Child Whole Life

CHILD WHOLE LIFE

insurance protection

Children's permanent life insurance allows you to protect the financial future of the important children in your life at an affordable price.

This plan includes low childhood rates that will never increase and coverage that stays in force throughout each child’s life, regardless of how their health changes and as long as premiums are paid.

BENEFIT AMOUNTS

Whole Life coverage is available for either $10,000 or $20,000

CASH VALUE

The coverage is a whole life policy, so it builds cash value that can be used in the future for your family’s financial needs

ISSUE AGES

Coverage is available for children from ages 15 days to 18 years

NO WAITING PERIOD

Once your application is approved, FULL protection starts the first day the policy is issued

SIMPLIFIED ISSUE

A simple application will determine eligibility

Financial Security:

Family Heritage is proud to be rated by A.M. Best as an “A” (Excellent) company. This rating is based on the latest analysis of Family Heritage’s financial strength, management skills and integrity.

Child Whole Life

MONTHLY Premium Rates

CHILD'S AGE AT ISSUE $10,000 WHOLE LIFE $20,000 WHOLE LIFE
Female Male Female Male
0* to 5 $4.00 $4.40 $7.00 $7.80
6 to 10 $4.75 $5.25 $8.50 $9.50
11 to 15 $5.50 $6.25 $10.00 $11.50
16 to 18** $7.25 $8.00 $13.50 $15.00

*Minimum age for a Child is age 15 days old

**Maximum age for a Child is age 18 years and 364 days old

Limitations & Exclusions:

If the insured commits suicide, while sane or insane, during the first two years that the policy is in-force, the benefit will be limited to the premiums paid (less any outstanding policy loan debt).

The benefits described in this brochure are contained in policy series L6POL

This brochure is not an insurance contract. The policy explains in detail the rights and obligations of both Family Heritage and the policyowner. It is important to read your policy carefully.

Simplified Underwriting. Only Better.

Get your clients up to $250,000 in death benefit protection without medical exams. Pacific Life’s Simplified Underwriting (SUW) offer(1) makes cash value life insurance coverage simpler than ever.

Which of my clients would qualify?

What are the offer details?

How do I get started?

Just follow these 4 simple steps:

1

Submit a simple form*
and signed illustration

2

Use the Interview Checklist* to help your clients prepare for the telephone interview

3

A BDLife212
representative will
conduct a short
telephone interview

4

We’ll review all case
information and
make the offer

Option to Get up to $3 Million Coverage with No Medical Exams

Your highly compensated clients can get up to $3 million in life insurance coverage
with no medical exams using our Executive Class Simplified Underwriting Program.**

** Eligibility for Executive Class Underwriting is based on health, age, income ($200,000+ annual income), occupational risk, and other factors. Additional
requirements may be requested, depending on answers to medical and nonmedical questions in the application. Policy must be a life insurance with accumulation
design (minimum non-modified endowment contract death benefit (level or increasing) with premiums illustrated at least the 7-Pay Premium or 90% of the
Guideline Level Premium.

All riders(2) are available EXCEPT the following:
• Accidental Death Rider (Form #R84-AD)
•Annual Renewable Term Rider-Additional Insured Rider (Form #R08RTA)
•Children’s Term Rider (Form #R84-CT)
•Disability Benefit Rider (Form #R84-DB)
•Guaranteed Insurability Rider (Form #R84-GI and #R93-GI)
•SVER Term Insurance Rider–Trust/Executive Benefit, SVER Term Insurance Rider–Corporate (Form #R09SVERT, ICC12 R12SVC or R12SVC)(3),(4)
•Waiver of Charges Rider (Form #R84-WC & R08WC)

1 Pacific Life reserves the right to order additional requirements as determined by the underwriters. Only one Simplified Underwriting program per insured.
2 Rider availability varies by product. Please refer to the respective product guide for more details. Riders will likely incur additional charges and are subject to state availability, restrictions and limitations. Clients should be shown policy illustrations with and without riders to help show the rider’s impact on the policy’s values.;
3 Form number based on state and product in which policy is issued.
4 In some states, this rider is called the Term Insurance Rider and Term Insurance Rider—Trust/Executive Benefit, or Term Insurance Rider—Corporate.;

Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or
make recommendations regarding insurance or investment products.

Knighton – Consulting and Planning with New IRC §199A

CONSULTING AND PLANNING WITH IRC §199A

Original Article by Jay Knighton Board Certified Estate Planning and Probate - Texas Board of Legal Specialization

As we transition deeper into 2018, more and more clients are seeking our advice
regarding strategies involving IRC §199A. One common theme that I want to bring to your
attention (personally and professionally) involves the interplay between owner salary and profits.
My goal for you in reading this paper is to provide you with consulting tools that will help your
clients not only reduce their taxes, but also to create additional cash flow that will help them
accomplish personal and business goals. This paper:

Perspective

This year I seem to have one meeting after another whereby the client measures business
success by how much they, as an owner, pay themselves. Practically every week of the year this
year, I have met with a business client, reviewed the client’s Profit and Loss statement, and
realized that the client is paying himself a significant amount in salary. I explain that if the client
owns the business, the client should focus more on profit than salary. The client typically looks
at me very confused and states something along the lines that he needs $300,000 to live on, so he
takes $300,000 as salary, leaving little to nothing for profit.

That reasoning is backwards. I am sure that everyone reading this realizes that a business
should manage to profit and not to an expense number like salary. Yet I have met with dozens of
businesses in the first five months of the year, successful businesses, mind you, that do not
manage to profit, but instead manage to a set salary.

Managing to a salary is a poor business management strategy regardless of this new IRC
§199A, but in general, is poor strategy looking forward due to several other reasons that I will
briefly list as follows:

We are focused on the new IRC §199A, so I will not delve much into the above points.
So what does IRC §199A have to do with salary and its interplay with profits?

IRC §199A

In order to understand how clients can utilize IRC §199A in a way to maximize its
benefits, below I will explain 5 concepts. Each concept leads into the next concept, so beginning
with the fundamental business equation is the foundation for understanding the end result of the
planning.

Concept #1 – Fundamental Business Equation

Every business taxpayer should have a good idea of its industry Profit Margin (Profit divided by
Revenue), then manage the business in a way to attain that average Profit Margin or exceed it.
Likewise, every business taxpayer should at least roughly understand the percentage of revenue
necessary to cover payroll, as well as the industry average for the business.

Concept #2 – Reasonable Salary

Every business owner who is also an employee should pay himself a reasonable salary.
The pertinent case is David E. Watson, P.C. v. United States, whereby the IRS established that
businesses must pay owner-employees a reasonable salary. Historically, the IRS has generally
accepted the wage base amount for social security as a reasonable salary. The 2018 wage base
amount is $128,400. Various industries may require adjustment to that amount, but for
discussion purposes, I shall focus on that amount.

Concept #3 – Medicare Tax of 2.9% Applies to Salary in Excess of Reasonable Salary

The combined employer/employee Medicare Tax of 2.9% applies to all salary in excess
of the $128,400 wage base. If a client is both an owner and employee, that 2.9% tax reduces
profit. In simple math, for every $100,000 of salary that exceeds the reasonable salary threshold,
the owner’s profit reduces by $2,900.

For entities taxed as an S corporation, if the owner-employee pays himself a reasonable
salary, the Internal Revenue Code does not levy employment taxes upon distributions of net
income (distributions of net income = profit). If an owner-employee pays himself more than a
reasonable salary, the owner is volunteering to pay employment taxes.

Assume for purposes of discussion that a reasonable salary is $128,400, which means that
for every $100,000 of additional salary over and above the reasonable salary standard, the owner
is paying $2,900 in employment taxes.

Concept #4 – Four Simplified Rules for Understanding and Applying IRC §199A

The analysis under Section §199A strictly applies to entities taxed as partnerships, S
corporations, and disregarded entities (LLCs or sole proprietorships). Entities taxed as C
corporations already received their tax benefit in the form of the 21% flat income tax rate.
(although for closely held C corporations, that 21% flat rate is often not a benefit). I am reluctant
to disrupt the flow of this paper, so I included the IRC §199A phase-out analysis and examples to
an Exhibit attached to this paper. Yet, for comprehension purposes as it pertains to this topic,
below please find the relevant rules.

Rule One:

The business must be taxed as a partnership, S corporation, or disregarded
entity. Businesses taxed under one of those three methods are known as “Qualifying
Businesses”. The planning contemplated by this paper focuses only on S corporations.

Rule Two:

If the business is a Qualifying Business, the business is entitled to a
deduction equal to 20% of the business’s Qualified Business Income (“QBI”). QBI is defined as
the net amount of items of income, gain, deduction, and loss with respect to the business. For
discussion of QBI, think “profit”.

Rule Three:

Phase-outs apply! The above two rules sound fantastic until you get to the
limitations. For individual taxpayers with taxable income greater than $157,500 ($315,000 for
joint filers), QBI from a “Specified Service” business begins to phase-out. A “Specified Service”
business is a business involving the performance of services in the fields of health, law,
consulting, athletics, financial or brokerage services. If the business is not a “Specified Service”
business, Rule Four provides the applicable phase-out.

Rule four:

For non-“Specified Service” businesses, Individual Taxable Income is
greater than the threshold of $207,500. For joint filers, Taxable Income is greater than $415,000.
For taxpayers with taxable income more than those thresholds, as long as those taxpayers are not
determining their QBI from a Specified Service Business, we must apply a completely different
phase-out. This phase-out is based either on: (1) wages paid; or, (2) wages paid plus a capital
element.

In this situation, the deduction for QBI cannot exceed the greater of:

  • 50% of the W-2 wages paid with respect to the Qualifying Business; or
  •  25% of W-2 wages + 2.5% of the unadjusted basis immediately after acquisition
    of depreciable property used in the business (including real estate).

Concept #5 – IRC §199A Applies to Profit

Consider our friendly client who pays himself a large amount in wages and salary, which
reduces profit. By paying himself a large salary, the client is negating the benefit of the 20%
reduction of Qualified Business Income via the new IRC §199A.

Example

Based on the five Concepts above, let us apply the Concepts to the following real life
example:


Client owns an LLC taxed as an S corporation. Client is a professional service provider such that
his business falls squarely in the possible exclusion of Rule Three under IRC §199A. Client is
married and files jointly with his wife. He gave himself a raise this year to $300,000, and strives
to receive profits of approximately $15,000. When asked why client pays himself such a high
salary, Client informed me that $300,000 in salary is the amount he needs to make in order to
sustain his lifestyle with profit, if any, going toward savings.


Assume Client’s income tax rate is 25%.

  1. Current Tax Effect:
    • Client pays employment tax on $300,000 of wages and salary, which equals $24,621.60.
    • Client pays income tax on $300,000 wages and salary, which equals $75,000.00.
    • Client pays no employment taxes on profits.
    • Client gets to reduce his profits from his S corporation by 20%, thus pays income tax
      only on $12,000 of profits.
    • Client’s income tax on $12,000 of profits equals $3,000.
    • Client’s earnings equaled $315,000. After taxes, Client was able to deposit in his bank
      $212,354.80.
  2. Adjusted Facts to Fully Utilize §199A:
    • Instead of the above, let’s consult with the client and encourage him to pay himself
      $130,000 as a reasonable salary with the remainder managed to produce a profit of $185,000.
    • Client pays employment tax on $130,000 of wages and salary, which equals $19,691.60.
    • Client pays income tax on $130,000 of wages and salary, which equals $32,500.
    • Client pays no employment taxes on profits.
    • Client gets to reduce his profits from his S corporation by 20%, thus pays income tax
      only on $148,000 of profits.
    • Client’s income tax on $148,000 of profits equals $37,000.
    • Client’s earnings equaled $315,000. After taxes, Client was able to deposit in his bank
      $225,808.40.

The above example illustrates a difference of $13,453.60 AFTER TAXES. As my wife
says, you can do a lot of things with an extra $13,453.60! In fact, the client could use that
$13,453.60 to fund an IRA, acquire key-man life insurance for business succession planning, pay
down lines of credit, position the business (due to increased profit) for a future sale, a nice family
vacation, or a host of other possibilities.

The Real Deal – “When I’m 65 PBS Documentary”

Who agrees that the golden years are stretching into golden decades?  One of the colleagues in this documentary made a statement that really stuck with me.  When asked why she wanted to be a part of this documentary she said, “Education, like this documentary film, can and does pave the way for people to become more comfortable with the financial jargon and aware of the consequences of not taking action.”

Products & Services

We specialize in assisting Independent Broker Dealer and their Financial Planners/Advisors in the development and service of Life insurance. We ask that you view us as an integral part of your team providing you and your clients life insurance expertise and services that encompass the entire process from initial analysis to post placement service. As importantly, we specialize in knowing where and why the product fits within the integrated financial plan you’ve designed with your client be they an Individual, Family or Business.

Why BDLife212?

We want to emphasize that BDLife212 is not simply another life insurance brokerage firm. You don’t need that. BDLife212 is a culture and process that was build for you – the Financial Planner/Advisor. We think of ourselves as your staff for all matters relating to Life Insurance, Annuities, Long Term Care and Disability Income. We are about making a difference. Providing that “extra degree” of support that results in a positive experience for you and your client.

About BDLife212

BDLife212 has created a culture and process that provides you that extra degree of focus, expertise, responsiveness and efficiency in support of your life insurance activities. We are dedicated to forming quality partnerships which result in a positive experience for you and your client and which fulfill, in a meaningful and appropriate manner, the insurance needs of your client. The extra degree makes all the difference.

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