1. Copyright 2013, 2015 - All Rights Reserved
Retirement Magic of
ILIPPs & FLIPPs
Double Your
Retirement
Income
Published by Capital Strategies Press / Sponsored by PolicyChallege.com
2. Copyright 2013, 2015 - All Rights Reserved
ILIPPs & FLIPPs
– The Retirement Wonder Tools
Compound stock & bond based returns tax free
Provide tax free retirement income
Boost qualified plan lifetime income by 10% to 15%
Multiply the wealth transferred at your death
Pay the taxes on retirement income from other sources
Protect your retirement income from inflation
Pay-up a retirement account for your spouse in the
event of your early death
3. Copyright 2013, 2015 - All Rights Reserved
ILIPP – stands for Indexed Life Insurance Private Pension
FLIPP – stands for Fixed Life Insurance Private Pension
Both concepts use the unique features
of a life insurance policy to create a
personal retirement solution.
(The primary difference between a FLIPP and an
ILIPP is the selection of the accumulation
method.)
4. Copyright 2013, 2015 - All Rights Reserved
ILIPP –
$335 a Month After-Tax Cost Age 40 to 65: $100,500
$1,807 a Month Retirement Income Age 65 to 100: $758,940
Taxes Due: - 0 -
Indexed Life Insurance
Private Pension
Sample ILIPP (Using Indexed Life Insurance for a male age 40 in average health and
assume an annual compounded return of 7.3%, with a 5.9% variable loan rate.)
The structure of an ILIPP combines favorable tax treatment with interest
rate leverage to generate impressive levels of retirement income.
**This is a sample illustration only, not a guarantee. The performance of an ILIPP is highly dependent
on future economic conditions over a long period of time, as well as the age and health of the insured.
Please see a NAIC compliant illustrations tailored to your specific situation.
5. Copyright 2013, 2015 - All Rights Reserved
Life Insurance has a
Bad Rep in Some Circles
Too many people buy -
High-Load, Low-Yield policies
ILIPPs and FLIPPs use -
Low-Load, High-Yield
products
ILIPPs and FLIPPs are Over-Funded, which Lowers Costs,
Magnifies Cash Growth and Triggers the Tax Shelter Inside
the Policy
6. Copyright 2013, 2015 - All Rights Reserved
If Life Insurance Wasn't
Such a Great Product -
- Rich People
Would Not Buy
So Much of It!
They even borrow from the bank to buy it –
They call it 'Premium Financing'
7. Copyright 2013, 2015 - All Rights Reserved
The Rich Buy Life
Insurance Because
They Know:
It Protects Wealth
It Transfers Wealth
Is a Tax Shelter
It can do the same for you!
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The Total Return on an ILIPP
Depends on Your Longevity
Total Death Total Tax Free
Distributions + Benefit + Cash Collected
Death at Age 75 $203,840 $154,485 $358,325
Death at Age 85 $407,680 $126,235 $533,915
Death at Age 95 $611,520 $165,869 $777,389
** The above amounts were taken from a NAIC compliant life insurance illustration
on an age 40 male in average health and assuming a constant annual return of 7.3%
and a variable loan rate of 5.9% (The carrier's 30 year average annual crediting rate from 1982 to
2012 was 8.1%)
The above is merely a sample. Policy values will change with gender, age,
health, carrier, policy type, interest rate assumption, policy loan assumption
and other variables. Consumers interested in this concept should obtain NAIC
illustrations from a life insurance agent licensed in their state of residence.
Not all agents are expert at this concept - Choose your agent wisely!
9. Copyright 2013, 2015 - All Rights Reserved
Most people pay minimum premiums
– this raises costs and stretches them out
$ $
$
ILIPPs & FLIPPs are Over-Funded, which
– lowers costs and accelerates cash growth
10. Copyright 2013, 2015 - All Rights Reserved
ILIPPs & FLIPPs are Powerful Financial Tools
that Deliver Unique Retirement Solutions –
Compound stock & bond based returns tax free
Provide tax free retirement income
Boost qualified plan lifetime income by 10% to 15%
Multiply the wealth transferred at your death
Pay the taxes on retirement income from other sources
Protect your retirement income from inflation
Pay-up a retirement account for your spouse in the event
of your early death
What is Your Priority?
11. Let's See How an ILIPP Can Energize Your
Retirement Planning
Do you have a retirement plan?
What are you retirement assets?
How much do you save each month for retirement?
What are your retirement goals?
Copyright 2013, 2015 - All Rights Reserved
For additional information on this financial concept
please visit PolicyChallenge.com
**Life insurance policies are purchased through licensed insurance agents. The purchaser must receive a NAIC
compliant illustration on any and all policies considered. Not all agents are familiar with this concept. For best
results choose your insurance agent wisely. - Please see the important notices on the following pages.
12. Links to Impartial Providers of
Historical Asset Class Performance
Copyright 2013, 2015 - All Rights Reserved
Federal Reserve Board posts returns from a variety of fixed income asset classes, some of which extend as far
back as the early 1900’s. Please visit: http://www.federalreserve.gov/releases/h15/data.htm
Ibbotson, owned by Morningstar, compiles an extensive list of asset returns and focuses on stock market based
asset returns. http://corporate.morningstar.com/ib/asp/subject.aspx?xmlfile=1414.xml
Capital Strategies Press publishes an annual summary of indexed performance. Their numbers are independent
of the projections made by the insurance carriers. http://CapitalStrategiesPress.com
Yahoo financial database: http://finance.yahoo.com/market-overview/
MarketLinking.com offers a public access database on a variety of market linked and indexed returns.
Visit http://MarketLinking.com
13. Important Notes and Disclaimers (Please Read)
Copyright 2013, 2015 - All Rights Reserved
The performance comparisons used in this presentation make assumptions about future rates of return.
These assumptions may or may not be valid. No one knows the future. Our only guide is the past and
the future returns from various asset classes may not reflect their historical averages or ranges. The
comparisons used herein are solely for the illustrative purposed.
Knowledge is power and when making financial decision knowledge is essential. Every consumer,
whether making investment, savings or insurance decisions should carefully study the past
performance of every asset class under consideration in order to make an informed decision about their
expectations of the future performance of that asset class. There are a number of independent third
party sources of asset returns. All consumers should consult one or more of these sources or other
impartial third parties that maintain similar databases and/or analysis.
Meaningful financial planning requires unbiased information. Financial decisions about retirement
funding, future retirement income, building a family nest egg, and purchasing insurance to provide
financial protection for life’s unexpected events all require making assumptions about future
performance. Unless these assumptions are based on expectations that have a reasonable probability
of being close to future results, you are not planning, you are guessing.
Please discuss asset class returns with a competent financial professional before making a final
decision about how to allocate your financial resources. This should be more than a cursory
discussion. If the financial professional you have chosen to trust seems uniformed in any way on the
subject of asset class performances, you should seriously consider replacing them and finding a more
knowledgeable professional.
Please, please, please take the time to build your personal knowledge of the various financial products
and the performance and liquidity characteristics of the asset classes available to you.
14. Important Notes and Disclaimers (continued)
Copyright 2013, 2015 - All Rights Reserved
The National Association of Insurance Commissioners (NAIC) has formulated guidelines for illustrations that
must be presented to each potential purchaser of cash value life insurance. These multi-page illustrations are
carrier, product and insured specific and contain substantial disclaimers, warnings and clarifications. The
summary presented herein is taken from one set of annual yield assumptions and premium inputs. Alternate
assumptions can produce radically different policy performance, including early lapse of the policy. The age and
health status of the insured is likewise a key assumption that when changed, can lead to policy performance
much less favorable to the policy owner.
These types of life insurance policies can only be purchased through the services of a life insurance
agent licensed in your state of residence. If you are interested in learning more about the retirement cash flow
features of cash value life insurance, please confer with a licensed agent and have her/him prepare NAIC
compliant illustrations using reasonable assumptions. We strongly advise that consumers never rely on the
carrier’s highest historical return. A lower return assumption will make the outcome more likely.
We also strongly advise that the interest rate spread assumed on any variable loan be reasonable in light of
historical performance data. The spread is the difference between the assumed policy crediting rate and the rate
charged on policy loans. Example: the policy yields an annual return of 8.3% and a loan charge of 5.5%, then the
spread is 2.8%.
A 2.8% spread is unreasonable and will create an internal compounding during the loan period that will inflate the
available retirement funds substantially. Since a 2.8% spread has never been sustained during any past
economic period, the results illustrated will be an illusion and will never occur. The variable loan rate of an
indexed policy is tied to the commercial bond rate. Universal life insurance carriers invest policy cash values
funds in the commercial bond market. If the insurance carrier charges the policy holder less than its bond
earnings, the carrier will lose money. A history of commercial bond rates are published by the Federal Reserve
and can be found on the Internet
The spread is a critical element of all indexed universal life illustrations that employ the universal loan. If your
agent glosses over the importance of the spread or seems fuzzy on its criticality, get a new agent, because you
are not working with a true professional.