Chris Paton UX Australia 2013 - Our billion-dollar baby: From greed to good
$Mil dollar baby
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Transcript of $Mil dollar baby
Couple in their early 30’s
Looking to provide a life long benefit for their newborn child
Want a product that can adapt to the child’s many life stages
Affordability is an issue
Death Benefit Protection until the child reaches adulthood
College expenses for 4 years (child age 18 to 21)
Death Benefit Protection (adulthood)
First home purchase (age 30)
Second home (age 45)
Retirement income (age 65 and on)
Access to Death Benefit (while living)
Male, Age 1, Verified Standard NT
Check-O-Matic Premium ($100/month)
$200,000 Face Amount
Option B (increasing) Death Benefit
Guaranteed Insurability Rider ($50k)
Accelerated Benefit Riders – No Cost
Life Insurance input parameters
Child begins 4 years of college at age 18
Parents take annual loans against the cash value to supplement tuition costs
Produces 4 separate income tax-free distributions totaling $48k
At age 30, child takes a loan of $25k from the cash value for a down payment on his first home
At age 45, child purchases a vacation home with a second loan of $100k
Distributions are received income tax-free
At age 65, child takes distributions to supplement retirement income
Insurance illustration calculates tax free income taken as loans at age 65 to be $154,979 per year
Distributions continue until age 120
Initial face amount provides death benefit protection for parents
Transfer of policy provides death benefit protection for child’s family
DB is over $700,000 by mid 50’s
Scheduled Premium Payments
• From age 1 to age 5 $100 per month
• From age 6 to age 10 $150 per month
• From age 11 to age 17 $200 per month
Scheduled Income
• From age 18 to age 21 $12,000 / year for 4 years college
• At age 30 $25,000 for house down payment
• At age 45 $100,000 cash for 2nd home
• At age 65 to 100 $154,000 annual tax free income