Securing Your Future Since 1919www.schwartzbrothers.com

Howard SharfmanPresident500 West Madison Street, Suite 2700Chicago, IL 60661O: 312.683.7152F: 312.759.4452C: 312.927.6343hsharfman@schwartzbrothers.com

April 17,2013

FOR AGENT USE ONLY

Case study

• Case study one – managing a WL portfolio and IUL

• Case study two – insurance as an asset class• Case study three – insurance protecting a

concentrated position

Case Study One

Client One

• Client 56M - UHNW – PR/NS• Capacity issues with Placement• Managing large WL portfolio for 10+ years• Concerned with Interest Dividend rate

declines• Wants to maintain high CV• Interest in and has had good experience with

Structured Notes• Long Term Player

                   

  Client  

  

  BEFORE AFTER moving basis to 3 IUL's at 6.25%  

   

 Cash Value Current NLV Death Benefit NLV Proposed CV NLV /New

Coverage Index @ 6.25% Proposed DB NLV/New

Coverage Index @ 6.25%  

   

  Today  $ 19,416,000   $  73,700,000   $       18,000,000   $       88,000,000   

  Year 15   $ 41,029,000   $  74,250,000   $       40,125,000   $       88,000,000   

  Year 20   $ 49,773,000   $  76,770,000   $       48,500,000   $       89,150,000   

  Age 81   $ 59,634,000   $  81,300,000   $       57,200,000   $       92,875,000   

  Age 91  $ 78,154,000   $  91,400,000   $       76,273,000   $       99,105,000   

   

  Reasons to change coverage  

  Diversify carriers and crediting strategy Similar illustrated cash value  

  Significant increase in Death benefit   Concern over interest rate declines     

  Internal document - please review company provided illustrations showing guarantees and policy charges. Numbers rounded                        

Case Study Two

Client Two

• Large Private equity fund manager• Age 55• Has never purchased life insurance• $1B+ net Worth• Gifted $5mm to IDGT• Loaned $45mm to IDGT• Trust purchased carried interest units in fund• Trust purchased $50mm of GUL/UL – asset

allocation of $10mm of premium

WHY?

• Leverage• Non correlated asset Predictable• IRR at age 85 = 6.14% @ 90= 5.00% • Arbitrage between DB IRR and AFR• Asset allocation to tax free, estate tax free

product• Exit through liquidity of carried interest

Next Steps

Similar transaction on life of wife

Case Study Three

Client Three - Concentrated stock

• Client 40’s with new found wealth from IPO• IPO at $15 moved to $40/share in 3 weeks• Reallocate shares to Life insurance as a

stabilizing factor in portfolio• Selling $5mm of shares provides $4mm after

tax • Allocating $4mm to SUL provides $65mm of

Death Benefit (16.2 x Premium)• Share price would have to be $389/ share to

equal life insurance value

Questions?

Thank you!

Howard Sharfman

hsharfman@schwartzbrothers.com