leverage the gifts by removing appreciation of the entity from the estate as well as offer possible valuation discounts for lack of marketability and/or control. With the increase and reunification of the gift, estate and generation skipping exemptions under the American Taxpayer Relief Act of 2012 (ATRA), substantial amounts of business interests can be gifted without paying a gift tax. the Business Owned Life Insurance Alternative

1 Use of discounts, though legitimate where appropriate, is often the subject of IRS scrutiny. Valuation should be determined by a qualified appraiser. It is important to confer with your independent tax and legal advisors regarding the use of this technique.

Annuity Funded Life Insurance

Tax-deferred investment products, such as tax-deferred annuities, can be an effective way to accumulate wealth. In fact, you may find that you have accumulated more than you need for retirement in these products. If so, you may be planning to leave a portion of these products to your beneficiaries.

Life

_{your way}.SM

1 Withdrawals of taxable amounts from an annuity are subject to income tax, and withdrawals prior to age 591/2 may be subject to a 10% federal penalty tax. Loans or withdrawals will decrease the cash value and death benefit and any living benefit riders. Using proceeds from an annuity to purchase a life insurance policy may be considered a replacement. Additional paperwork may be required, and in cases where both contracts are issued by MetLife or an affiliate, certain restrictions may apply. Taxes can be a major obstacle to achieving your financial objectives. In fact, the combined effect of estate and income taxes can significantly diminish the value of your annuity when it is ultimately transferred to your beneficiaries. The Annuity Funded Life Approach The annuity funded life strategy involves the use of existing annuity contracts to fund a life insurance policy. It is a strategy you may want to consider if you wish to pass on your retirement assets to beneficiaries in a more tax-advantaged manner. The strategy works as follows: Begin taking payouts from your annuity through annuitization or withdrawals.1

• Annuitization — allows an annuity owner to receive a payment stream, either for life or a set period of time. The amount and duration of payments will differ with each type of annuity and will be outlined in the annuity contract. Some annuities pay out for the remainder of your lifetime and some pay out for a set number of years—continuing to pay out even beyond your lifetime if you die during the set number of years. Your beneficiaries would then receive the remainder of the payouts.

• Withdrawals — are the other option for receiving payouts from the annuity. Your annuity contract will specify the extent to which you can withdraw funds. If you choose this option, your annuity stays intact and can be passed on to beneficiaries, keeping in mind that withdrawals will reduce any death benefit of the policy.

If you don’t take distributions or partial withdrawals and end up passing the annuity’s full value to your beneficiaries at your death, they could be left with an estate tax liability due on the annuity or on the annuity’s death benefit. Use Distributions to Purchase Life Insurance Once you choose your approach for taking payouts from the annuity, you can use the net payments received to make gifts to an irrevocable life insurance trust (ILIT) or some other third party, such as your children, who own a life insurance policy insuring your life. The owner of the life insurance policy (either the trust or another third party) can then use your gifts to pay annual premiums on a life insurance policy.

ANNUITIES COUPLED WITH life insurance ^{MAY HELP} YOU PASS ON more assets TO YOUR benef iciaries. 17.75 in.

16 in.

11 in.5 in.

8.5 in.

.5 in. RADIUS CORNER

8.5 in. .75 in.

Spousal Lifetime Access Trust Transferring wealth and retaining spousal access Life insurance products are issued by:

Metropolitan Life Insurance Company First MetLife Investors Insurance Company 5 Park Plaza, Suite 1900 Irvine, CA 92614 metlife.com 1302-0475 CLVL23056 L0413316216[0415]

© 2013 METLIFE, INC. And in NY by: Metropolitan Life Insurance Company First MetLife Investors Insurance Company 200 Park Avenue New York, NY 10166 Equity Advantage Variable Universal Life is offered by prospectus only, which is available from your registered representative. You should carefully read the product prospectus and consider the product’s features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding choices. this and other information is available in the product prospectus and in the prospectuses for the underlying funding choices, which you should read carefully before investing. Product availability and features may vary by state. All product guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. Policy cash value allocated to the variable investment options is subject to market fluctuations so that, when withdrawn, it may be worth more or less than the amount of premiums paid. there is no guarantee that any of the variable investment options will meet its stated goals or objectives.

Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. MetLife, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisers regarding their particular set of facts and circumstances. MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. Contact your financial professional for costs and complete details. Equity Advantage Variable Universal Life is issued by MetLife Investors USA Insurance Company on Policy Form 5E-46-06 and in New York only, by Metropolitan Life Insurance Company on Policy Form 1E-46-06-NY-1. Variable products are distributed by MetLife Investors Distribution Company (member FINRA). All are MetLife companies.

Life Insurance Products:

• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value

Please wor k with y

our fessio financial pro

nal to ^{out M}^{re ab} ^{learn mo}

etLif

e’s Core Stories for Life.

LIFE InSUrAnCE

Sales Starters IRA Funded Life

This client has done a great job of accumulating a significant IRA balance. Now in retirement they have determined, with the assistance of their financial professional, they will not need the IRA for retirement income. Their income needs are met with other assets. They would like to preserve their IRA asset for their beneficiaries.

During the wealth management process, they have learned that passing the IRA to beneficiaries may be impacted by income and estate taxes. They would like to pass the IRA as tax efficiently as possible to their beneficiaries.

hOw thIS wORKS

step 1 Client takes withdrawals or Required Minimum Distributions from IRA. step 2 Income taxes will be due on these distributions.1 step 3 Gifts would then be made of the after-tax amounts to a properly structured Irrevocable Life Insurance Trust (ILIT).2

step 4 The Trust would use the proceeds of the gifts to pay premiums on a life insurance policy, typically on the life of the client or couple. step 5 Upon the death of the insured, the life insurance proceeds will be received free of income taxes and estate taxes.

client

the

solution

the

concern

the

Client takes withdrawals or Required Minimum Distributions

Client makes gifts of after-tax amount ILIt IRA

Client

Beneficiaries Balance of IRA (if any) after estate and income taxes go to beneficiaries Life insurance proceeds go to trust beneficiaries

StEP 1 & 2 StEP 3 & 4

StEP 5 LIFE INSURANCE

Client Information Name(s): _____________________________________________________________________________________________________ Address: _____________________________________________________________________________________________________ City, State, Zip code: _____________________________________________________________________________________________ Phone: ___________________________________________________ Cell phone: _________________________________________ Advisor Name Advisor Name: _______________________________ Advisor Company: ____________________________________________________ Advisor Office address: ___________________________________________________________________________________________ Advisor Phone: ________________________________________ Advisor email: ____________________________________________ Life Insurance Information Client’s Birthdate: _____________________ General health: Good Average Poor Smoker: Yes No Spouse’s Birthdate: ___________________ General health: Good Average Poor Smoker: Yes No What type of coverage is required? ____ Survivorship coverage insuring both lives ____ Single life coverage insuring client’s life ___ Single life coverage insuring spouse’s life Type/Name of Product? __________________________________________________________________________________________ If Variable Universal Life (VUL), what hypothetical gross rate? ____% (Cannot be higher than 10%) How much coverage is required? $ ________ level __________ increasing _________ Do you want death benefit guarantees? Yes No How will premiums be paid? ____ level premiums for life

____ level premiums for ____ years ____ level premiums for minimum years possible ____ other (please describe) _______________________________________________________________ Irrevocable Life Insurance Trust Fact Finder

Life

. your way SM Please work with your financial professional to complete this fact finder. Your advisor can help you determine the answers to these questions and provide additional details on different options that are available. Having a complete picture of your financial assets and objectives is a critical step to helping achieve your goals.

(Name Product, or state type, e.g. universal life, variable life)

8/30/2013 file://Z:\Electronic Marketing\Email_SMRFs\Ira_funded_life\email.html Supplemental Illustration

Prepared for:

This is a supplemental illustration designed solely to illustrate a concept and is not valid unless preceded or accompanied by a basic compliance illustration for the life insurance policy described. NOT VALID WITHOUT ALL PAGES. Prepared by:

• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union • May Go Down In Value Annuity Funded Life Using Promise Whole Life 120

Valued Client

MetLife Agent MetLife Investors 1300 Hall Blvd Bloomfield, CT 06002 866-901-0002

L0313309867[exp0315] For Producer or Broker/Dealer Use Only. Not for Public Distribution.

An intentionally defective irrevocable trust (IDIT) can be an effective estate planning tool. Properly used, they can enable clients to accomplish a variety of objectives. They can be particularly effective in managing transfer tax issues associated with large premium life insurance cases. This article will explore the general use of IDITs and how they can be used in conjunction with life insurance. Income taxation of trusts – In General It may be helpful to begin with a brief overview of trust taxation principles. A trust is a distinct legal entity that can own and manage property in the same way individuals and corporate entities can. Like their individual and corporate counterparts, trusts are subject to income tax on income realized in any given tax year. Taxable income generally consists of gross income for the year minus deductions. Gross income for a trust is broadly defined, as it is for individuals – income from whatever source derived. If an item would represent income in the hands of an individual, it will be considered income to the trust. Similarly, a trust may generally claim deductions that would otherwise be allowed to an individual, though there are certain exceptions and additions. One additional deduction unique to trusts is the ability to deduct from income distributions of taxable income made to beneficiaries of the trust during the year. Where that occurs the beneficiaries pay tax on the income distributed to them. Generally speaking then, with trusts, whoever receives the income, pays the tax.

the Grantor trust Rules The general rules outlined above do not apply to grantor trusts. Grantor trusts do not have income taxable to the trust. Rather, the trust income is taxable to the grantor as the owner of the trust for income tax purposes. The grantor trust rules were established to prevent wealthy taxpayers from reducing their income taxes by transferring income producing property into trusts over which they retained significant control, but which would be taxed at rates lower than the grantor’s. Under the grantor trust rules a person who transfers property to a trust (the grantor) is treated as the owner of the trust for income tax purposes if the grantor retains certain powers or interests in the trust or trust property. As owner of the trust the grantor is taxed on income earned by the trust (to the extent of his or her ownership interest). Those powers or interests which result in Grantor trust status are outlined in Internal Revenue Code (IRC)

§§ 673 - 679. They include (but are not limited to) the following:

• Certain reversions of the trust property to the grantor (if the value of the reversion exceeds 5% of the value of the trust) (§ 673)

• Retaining certain powers to control beneficial enjoyment of the trust property or income (§ 674)

• Retaining certain administrative powers (§ 675): – To deal with trust funds for less than full and adequate consideration – To borrow without adequate interest or security – To exchange property of equal value

• Retaining the power to revoke the trust (§ 676)

• Trust income distributed or held for the benefit of the grantor (§ 677): – Income used to pay life insurance premiums on life of grantor or grantor’s spouse – Income used to discharge a legal obligation of the grantor Today, the income tax brackets for trusts are compressed when compared to those for individuals. In 2011, for example, the highest marginal bracket of 35% is imposed on every dollar of income over $11,650. By comparison, for married taxpayers, filing jointly the 35% bracket does not apply until taxable income exceeds

$388,350. These compressed tax brackets are one reason why it is often preferable to treat the grantor as owner and tax the income to the grantor rather than to the trust. Estate Planning with Intentionally Defective Irrevocable trusts

Please note: This document is designed to provide introductory information on the subject matter. MetLife does not provide tax and legal advice. Clients should consult their attorney and /or tax advisor before making financial investment or planning decisions. See Important Note on page 3.

Executive Bonus Plans

Attract, Retain &

Reward Top Talent

LIFE INSURANCE

MetLife also has the sales and marketing professional resources to help you utilize these materials to

develop a custom approach to your business. Contact us today for how we can help you incorporate Core

Stories for Life into your practice.

A Complete Selling System

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A life insurance review confirms :

• The coverage amount is sufficient to meet

their needs

• The beneficiary designations are up to date

• The policy is properly owned for estate

planning purposes

• The right type of coverage is owned

Your clients' life insurance should be reviewed when :

• Their marital status changes

• Children or grandchildren come into the family

• They purchase a new home

• They stop working

• Their business changes owners

• The value of their business changes

• The business has one or more employees

vital to its success

Life insurance reviews are a critical component to meeting your client’s needs,

whether they are individuals or business owners. Just like other consumer products,

life insurance evolves over time. Pricing changes, underwriting updates and new

riders and/or features may enable clients to purchase additional coverage for the

same cost or continue their existing coverage at a reduced cost.

More often, however, your client experiences changes that necessitate a life insurance review to ensure the

existing coverage still meets their needs.

changes. ^life

Life Insurance Review

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Accumulation

Life insurance products are designed primarily to provide an income tax free death

benefit, but permanent life insurance policies also have a cash value, which if variable,

is subject to additional asset management fees. Even though life insurance is not

considered an investment product, the cash value portion of permanent life insurance

products has investment-like attributes. The cash value has tax deferred growth potential

and may even be accessed on an income tax free basis through loans and withdrawals.

Supplemental Income strategies are appropriate for clients who have a need for life insurance protection and may

have contributed the maximum to traditional IRAs or employer qualified plans. By contributing more than the minimum

premium due on the policy, the cash value should accumulate to build a reserve which can be accessed on a tax free

basis to supplement retirement or other income needs later in life. (Please see: A Note About Life Insurance Distributions)

Spousal Lifetime Access Trusts enable married clients to create a wealth transfer plan while preserving the ability for

the non-donor spouse to access income for the remainder of his or her lifetime. ¹

1 SLATs should be drafted with care to avoid unintended tax consequences. It is important for clients to confer with their independent tax and legal advisors

regarding use of this technique.

4 accumulation.

For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Accumulation & Protection

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A Note About Life Insurance Distributions:

Loans and withdrawals will decrease the cash

value and death benefit. If the policy does not

perform as expected it may be necessary to

reduce or stop distributions, and/or premium

payments may need to be resumed to avoid a

policy lapse. There may be tax consequences if

the policy lapses or is surrendered prior to the

death of the insured.

Distributions are generally treated first as tax

free recovery of basis and then as taxable

income, assuming the policy is not a Modified

Endowment Contract (MEC). However, different

rules apply in the first fifteen policy years when

distributions accompanied by benefit reductions

may be taxable prior to basis recovery. Non-

MEC loans are generally not subject to tax but

may be taxable to the extent of policy gain

and an additional 10% tax may apply if taken

prior to age 59½. Always confirm the status of

a particular loan or withdrawal with a qualified

tax advisor. Cash value accumulation may

not be guaranteed depending on the type of

product selected. Investments in variable life

insurance are subject to market risk, including

loss of principal.

Protection

Almost 75% of Americans agree

that life insurance is the best way to

protect survivors against the financial

implications of the premature death of

a primary wage earner. According to

the same respondents, life insurance

surpassed all other sources of financial

assets or income that Americans expect

to use to help pay bills and to maintain

their lifestyle if a primary wage earner

dies. ² However, the same study revealed

that 50% of all U.S. households either

don’t own life insurance and believe

they should, or do own life insurance

and believe they need more.

2 Is the Future Bright for Individual Life Insurance. LIMRA 2011

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A Capital Needs Analysis is one of the most critical

things a financial professional can do to help clients

obtain the coverage they need. The first step of a

capital needs analysis is to determine the income gap

which would need to be replaced in the event of a client’s

premature death. This includes the annual amount of

money that would be required to maintain the family’s

standard of living as well as any one time expenses

such as mortgage payoff, final expenses or anticipated

education expenses for children. Once the family’s

financial needs have been determined, it is important

to consider how the life insurance death benefit, in

conjunction with other household assets, will meet the

family’s needs for an anticipated number of years. Do the

clients anticipate only living off the earnings or spending

a portion of the principal each year? How they anticipate

spending their assets will be an important factor in

determining the amount of death benefit to purchase.

A Capital Needs Calculator is available on the electronic

version of Core Stories for Life. This calculator can estimate

the appropriate amount of coverage for your clients.

protection.

6 For Producer or Broker/Dealer Use Only. Not for Public Distribution.

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Repositioning Assets

The financial products clients use to accumulate assets for retirement are not always

the most practical when it comes to transferring wealth. Many times creating a

wealth transfer strategy is as simple as evaluating a client’s current portfolio for

assets that will not be needed for retirement income and finding opportunities to

transfer those assets more efficiently to their beneficiaries with regard to taxes.

Live Better Leave More ^SM is a

strategy that may help clients resolve

the internal conflict which often

exists between leaving a legacy and

enjoying the benefits of a lifetime of

hard work and good savings habits.

Too often, clients feel obligated to

sacrifice their personal desires in an

effort to enhance their legacy.

This strategy begins by evaluating

options to more efficiently transfer

wealth to loved ones. It looks at

potentially repositioning excess

assets within a client’s portfolio into

a life insurance policy to guarantee

the legacy and potentially allow

clients to leave more to their

beneficiaries after taxes. ³

IRA Funded Life addresses the asset

which is often the largest in your

client’s portfolio, and therefore most

likely to be earmarked for their legacy.

Unfortunately, depending on the

size of the client’s estate, the IRA (or

other qualified retirement plan assets)

may be subject to both income and

estate taxes. The combined effect of

these taxes on the IRA may reduce the

amount distributed to the beneficiaries

by 50% or more. Repositioning some

of the IRA assets into life insurance

may allow clients to increase the

potential wealth transferred to

beneficiaries.

Annuity Funded Life is a strategy for

clients who do not anticipate spending

all of their annuity assets during their

own retirement. Growth on the annuity

will be subject to income taxes and the

entire annuity value is considered part

of the client’s estate, in many cases

making this an inefficient asset for

wealth transfer. Repositioning a portion

of the annuity into life insurance may

allow clients to increase the net amount

beneficiaries receive.

wealth

transfer.

3 Guarantees are based on the claims-paying ability of the issuing insurance company.

Wealth Transfer

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Life Insurance and Trusts

When your clients consider their legacy, there are many factors that may influence

their decision to implement a formal plan. Clearly the potential for estate taxes may

be one of those factors. Other considerations may include creating certain incentives

for beneficiaries to receive the proceeds and/or protecting their legacy against

judgments, ⁴ family divorce or beneficiaries with the potential to misuse the assets.

A properly structured irrevocable trust not only enables assets to pass from one

generation to the next free of estate taxes, but may also place limitations on

distributions to help alleviate client concerns about the transfer of wealth.

Dynasty Trusts are specific types of irrevocable trusts

designed to provide distributions to trust beneficiaries

for several generations, while keeping the remaining

trust assets outside the beneficiaries’ respective taxable

estates. The trusts typically utilize the client’s Generation

Skipping Transfer Tax (GSTT) exemption to gift assets to

grandchildren and other “skip” persons free of this tax. Life

insurance may provide important leverage to these gifts.

While the trust may aim to last forever, many states have

developed Rules Against Perpetuities to limit the duration

of this type of trust. Qualified legal advisors should be

consulted to ensure the trust is drafted according to your

client(s) wishes.

Leveraged Credit Shelter Trust is a strategy which

utilizes the basic estate planning technique of Credit

Shelter Trusts, also known as “B” Trusts or By-Pass

Trusts. Funding the Credit Shelter Trust (CST) with life

insurance purchased on the life of the widow or widower

may provide immediate leverage and may also help

mitigate the higher trust tax rates assessed on income

not distributed to the beneficiaries.

trust.

4 Creditor protection laws vary dependent upon governing federal and state law. The applicability of such laws also depends on the terms of the trust.

Consumers should be sure to confer with their independent tax and legal advisors prior to establishing a trust for this purpose ^. .

8 For Producer or Broker/Dealer Use Only. Not for Public Distribution.

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Business Development Stages

In addition to the concerns that individuals face, business owners have

additional needs to protect the long term viability and success of the business.

To best serve the needs of your business owner clients, it is important to

recognize the developmental stage of the business.

START-UP BUSINESSES are generally in a somewhat precarious survival mode.

These owners are typically investing great amounts of time and resources to

ensure the business’ viability. Protecting the business against unanticipated

losses is critical in this ownership phase.

Key Person Insurance is critical protection for start-up businesses whose financial success or

survival is dependent on a few key employees. A key person life insurance policy may provide

immediate liquidity in the event of a key employee’s unexpected death. The policy may also be

able to provide the business with tax-advantaged access to policy cash values in times of need,

such as if the employee resigns or becomes disabled.

1 Business Owners

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PROFITABLE BUSINESSES are stable and

profitable enough to financially support

the owners and employees. In this phase,

the business owner becomes concerned

with how to utilize the business to save for his own

retirement. The owner also begins to contemplate

providing benefits to his employees for increased

loyalty and retention purposes.

Executive Bonus Arrangements are a popular way to

offer nonqualified benefits to selected employees with

generally little to no restriction on who may be chosen

or excluded. In this arrangement, the employer pays a

bonus or salary increase to selected employees, subject to

reasonable compensation guidelines. In turn, the employee

can use the bonus proceeds to purchase life insurance.

Employers do not have control over the policy cash

values since the employee is the policy owner, but the

employer may elect to restrict the executive’s access to the

cash values through a restrictive agreement. Cash value

access would therefore be restricted and subject to the

employer’s consent until the employee satisfies specific

requirements ⁵ which typically relate to tenure.

Life Insurance in a Qualified Plan involves purchasing

life insurance within a defined benefit or defined

contribution qualified plan and can help purchase

coverage while providing appropriate income tax

deductions. Life insurance provides instant protection in

the event of premature death, even if only one premium

payment has been paid. For small business owners such

as doctors, attorneys, accountants and trade professionals

whose business value may decline substantially without

their continued contribution, the policy's death benefit

may help replace this lost value for beneficiaries.

Furthermore, a properly designed strategy to remove the

policy from the plan at some point in the future can help

business owners meet personal estate planning goals.

Nonqualified Deferred Compensation Plans are an

executive benefit often informally funded with cash value

life insurance to provide key employee benefits upon the

attainment of specified performance requirements.

2 5 With respect to a §162 Executive Bonus Plan, the employer should consult

with and rely on independent legal and tax advisors regarding whether any

executive bonus plan may be considered to be a welfare benefit plan under

ERISA and if so, what requirements must be met.

10 ^executive

benefits.

For Producer or Broker/Dealer Use Only. Not for Public Distribution.

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ESTABLIShED BUSINESSES have proven

their staying power and profitability. Once

this stage begins, it is important that the

owner consider what will happen to the

business when the owner no longer desires, or has

the ability, to maintain such an active role. In an

ideal situation, all partners and their beneficiaries

would be in agreement about the future for the

business and have plans in place to ensure it can

happen. Good planning avoids being forced to

sell the business quickly, and potentially below

fair market value, to pay estate taxes or satisfy

beneficiary interests. Unfortunately, such situations

rarely occur organically, which can result in periods

of business uncertainty that can include lost

customers, sales and profitability. Implementing a

plan for the business’ succession is the best way to

ensure a fair and orderly transition.

Business Succession Planning encompasses several

different strategies to arrange a transition plan which will

satisfy the owner, any partners and their beneficiaries.

Life insurance is commonly used to fund business

succession strategies because of its flexibility. The

premiums are typically moderate compared to the total

amount of money that would have to be raised if a death

did occur. In addition, permanent life insurance has a

cash value component that may be accessed through

withdrawals and loans in the event an owner becomes

disabled or retires. (Please see: A Note About Life Insurance

Distributions on page 5)

3 business

succession.

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MetLife provides additional resources to

incorporate the Core Stories for Life into

your practice. These include:

Electronic Prospecting Tool helps you to determine which

strategies may be most appealing to your clients by having them

answer just a few simple questions. This tool is located on the

Find Potential Solutions tab on the Core Stories for Life minisite.

Client Profile Chart helps identify which core stories may be

right for your client. Using simple client demographic information

and concerns the chart provides you with suggested questions to

ask these clients and possible planning strategies.

Meeting Support Materials include the Client Identification

Form and Meeting Follow-Up Worksheet which help to identify

particular clients for strategies presented at meetings, either

before or after the meeting.

* Presentations are available for almost all topics on the electronic version of the Core Stories for Life.

12 For Producer or Broker/Dealer Use Only. Not for Public Distribution.

Profiling Tools

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Core Stories for Life

Live and Interactive

This robust selling system offers easy to explain concepts that can be used with your individual or

business owner clients to demonstrate how life insurance can:

• Create financial protection for loved ones

• Grow equity and help preserve their lifestyle, and

• Leave a meaningful legacy

Life insurance is a flexible product that offers death benefit protection and may also offer an opportunity to save

for the future. Evaluating all available financial opportunities may help clients reach their financial goals. Life

insurance is one of those opportunities — providing protection today and helping prepare for tomorrow.

To access all of MetLife’s Core Stories for Life materials, enter the key words

“Core Stories” into the search field in the upper right hand corner of your

MetLife financial professional website.

Please contact your Regional Sales Vice President or Internal Sales Associate with any questions, or to order

printed versions of marketing materials.

Live and Interactive

Core Stories for Life

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Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not

intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance

products. Clients should seek advice based on their particular circumstances from an independent tax advisor.

MetLife, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes

only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and change. Tax results and the appropriateness of any product

for any specific taxpayer may vary depending on the facts and circumstances. Clients should consult with and rely on their own independent legal and tax advisors

regarding their particular set of facts and circumstances.

MetLife life insurance policies have limitations, exclusions, charges, termination provisions and terms for keeping them in force. There is no guarantee that any of the

variable investment options in this product will meet their stated goals or objectives. The account value is subject to market fluctuations so that, when withdrawn,

it may be worth more or less than its original value. Guarantees are based on the claims-paying ability and financial strength of the issuing insurance company.

Life insurance products are issued by MetLife Investors USA Insurance Company, Irvine, CA 92614; Metropolitan Life Insurance Company, New York, NY 10166 and

in New York only by First MetLife Investors Insurance Company, New York, NY 10166. All guarantees are subject to the claims-paying ability and financial strength