TEN STEPS To A Perfect Illustration Thom Robb JD CFP Director of Advanced Markets Farmers New World Life January 2017 10 Steps to a Perfect Illustration STEP ONE Payments Begin at the bottom and work up ID: 772752
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TEN STEPS To A Perfect Illustration Thom Robb, JD, CFP Director of Advanced Markets Farmers New World Life January 2017
10 Steps to a Perfect Illustration STEP ONE: Payments Begin at the bottom and work up. Consider the client’s Budget (augment with Term, if necessary) Select “Specified” premium 1
10 Steps to a Perfect Illustration STEP TWO: Payments Enter planned premium forever Shorten by using the Years to Pay box (Ex. a65, or y20) For additional lump sums, contact sales support for assistance with the face amount, and charges. 2
10 Steps to a Perfect Illustration STEP THREE: Rate of Return IUL default allocation at 100% S&P to allow maximum illustrated rate of 5.50% (6.08% 10/27) VUL – illustrate at 8% or 9% rate of return If the client does not think the market will return 7-8% over time, IUL is appropriate IUL/VUL stress test – illustrate at 5/6% 3
10 Steps to a Perfect Illustration STEP FOUR: Output Options Overview is the “Prequel” Costs and Values report is automatic for VUL, optional for IUL 4
10 Steps to a Perfect Illustration STEP FIVE: Benefits Set death benefit option to “ A”-increasing and use the box to change to level ***Can be illustrated with option “B”-level, but the tradeoff is lower income Close the dialog box without changing anythingDo NOT enter cash flow in this box; instead Solve for it. Solve will autoselect A=>B DB Option at the end of premium payment period *** 5
10 Steps to a Perfect Illustration STEP SIX: Solves The middle section is “Solves.” Drop-down menu provides 5 options. Select “ premium/face income ” 6
10 Steps to a Perfect Illustration STEP SEVEN: Solves Dialog box with 4 fields will open. Select “ withdrawals ” Age at first withdrawal is the same as the age at last premiumYears can be 15, 20, or 25 (do not use age 100)Solve for “face and income” This solves for the minimum non-MEC face amount and the maximum level income for the term of years selected. Click <OK> 7
10 Steps to a Perfect Illustration STEP EIGHT: Calc Results Do not run the full illustration yet Click < Calc Result> to see if the results are plausibleAre premiums correct?Premiums end in the correct year?Income for the correct years? Does the illustration carry beyond age 100? 8
10 Steps to a Perfect Illustration STEP NINE: Refine for more Income (if possible) Return to the Solves box. Open “ Premium/Face Income ” In the dialog box, change “Face and Income” to “Income”. Click <OK> Return to the Benefits box. Open the “Change Face Amount or Option” boxIn the first year of distributions, enter 33% - 50% of the solved death benefit, down to $75k (platinum, platinum choice) or $150k (platinum plus or elite)Allow the minimum amount to copy down to age 121. Click <OK> 9
10 Steps to a Perfect Illustration STEP TEN: Review & Print Click < Calc Result> again For shorter time horizons before income, older clients, or larger initial non-MEC face amounts, the income may be significantly better than it was without the “Refine” step If you reduce this face amount too much, you could wind up with “forceouts” – negative premium in the last few years of the policy. Increase the distribution phase face amount until the forceouts disappear.Click <Run Illustration>, print and save 10
10 Steps to a Perfect Illustration BONUS STEP: Save and Duplicate To use the illustration as a template, click <My Cases> Use the dropdown menu to select <Duplicate> This will create a new illustration while preserving a copy of the original case.