Life Insurance 101

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The Manufacturers Life Insurance Company of New York100 Summit Lake Drive, 2nd Floor, Valhalla, New York, 10595www.manulifenewyork.com

How much should you have?

What kind of policy should you buy?

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Client Profile

A topic that should be discussed with ALL of your clients!

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The Problem

Any of us can die unexpectedly.

Will our heirs have enough assets to maintain their lifestyle?

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How much do I need?

A simple estimate can be done using a one-page worksheet

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Immediate expenses (cash needs)

Maintaining family standard of living (income needs)

Two Typical Needs

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Cash Needs

6 most common:– Final expenses

– Debt liquidation

– Childcare

– Mortgage

– Education

– Emergency fund

Funds needed within 90 days of death

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Income Needs

Guideline – a family usually needs 75% of prior income upon the death of a spouse

This assumes:– Mortgage has been paid off

– Education funds have been established for the children

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Income Need Questions

How much will your family need?

How long do you want to provide for them?

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A simple approach to a complex situation.

Intended to be thought provoking, not necessarily comprehensive.

The Life insurance Needs Worksheet

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The Smiths

Client Bob & Jane Smith

Ages 45 & 40

Number of Children 3 Ages 12, 8, 2

Bob’s Income $200,000

Jane’s Income $0 as homemaker

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Fund any cash needsProvide income to Jane so she will not HAVE to work or marry unless she choosesIf she marries, do not want the kids to lose their inheritance to a second spouse

Objectives if Bob Dies

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#1: Cash Needs

Final Expenses $ 10,000

Mortgage Fund $ 250,000

Debt Liquidation $ 25,000

Education Fund $ 120,000

Child Care Fund $ 0

Emergency Fund $ 30,000

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#2: Income Needs

75% of $200,000 income is $150,000 per year.

Let’s assume you can earn a gross rate of 9%, but want to offset an inflation rate of 3%. This results in a net rate of 6%.

Divide $150,000 by 6%. Capital of $2,500,000 is needed to provide this income per year if you wish to preserve principal.

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#2: Total Insurance Need

Based upon the calculations on the previous slide, here are the needs:

Cash Needs $ 435,000

Income Needs $2,500,000

Total $2,935,000

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#3: Capital Available

Checking Account $ 5,000

Brokerage Account $100,000

Group Life Insurance $400,000

Personal Life Insurance $250,000

Bank CD $ 10,000

TOTAL $765,000

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The Numbers

Total Need $2,935,000

Capital Available $ 765,000

Capital Shortage $2,170,000

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Do you have enough liquid capital to provide for your family’s cash and income needs if you die?

The BIG Question

If you have a capital shortage, the product available to meet the shortage is life insurance!

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Forms of Life Insurance

Term

Universal Life

Variable Life

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Choosing the Appropriate Insurance Product

What does customer want to achieve with this insurance?

What is the acceptable premium level and how will it be paid?

What is customer’s risk tolerance – what’s more important – guarantees, affordability or optimizing of performance potential?

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Customer Needs Risk Profile

Cost Flexibility InvestmentPerformance

Focus

Term VariableUniversal

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Term Life Insurance

Features/Benefits

Affordable premiums and maximum temporary death benefits

Various term periods available

Coverage needs to be convertible

When to Recommend

When temporary affordable coverage is needed. Examples are:– Income protection

– College tuition protection

– Debt or other financial obligation

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Universal Life

Features/Benefits

Flexible premium

A current interest rate

Flexible death benefit options with emphasis on either cash build-up or protection

Loans or withdrawal availability

When to Recommend

Prospect wants flexible coverage and wants to avoid fixed premium commitment

When competitive cash value accumulation is emphasized

When prospect has the ability and discipline to make flexible premium payments

Has same insurance needs as other permanent policies

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Variable Universal Life

Features/BenefitsPolicyowner controls investment element in the insurance policyPremiums are flexible and can be directed to any of the underlying investment accountsPolicyowner can switch between investment accounts without current taxationLoan or withdrawal availability

When to Recommend

When cash growth potential is emphasized over guarantees

When policyowner is investment oriented and will accept the risk in return for potential reward

Policyowner wants maximum control over policy and will accept risk

Has same insurance needs as other permanent policies

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Preferred available to age 90Affordable no-lapse guaranteesSome of the world’s leading investment managers Suitable for clients with supplemental retirement and estate planning needs using life insurance

Why Venture® Variable Insurance?

These guaranteed product features are dependent upon the claims-paying ability of The Manufacturers LifeInsurance Company New of York.VENTURE ® Variable life insurance products are issued by The Manufacturers Life Insurance Company of New York (Manulife New York) and distributed by Manulife Financial Securities LLC through other broker/dealers appointed by Manulife Financial Securities Please call 1-800-743-5542, to obtain a prospectus containing more complete information including charges and expenses. Please read the prospectus carefully. VENTURE® is a registered trademark of The Manufacturers Life Insurance Company (U.S.A.) and is used under license by The Manufacturers Life Insurance Company of New York.

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Flexible premium allows flexible contributionsDollar cost averaging*Automatic asset allocationSelect from over 60 underlying investment options

Why Venture Variable Insurance?

Dollar Cost Averaging (DCA) does not assure a profit or protect against loss in declining markets. Since DCAinvolves continuous investments in securities regardless of fluctuating price levels of such securities, a purchasershould consider his or her ability to continue such purchases through periods of low price levels.

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Manulife’s New York Investment Portfolio

Some of the world’s leading fund managersWide range of investment options for every preference and risk toleranceLifestyle portfolios available for easy diversification

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Manulife New York Company Strengths

Competitive medical decisions

Jumbo case team

Older age specialist

Informal query team

Aggressive financial underwriting

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For more information, please call your local Manulife New York Representative, or the Advanced Markets Group at(800) 743-5542, option 5

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