Programs for:

Business Owners
 Today’s Agenda

 Programs for:
 Business Owners
 What the Programs are:
 Financed Planning for Business retirement
 How the Programs work:
 Overview of the Programs
 Case Study:
 Paul Smith

 The Business Owners’ Challenge

• 47% of Business Owners surveyed

indicated that they do not believe that
they are financially prepared for their
retirement1
• 68% of Business Owners believe that they
will live below their current lifestyle when
they retire2
So, what’s the challenge?

1 Harris Interactive on behalf of Sharebuilder 401(k)

2 LIMRA, 2006
 Phases of the Entrepreneurial Business

Maturity
Expansion

Growth
Startup

Limited Excess Excess Cashing

Excess Money Funds Out
Money Reinvested Available Phase
Selling the Business: The Perception

Most Business Owners believe that

they will sell their business
to fund their retirement –
if they retire, that is

Unfortunately…………
 Selling the Business: The Reality

Approximately 1.2 million

viable businesses go on the
market for sale each year

Nearly 3/4 of these fail in their

efforts to sell

Most of the businesses sold

end up selling for much less
than their expected Market
Value, and in many cases,
below their Asset Value
Source:
2005 Business Reference Guide, 13th Edition (West)
 The Entrepreneur’s Dilemma: Restrictions

Government Mandated Restrictions

Retirement Health
 The Answer

Programs:


• designed solely for you, the Business Owner,

• that use your business checkbook,
• that allow for large sums of money to grow
tax deferred,
• that are tax efficient and cost effective, and
• that will create less risk and more stability in
your portfolio
What the Programs
are:
Financed Planning
 Rule of 72

The Rule of 72
How long does money take to double?
Divide 72 by the assumed rate, the result is $4M
the number of years until a sum doubles.

$2M
$1M
$500K

$500K $500K $500K $500K

0 Years 10 Years 20 Years 30 Years
Assumptions: Net Book Value of Business - $500K Interest Rate – 7.2%

Note:
Hypothetical results for illustrative purposes only and not a representation of past
or future results.
 Compressed Time Frame Concept

Accelerated Funding
Choice 1 - $ 16,667 per year X 30 years = $500,000
Choice 2 - $ 50,000 per year X 10 years = $500,000
Choice 3 - $500,000 only once X Today = $500,000

$16,667 $1,684,584
$50,000 $2,860,393
$500,000 $3,808,127

Today 30 Years
Note:
A hypothetical crediting rate of 7%. Represents approximations and should not be relied upon as tax or investment
advice. The performance of financial products fluctuate over time. The actual time to achieve any result cannot be
predicted with certainty.
 Compounding with Real Estate

7%
average annual growth
over 20 years

Asset Value = $500,000 Asset Value = $1,934,842

$500k Mortgage
7% $500k Mortgage
Interest-Only
$35,000 annual cost

Point A Point B

$1,434,842 gross gain - $700,000 interest cost = $734,842 Net Gain

Note:
This is a hypothetical example, not indicative of actual results. Actual results will vary.
 The Stability of Equity Indexed Products

Allows client to participate in market upside

No downside risk to principal and prior period
Annual
earnings Crediting $1,134,000
Annual Crediting 5%
0%

Annual $1,080,000
Crediting Needed to
8% Catch Up
14.12%
$1,000,000 Market Down Turn $993,660
- 8%

Keep in mind…
If you received the 5% as shown in this example on the $993,660, you would
have a total of $1,043,343. That is a $90,657 difference because of the
guaranteed floor.
 How the
Programs Work:
An Overview
 Program Overview
Step 1 Step 2 Step 3
Commercial Loan Transfer Method Asset Funding

Universal Life
and/or
Annuity
Products

Client Business

Client Business

Global One Financial

 Recent Cases

Industry Case Size

• Furniture $200,000
• Dentist $600,000
• Doctor $2,400,000
• Nuts & Bolts $1,000,000
 ***Almost all Business***

 Case Study:
ABC Company
Case Study – ABC Company
Summary – Paul Smith
 Solution – Paul Smith
ABC Company implements a Financed Planning™ program in the
amount of $600,000.

•
The $600,000 is placed into an Equity Indexed Annuity, owned by
Paul Smith (assumed annual tax deferred earnings of 7%).

•
ABC Company makes interest payments of approximately

$40,500 annually (assumed interest rate of 6.75%).

•
After 13 years, Paul’s annuity value will have grown to $1,445,907,
which gives Paul an income in the amount of $115,957 per year

for
25 years.

•
(This example assumes that the loan is repaid at retirement using assets that are not part of the program’s

 Equivalent Yield – Paul Smith

ABC Company makes interest payments for the Program

of approximately $40,500 annually.

If the company were to distribute this amount to Paul directly, he

would have to pay income tax at 35%, leaving him with $26,325
per
year to invest.

Paul’s investment of $26,325 per year for 13 years would have to

earn an annual rate of return of 19.26% in order to provide the
same annual income of $115,957 for 25 years.
 Value and Benefits…

• Provides alternative to traditional retirement

plans
• Allows catching up on retirement planning
• Provides asset protection opportunities
Program Structure - Asset
Protection
Corporate Level
In order to make a loan with no personal guarantee,
we lend directly to the corporation and place a lien
on certain corporate assets. This may limit the
attractiveness for a potential law suit.

Individual Level
The product is owned by the individual, not the
corporation. If the corporation is sued, this is not
its asset.

Product Level
This level depends on the state you sell in. State law
defines the level of protection regarding cash value
and policy attachment by creditors.
The Next Step

For more information contact

John A Weisenberg
Senior Finance Manager
240-462-8296
saw101@msn.com