1 Planning for Financial SecurityRisk Management Photo collage Planning for Financial Security Hello my name is [insert your name], your VALIC financial advisor. Welcome to the Risk Management presentation. Thank you so much for taking the time to be here. [Name of presenter] [Title of presenter]

2 1 Identifying risk 2 Managing risk 3 Action steps AgendaHere are today’s topics [read agenda.] In today’s session you will learn about: How to identify and manage risk The importance of insurance protection The cost of procrastination At the end of my presentation, I would sincerely appreciate your feedback. The seminar evaluation form is an insert in your workbook [presenter, you may ask the audience to tear it out now so it is ready at the end of the presentation]. Please complete it and leave it with me when the session ends. Thank you in advance for your feedback.

3 Identifying risk A key component of sound financial planning involves protecting yourself from unforeseen losses that could jeopardize your income and assets.

4 What risks do you face? Identifying risk Types of risks Auto accidentHurricane Illness Floods Disability Earthquake Death Windstorms Fire/arson Theft Lawsuit Unemployment We have all heard the saying: When it rains it pours. Life’s unexpected events seem to happen at the most inopportune times. Although it’s never a good time for a disaster, you can at least take preventive measures before one occurs to help reduce the damage in your life and for those who depend on you. Here’s a list of a few risks that you may face at some point in your life. Can you name any others?

5 RISK What is risk management? Assess Re- Identify Manage MeasureIdentifying risk What is risk management? Risk management process Assess Re- Identify RISK Manage Measure [This slide has automatic animations. Click for each stage.] Risk is closely tied to uncertainty and measures the likelihood that something bad will happen. Risk management is the process of assessing this risk and developing strategies to manage it. It involves identifying the risk and determining the expected consequences with the ultimate goal of avoiding or minimizing harm. It makes sense to reevaluate your risks periodically, particularly when there are changes in your circumstances, family or finances.

6 RISK Ways to manage risk Reduce Avoid Accept Transfer Identifying risk[This slide has animations.] How will you manage the risks in your life? There are four ways you can manage risk. Let’s use the risk of driving a car as our example: [Click to reveal each stage] You could avoid the risk of an auto accident by just not driving at all. If you decide to drive, you could reduce the risk of an accident by not driving on the freeway. You may choose to accept the risk of an accident or car trouble by setting aside enough cash reserves to cover any loss you may experience, or You may decide that it’s more feasible to transfer the risk by purchasing insurance to protect against the loss. Because most insurance policies have a deductible, auto insurance is typically a combination of transference and reduction. Next, we’ll discuss the different types of insurance necessary to manage risk. 6

7 Managing risk Personal risk is different for everyone, and you need to have contingency plans in place to help you handle risks. One of the ways you can help protect yourself personally and financially is by purchasing insurance.

8 $ $ $ RISK RISK RISK Transferring risk You You Insurance companyManaging risk Transferring risk You You Insurance company $ RISK Hurricanes Floods Auto accidents Fire Disability Earthquakes Windstorms Theft Illness Death $ RISK Hurricanes Floods Auto accidents Fire Disability Earthquakes Windstorms Theft Illness Death $ RISK Hurricanes Floods Auto accidents Fire Disability Earthquakes Windstorms Theft Illness Death Insurance is probably one of the most important components of your risk management plan. By purchasing insurance, you can transfer your personal risk to a third party — the insurance company. An insurance policy serves to protect you against liability. The amount of insurance you need in any given area depends on your individual circumstances and needs. You pay the insurance company premiums in return for accepting some or all your risk. It’s important to note that you are paying to protect yourself from risks that may never impact you. What if you’re never in a car accident, and the tornado misses your house? It may seem strange, but insurance is a product that you purchase and hope to never use. What if you pay for flood insurance, for example, and it never floods? Aren’t you paying for a service you don’t get to use? Actually, when you buy insurance, you are paying to protect yourself from risk. That’s the service you are using, even if you never end up with a claim. What if these events don’t occur while you’re covered?

9 Did you know? Managing riskA client of Heidi Klum’s once insured her legs for $2 million. [Optional slide.] [This slide has animations.] Today, it’s possible to insure against just about any kind of risk. For example, Heidi Klum, supermodel and "Project Runway" host, had her legs insured by a client for $2 million. Interestingly, because she has a scar on one leg, her legs aren’t equally valued. Her right leg is actually worth a little more! David Beckham, the world-renowned former soccer player, once had his legs insured for $70 million! Fortunately, neither of these insurance policies paid off. So what types of insurance are available to manage risk? Source: Businessinsider.com. 20 Celebrities Who Insured Their Body Parts For Millions. March 5, 2012. David Beckham’s legs were insured for $70 million.

10 Types of insurance Managing risk Life Health Disability LongevityLong-term care Longevity Home Liability Auto [This slide has automatic animation.] Unless you’re a celebrity, you may find these types of insurance more practical… [Review slide.] With each of these, your focus should be on maintaining reasonable costs while protecting yourself against catastrophic losses. Over time, the amount of insurance we need or our exposure to risk may change. Conducting an annual review of your coverage can help you ensure that you’re not paying too much for too little. Also, you may find that new forms of insurance and improved policy features have become available. Let’s look at these common types of insurance more closely.

11 Auto insurance Did you know?Your credit score impacts your insurance rates. – Kelley Blue Book, 2014 You’re probably already familiar with auto insurance. One of the most common facts is that no matter what state you live in, you are required to carry auto insurance on any registered vehicle. The biggest difference is the amount and/or type of insurance that you might be required to buy. And while you are shopping around, keep in mind that your credit score impacts your insurance rates. Insurance providers have found that certain credit characteristics — such as age, driving record and claims history — are useful to predict how likely it is that the individual will have an insurance claim. So what are the different types of auto insurance coverage available? Source: Five Things You Might Not Know about Car Insurance, Kelley Blue Book, 2014.

12 Auto insurance Managing risk Types of coverage ConsiderationsLiability  Deductible Medical  Discounts Uninsured motorist  Comparison shopping Collision Comprehensive Average monthly cost of auto insurance $ 125* Liability coverage is the most common type of coverage available under an automobile insurance policy. With this coverage, your insurance company pays out to others on your behalf for bodily injury and property damage if you were found at fault. This coverage also covers any legal bills you may incur. With medical coverage, your insurance reimburses you and any passenger(s) in your car for medical payments related to injuries sustained, regardless of liability or fault. Uninsured motorist protection pays you if the at-fault party in an accident was uninsured or underinsured. With collision coverage, your insurance pays you for accident-related damages to your car. It is often the most expensive component of automobile insurance. As opposed to collision, comprehensive coverage pays you for non-accident related damage to your car. This would include damage from vandalism, theft, glass breakage and other natural damages. When purchasing auto insurance you must consider its applicable deductible, which is the out-of-pocket amount you will have to pay for damages before the insurance company pays to repair your car. The higher the deductible you’re willing to fund yourself, the lower your premium will be. However, avoid choosing a higher deductible just to lower your premiums; you don’t want to find yourself unable to afford the deductible if you were to incur damages. Another great way to save on your automobile insurance is if you qualify for discounts for circumstances such as insuring multiple cars with the same provider, maintaining a good driving record or having certain safety features on your car, like anti-lock brakes and/or a backup camera. These discounts can often reduce your premiums by as much as 25% or 30%. Finally, shopping for competitive quotes—for any type of insurance—is always a good idea and a great place to start. *Average among 50 states and the District of Columbia. Source: Average Cost of Insurance: Car, Home, Renters, Health, and Pet (2017). Valuepenguin.com. 12

13 Auto liability Managing riskWithout auto insurance, you might be responsible for the following expenses if you were in a car accident: Auto repairs or replacement Medical bills Fines and legal fees [This slide has animations.] If you were involved in a car accident and didn’t have auto insurance, you will be liable for expenses related to [click for expenses to appear]: auto repairs or replacement, medical bills and even legal fees. The extent of liability depends on whether you were at fault and the state in which the accident occurred. If you were injured in a car accident caused by the other driver but did not have your own car insurance, there may still be certain restrictions on what you can recover against that driver. Several states have a rule called “No Pay, No Play,” where drivers without valid automobile insurance at the time of an accident are limited in the types of compensation they can receive for injuries. For example, you might be reimbursed for your medical bills, but not "non-economic" damages, like compensation for pain and suffering. The rule is meant to ensure that uninsured drivers in an accident can’t claim the full benefits of insurance they themselves are unwilling to provide for the benefit of other drivers. Many states also impose criminal or administrative penalties. Almost every state will fine uninsured drivers in accidents hundreds or even thousands of dollars. Plus, the Department of Motor Vehicles in most states will impose penalties that include driver’s license suspension or revocation, usually from a few months to a year. And if it’s a severe or fatal accident, incarceration is also a possibility. So, with the time, expense and inconvenience associated with a car accident, especially for the uninsured motorist, isn’t it worth it to mitigate your risks? How do the costs related to potential risks compare to the cost of insurance? 13

14 Homeowners insurance Did you know?Standard home insurance policies don't cover flood damage. – Insurance Information Institute, 2014 Now, let’s discuss the risks to your home. Your home may be your biggest investment, so it is important to properly protect it. That’s where home insurance comes in. It helps protect your dwelling against unexpected loss of property and personal belongings. But did you know that not all disasters, such as flood damage, are covered by a standard home insurance policy? Let’s review the different types of home insurance coverage available. Source: What Is Covered by a Standard Homeowners Policy? Insurance Information Institute, iii.org, 2014.

15 Homeowners insurance Managing risk Types of coverage ConsiderationsDwelling  Consider additional riders Other structures  Review your policy annually Personal property  Maintain adequate coverage Loss of use Comprehensive personal liability Medical The types of home insurance coverage include: Dwelling insurance, which covers anything involving the physical structure of your home, such as flooring, roofing, doors, cabinets, appliances, and light fixtures. However, it will not cover natural wear and tear and deterioration. Other structures insurance covers unattached structures from the main home foundation such as detached garages, sheds, fences and guest quarters. Personal property insurance covers damage to, or loss of, personal property such as household contents and other personal belongings used, owned or worn by you and your family. Loss of use insurance covers additional living expenses incurred when having to temporarily shelter elsewhere when your home is damaged beyond normal living conditions or while repairs are underway that force you out of the house. Comprehensive personal liability insurance protects you against claims arising from accidents to others on property that you own or rent. Medical expense insurance pays the medical bills of people from outside your household who are accidentally injured while on your property or by you or a household member, including a pet, whether on your property or elsewhere. This coverage is paid out regardless of legal liability. If you think you might need additional protection beyond what your base insurance policy coverage offers, you may consider adding a “rider” to your policy for an additional cost. Some of the most common riders provide protection for high priced personal property, a home business, income property or secondary residence or recreational vehicle. They also protect against natural disasters such as flood or earthquake, additional theft, sewer and drains back-up and even inflation. Keep in mind that factors such as the age of the home, its location and the type of construction may affect your insurance premium. You should review your homeowners policy on an annual basis to help ensure that you have adequate coverage that reflects higher home values or replacement costs. Average monthly cost of homeowners insurance $ 77* *Average among 50 states and the District of Columbia. Source: Average Cost of Insurance: Car, Home, Renters, Health, and Pet (2017). Valuepenguin.com.

16 Homeowners liability Managing riskWithout homeowner’s or renter’s insurance, you could be personally responsible for the following expenses: Repairs due to negligence or natural disasters Loss of personal belongings (due to damages, theft or vandalism) Medical expenses (you, family members or others) Legal fees [This slide has animations.] If you own a home or rental property and it is not properly insured, you will be responsible for expenses such as related damages to the home or people that were affected by issues in the home (whether family members or others). Among these expenses are [click for expenses to appear]: costs for damages resulting from negligence or natural disasters; loss of personal belongings (either due to damages, theft or vandalism), medical bills for any injuries, legal fees resulting from any lawsuits. How do the costs related to potential risks compare to the cost of insurance?

17 Health insurance Did you know?You can deduct medical expenses not covered by your health insurance. – Insurance Information Institute, 2014 Now let’s talk about your personal health protection. Leading a long life in good health is the ideal. Unfortunately, that’s not the reality for most. Maintaining a healthy lifestyle is important but can be rather costly if you become severely ill, possibly even depleting a lifetime of savings. Health insurance can assist with the risk of not having enough funds to pay for major out-of-pocket medical expenses. And if your health insurance does not cover certain medical and dental expenses, you might even be eligible to deduct them on your income tax return if they add up to more than 7.5% of your annual gross income. Let’s review the different types of health insurance plans and coverage. Source: Can I deduct the medical expenses that my insurance does not cover on my income tax return? Insurance Information Institute, iii.org, 2014.

18 Health insurance Managing risk Types of coverage ConsiderationsTraditional  Your family’s specific needs Managed care  Expected future needs Supplemental  Current coverage Average monthly insurance premium $ 321* Most of us receive health insurance through an employer. Health insurance can be broken down into two broad categories: traditional and managed care. With traditional insurance, you can select any doctor or hospital at the time service is needed, and the provider bills you each time you receive care or treatment. With this service you pay higher out-of-pocket expenses and there’s often a cap on the amount of benefits you can receive over your lifetime. Managed care plans involve an arrangement between the insurer and a selected network of healthcare providers in which policyholders receive significant financial incentives to use in-network providers. The three major types of managed care plans are PPOs, HMOs and POSs. Preferred Provider Organizations (PPOs) incent you to seek services in-network. For a higher co-pay, you can refer yourself to a specialist without preapproval. Point-of-Service (POS) is similar to PPOs, but you must choose an in-network Primary Care Physician (PCP). Seeing a specialist will most likely require a referral from your PCP. Going out of network will mean higher out of pocket expenses. Health Maintenance Organizations (HMOs) are the least expensive and least flexible of these plans. You can only see in-network doctors, and you need a referral from your PCP before seeing a specialist. You may also need clearance before visiting the emergency room. You may wish to purchase supplemental insurance to cover specific events or conditions, like accidental death and dismemberment, cancer or other critical illnesses or conditions. This type of insurance is designed to help bridge the financial gap between health insurance that pays medical costs, disability insurance that makes up for lost income and additional costs associated with a major illness. Purchasing supplemental insurance may be impacted by the following: Your health, age and gender Your family history – do you have a family history of heart attack, stroke, cancer, etc.? Your lifestyle – do you smoke, engage in high-risk activities such as sky diving or racecar driving? *Average among 50 states and the District of Columbia, during November 2015 – January open enrollment period. Source: eHealth, Health Insurance Price Index Report Open Enrollment Period October 2016.

19 Healthcare liability Managing riskWithout healthcare insurance, you might be responsible for the following expenses: Fine for the uninsured Doctor visits Ambulance/emergency room fees Hospitalization Procedures/surgeries Examination/testing Medications [This slide has animations.] The rising cost of health insurance leads many consumers to go without coverage. About 29 million people in the United States have no health insurance.1 Having no health insurance also often means that people will postpone necessary care and forego preventive care and are more likely to be hospitalized for health conditions that could have been avoided. Programs such as Medicare, Medicaid and CHIP can assist those who qualify. However, if you can afford insurance, by law under the Affordable Care Act, you must carry health insurance coverage or face a fine when you file your income taxes. For the 2016 and 2017 tax years, fines are either 2.5% of your household income or $695 per adult ($ per child), whichever is higher.2 This is in addition to any medical expenses you incur while uninsured. Some may choose to pay the penalty and take a chance on facing a medical situation, some of which may include [read list]. So if this is you, how much might taking a chance cost you? The average cost of ambulance transportation ranges from $500 - $1,500, and an inpatient hospital stay for a day can average more than $4,000.3 And that’s just for one visit! Keep in mind that charges vary depending on your state. Sources: 1Health Insurance Coverage in the United States: Current Population Reports. United States Census Bureau. 2If you had no Health Coverage. Healthcare.gov. 3Paying Till it Hurts: E.R. Visit. As Hospital Prices Soar, a Stitch Tops $500. Nytimes.com. Retrieved July 9, 2014. A hospital stay could average more than $4,000 per day!

20 Healthcare liability Managing risk The cost of being uninsured JackAnnual salary $ 50,000 Medical expenses $ 4,890 Uninsured penalty + $ 1,250 So let’s use a hypothetical example of Jack, a young uninsured man living in New York City who earns $50,000 a year. Although his income might seem low by New York standards, it’s still slightly too high for subsidized insurance coverage. Let’s say Jack throws his back out while at home exercising and the related treatment, including an exam, xrays, therapy and typical medical and prescription expenses, totals about $4,890. If you add in the $1,250 uninsured penalty (which is 2.5% of his annual household income) his total outlay for the year reaches $6,140. That’s about $2,300 more than the average annual insurance premium of $3,852! [$321 per month, x 12 = $3,852.] So, the cost to pay out of pocket for a one-time medical situation is much higher than if he had chosen to insure. Outlay for the year = $ 6,140 This is just a hypothetical example. The annual uninsured penalty is calculated from 2.5% of annual household income. 20

21 Disability insurance Did you know?Employers are not legally required to offer long-term disability coverage. – Insurance Information Institute, 2014 So what if your health deteriorates or you incur injuries that deem you disabled? Your disability could impact your ability to earn an income at a time when your medical expenses can increase considerably. Think about it: if you were injured and unable to work for six months, who would pay the mortgage and the bills and otherwise meet your financial obligations? This is where disability insurance can help. Keep in mind that, although most employers offer some kind of disability insurance, they are really not required by law to offer this coverage. It is important that you find out exactly what your employer offers before you have to file a claim. Let’s review other important facts. Source: Will my employer provide disability coverage? Insurance Information Institute, iii.org, 2014.

22 Managing risk Disability insurance Did you know? Approximately 54 million Americans have at least one disability The unemployment rate for people with disabilities is 10 times greater than the national unemployment rate By age 65 you are more likely to become disabled than to die Unfortunately, disability insurance is an important area of coverage that’s overlooked by most people. Did you know that: There are approximately 54 million Americans with at least one disability, making people with disabilities the nation's largest minority group. The unemployment rate of people with disabilities is ten times greater than the national unemployment rate. By age 65 you are more likely to become disabled than to die. The first step in determining your need for disability insurance is to take a hard look at what amount of your income is necessary to maintain a reasonable standard of living. Also, you might want to take into consideration any offsetting resources you may have such as sick leave or vacation balances that would continue your income while you are off work. Disability insurance will provide income in the event that you become disabled and are unable to work. Source: Disability Funders Network, Disability Stats and Facts. Retrieved January, 2017. 22

23 Disability insurance Managing risk Types of coverage ConsiderationsShort-term  Definition of disability in the policy Long-term  Benefit payouts  Cancellation and renewal terms  Employer group benefits  Inflation adjustment feature  Exclusion and benefit period The two primary types of disability insurance include: Short- term insurance coverage provides income replacement protection, usually after one week of disability, and will pay for up to six months. Long-term insurance coverage kicks in generally at the six-month mark and continues until age 65. If you have disability insurance through your employer, you probably have only long-term disability coverage, and typically the coverage ranges between 60% and 70% of your current gross salary. If you are considering purchasing disability insurance on your own, expect to pay between 1% and 3% of your annual salary. Keep the following items in mind: [Read the slide.] In the policy, how is disability defined? Does the policy cover accidents and illness? Are benefits paid for partial or recurring disabilities? Are full benefits paid after loss of sight, speech, hearing or use of limbs? Is the policy non-cancelable, guaranteed renewable or conditionally renewable? How long must the worker be disabled before premiums are waived? Is there an option to buy additional coverage, without evidence of medical insurability, at a later date? Does the policy offer an inflation adjustment feature? Once you have decided to purchase disability insurance, consider looking for options to save money on your policy by minimizing the amount you insure. Average annual cost 1% - 3% of annual salary Source: Too Young for Disability Insurance? Yeah, Right. Foxbusiness.com, July 30, 2014. 23 23

24 Long-term care insuranceDid you know? Many recipients of long-term care are working adults under the age of 64. – California Partnership for Long-term Care, 2015 You need long-term care if you can no longer perform everyday tasks such as bathing, dressing, toileting, transferring, eating and continence, which are commonly referred to as Activities of Daily Living or ADLs. But did you know that long-term care is not just for the aging? Forty percent of long-term care recipients are working adults under the age of 64. The need for this care can span years and can be expensive depending on the type of care you need and location where that care is provided. Medicare or private health insurance may not pay for most of this care. So how can you afford to pay for these services if you need them? Long-term care insurance is one way of managing the risk that you may need this care by helping to pay for these expenses. Source: Long-Term Care Myths. California Partnership for Long-Term Care, 2015.

25 Long-term care insuranceManaging risk Long-term care insurance Types of policies Considerations Tax-qualified  Activities of Daily Living (ADLs) Non-tax-qualified  Medicare coverage Reimbursement  Timing your purchase Indemnity Cash benefit So what are the different types of long term care insurance policies? They include: A federally tax-qualified policy, which allows you to itemize your medical expenses and possibly deduct part or all of the policy premium. Benefits paid are generally not taxable as income. To be eligible, you must be unable to perform two ADLs without substantial assistance. Non-tax-qualified policies do not allow premiums to be tax deductible and corresponding benefits may have to be claimed as taxable income. Triggers are “medical necessity" and/or other measures of disability. Reimbursement policy reimburses you for the expenses incurred, or up to your policy’s monetary limit, whichever is less. You must meet the need for assistance with ADLs as indicated in your policy. An indemnity policy reimburses you for the full daily benefit amount every day a covered service is received, regardless of the cost for that service. So if your daily benefit amount is $150 a day, and the cost of your covered service adds up to $100, the insurance company will reimburse you the full $150 each day. A cash benefit policy reimburses your daily benefit amount up to your total amount of coverage, regardless of who takes care of you and whether services are provided each day. To ensure eligibility and coverage, it’s important to understand how ADLs are used to assess disability. You should also understand the use of custodial and skilled terms and their application to determine payment of services . Skilled care is health care given by skilled nursing or rehabilitation staff, and services are paid for by a health care plan. Custodial care is assistance with ADLs and services are usually not covered.1 Also be aware that Medicare only pays for approximately 20% of all long-term care costs and less than half of that for institutional care.2 Although age 50 is the recommended age for purchasing LTC insurance, accidents, chronic illnesses and disabilities can occur at any age, requiring the need for long-term care. So, how much does long-term care cost? Sources: 1What is the Difference Between Reimbursement, Indemnity and Cash Benefit Type Policies? Retrieved March 31, 2014. 2Long Term Care. Retrieved March 31, 2014. Average cost of insurance Depends on age and care 25 25

26 The cost of long-term careManaging risk The cost of long-term care Median annual cost 2016 Inflation estimated in 2020 [This slide has animations.] One of the most overlooked retirement costs may be one of the most expensive. Seventy percent of people turning age 65 may need long-term care during their lifetime.1 The majority of Americans underestimate the costs of long-term care, especially nursing home care, and neglect saving for it. This chart shows the median annual cost at different centers of care. Notice the median annual cost for a private room in a nursing home in Now, if we factor in inflation at an annual compound growth rate of 3% [click for inflation data to appear], in four years that same room could cost over $100,000 a year!2 And, even if the care is provided at home, there are still medical costs and routine care expenses that don’t include out-of-pocket expenses to the caregiver for lost wages and benefits. It is estimated that caregivers spend an average of $8,000 per year of their own money when providing care for their loved ones.3 Sources: 1Who Needs Care? LongTermCare.gov. Retrieved March 2016. 2Cost of Long Term Care Survey, Genworth Financial, 2016. 3Senior Care Cost Index. Caring.com. September 2014. Adult Day Care Assisted Living Home Health Nursing Home (Semi Private) Nursing Home (Private) This chart shows the median annual cost for long-term care across the United States in 2016 at different centers of care and the five-year average annual cost at an assumed 3% inflation rate. Sources: Cost of Long Term Care Survey, Genworth Financial, 2016.

27 Monthly savings needed Future cost for 2.5 years of long-term careManaging risk Long-term care insurance Self-insuring Monthly savings needed Future cost for 2.5 years of long-term care In $1,771 $273,447 10 years $906 $367,489 20 years $606 $493,875 30 years The chart assumes continuous monthly contributions with an average annual rate of return of 5%, annual nursing home care cost of $82,100 in 2016 and an inflation rate of 3% for semi-private nursing home care. This chart is hypothetical and only an example. Self-insuring means having enough money to pay privately for future long-term care services. This will often require a dedicated, aggressive and immediate savings plan. The question is, can you predict when you will need long-term care – in 10 years, 20 years or 30 years? [Review chart]. Though you may not require nursing home or other long-term care until you’re in your 80s, be aware that 40% of the people who receive long-term care are between the ages of 18 and 64.1 Also, when you’re considering whether to self-insure or not, it’s important to compare the amount you would have to save annually with what you would have to pay in annual premiums for long-term care insurance. And don’t forget to factor in inflation! Source: 1Long-Term Care Myths. California Partnership for Long-Term Care, 2015.

28 Longevity insurance Did you know?City-living could add years to your life. – What People Who Live to 100 Have in Common Money.USnews.com Have you considered the possibility of living to the age of 100, or even longer? With a growing number of Americans living longer—30% chance for men and 40% chance for women to live until age 901—more time is being spent in retirement than ever before. And if you live in the city, your chances seem to be higher than most. How is that possible? Let’s discuss. Sources: 1Do I really need my savings to last until I’m 100? Chart: Ron Gebhardtsbauer, Smeal College of Business, Penn State University. CNNMoney, cnn.com. Retrieved March 31, Data by the 2010 U.S. Census Report.

29 People are living longerManaging risk People are living longer 66,0001 Number of centenarians in the U.S. 86%2 Percent of centenarians that live in the city 43%3 Percent of workers age 50+ concerned about outliving their savings [This slide has automatic animations.] When we talk about longevity, we’re talking about how long a person might live. Today we are living longer than most ever imagined. Consider that centenarians (people age 100 and older) are a growing segment of the population, with over 66,000 estimated in the U.S.1 But did you know that a large majority live in urban areas? The U.S. Census reported that about 86 percent of centenarians lived in urban areas, compared with 84 percent of those in their 90s, 82 percent of those in their 80s, and 77 percent of those in their 70s. Living in the city might lead to more social networking, mental stimulation and access to better transportation, doctors and hospitals.2 But with longevity comes the concern by many pre-retirees that they could possibly outlive their money. This is a valid concern because the longer you live, the more time there is for various factors (e.g., market downturns, disability, medical expenses, etc.) to affect your retirement savings. According to a study from Boston College’s Center for Retirement Research, fewer than half of American workers will have enough money to retire at 65. If those same people keep working until 70, 86% are likely to be comfortable in retirement.3 So, if you knew that you were going to live past 90 or even 100, what would you do to help safeguard your retirement savings? Sources: 1Annual Estimates of the Resident Population by Single Year of Age and Sex for the United States: April 1, 2010 to July 1, U.S. Census Bureau, Population Division. Release Date: June Centenarians: U.S. Census Report. 3Boston College’s Center for Retirement Research. In the 401(k) era, 70 may be the new age to retire. June 21, 2012. Sources: 1Annual Estimates of the Resident Population by Single Year of Age and Sex for the United States: April 1, 2010 to July 1, U.S. Census Bureau, Population Division. Release Date: June Centenarians: U.S. Census Report.3The Current State of Retirement: Pre-Retiree Expectations and Retiree Realities. Transamerica Center for Retirement Studies. December 2015.

30 Longevity insurance Managing riskStrategy to help ensure you never outlive your retirement income Annuity Features Considerations 100% contractually guaranteed income for life How long are you likely to live? Will your savings last that long? Earnings grow tax deferred Timing; purchase long before needed Optional riders Intended for later use; limited or no immediate access to funds Cost of fees and optional riders (e.g., death benefit, cost-of-living adjustment) That’s where longevity insurance comes in. It’s a strategy to help ensure that you don’t outlive your retirement income through the purchase of an annuity. An annuity is a contract with an insurance company that, according to the terms of the contract, provides you with income payments at regular intervals in return for the annuity’s initial purchase cost and additional premiums, if any. Your purchase price and any premiums are invested according to your contract terms, and your payments and earnings grow tax deferred. Future payments are 100% contractually guaranteed by the claims-paying ability of the insurer. You can purchase an annuity that pays you guaranteed income for the rest of your life, which means no more worrying about outliving your savings, no matter how long you live! With this strategy, you’re paying to protect yourself from the risk of outlasting your savings. So, what happens if you die before you reach the age at which you would collect income payments? It depends on the contract terms, but in many cases, neither you nor your heirs would collect on the policy because the event you were insuring against (living past the designated age) never occurred. However, you can typically purchase “riders” to an annuity product that add more favorable terms to the agreement. For example, you might want to purchase a death benefit rider that allows you to name a beneficiary who would receive a lump sum or payments, according to the contract terms, in the event of your death. You may also consider purchasing a cost-of-living adjustment rider that would hedge against inflation by increasing the eventual payout amounts to reflect an overall rise in the cost of living. When purchasing longevity insurance, consider the following: Your current health, genetic history and longevity trends to estimate your potential longevity. Review or develop a financial plan that helps you determine your savings is likely to last as long as you do. Buying an annuity years ahead of the desired starting age is the most cost-effective approach. Plus, you may also save on premiums by delaying the distribution of funds. The annuity would represent a long-term investment that’s intended to fund the later years of your retirement. The contract would typically lock up the funds invested, so you may be unable to access your lump sum. The cost of purchasing an annuity varies according to your age at purchase, insurer, product line and features. Consider the applicable fees and expenses, as well as any riders. Also keep in mind that women usually receive smaller annual payouts than men making the same initial purchase, due to their higher odds of living longer.1 Source: 1Should You Buy Longevity Insurance? May 25, 2012. Average cost Varies by age, insurer, product, etc. Guarantees are backed by the issuing insurance company’s claims-paying ability. Sources: How to Select and Shop for an Annuity. wsj.com. Retrieved October 9, 2014. 30

31 Life insurance Did you know?Life insurance is often considered the cornerstone of sound financial planning. – Insurance Information Institute, 2014 Now, let’s discuss your options for safeguarding your financial assets through life insurance. Life insurance is an important part of a comprehensive financial plan and protects the people you care about most. Because of the multitude of options provided by life insurance to help secure your assets during your lifetime and beyond, we’ll focus the rest of this presentation on your life insurance needs.

32 Life insurance 20% 30% 41% 64% Managing riskPercent of long-term savings provided by life insurance1 30% Percent of households with no life insurance2 41% Percent of purchases motivated by life events2 64% Percent of policyholders who believe life insurance provides a better quality of life3 [This slide has animations.] One of the goals of any financial security plan is to protect against life’s uncertainties, and life insurance is often the first item on the list for taking care of family members. However, with disposable income at an all-time low, many families have to make difficult decisions on what financial priorities take precedence. Unfortunately, life insurance is not at the top of the list. “Everyday expenses” such as energy costs, food, clothing and transportation were cited by more than half of consumers surveyed as limitations on their ability to save for financial goals. Did you know? [Click for each statistic to appear.] Twenty percent of Americans’ long-term savings are provided by life insurance, including annuities and permanent life insurance.1 Yet, 30 percent of U.S. households have no life insurance at all.2 Among the triggers to shop for life insurance, 41 percent of shoppers say life events (marriage, children, buying a house, etc.) motivated them to shop for life insurance. 2 Sixty-four percent of life insurance owners think they have a better quality of life than the average American (vs. 51 percent of non-life insurance owners).3 How can life insurance help meet your needs? Sources: 1Public Policy Should Encourage Financial Security. SecureFamily.org, March 19, 2014. 2Facts About Life Life Insurance Awareness Month. LIMRA, n.d. Retrieved May 13, New York Life’s “Keep Good Going” report, August 2012. Sources: 1 Public Policy Should Encourage Financial Security. SecureFamily.org, March 19, Facts About Life Life Insurance Awareness Month. LIMRA, n.d. Retrieved May 13, New York Life’s “Keep Good Going” report, August 2012.

33 Life insurance Managing risk You don’t have to die to use itCover unexpected and emergency expenses Pay off debt Generate business cash Fund an education [This slide has animations. Click for each bullet feature to appear.] Just about everyone could benefit from life insurance. It can help protect your financial plan in a number of ways…and you don’t have to die to use it! You may be able to tap into your life insurance to: Deal with unexpected expenses and emergency situations, Pay off debt, Use as a collateral to generate business cash, Fund a college education, or Replace current income or supplement retirement income. But, how do you determine your need for life insurance? Supplement retirement income

34 Life insurance needs analysisManaging risk Life insurance needs analysis “How long will I need coverage?” “What types of life insurance make sense for me?” “What needs could life insurance meet?” “How much is enough?” [This slide has animations. Click for question to appear.] If you are considering purchasing life insurance, here are a few questions to consider: What are my needs? What type of life insurance do I need? How much life insurance do I need? For how long will I need life insurance? Source: 5 myths that could derail your retirement. Cnbc.com. November 5, *EBRI, 2016 Retirement Confidence Survey.” 34

35 Immediate and ongoing needsManaging risk 1. What needs could life insurance meet? Immediate and ongoing needs Income replacement Retirement supplement Payment of outstanding debt Estate funding Education funding Last illness and burial Emergency fund Continue a family business [This slide has animations. Click for each bullet feature to appear.] First, you should analyze your life’s needs. Most of us have immediate and ongoing needs. These may include [read the list].

36 2. How much life insurance do I need?Managing risk 2. How much life insurance do I need? Needs differ based on your personal circumstances I need to build cash reserves for emergencies and retirement I can’t afford much, but I still need to be well-protected I need to provide for my loved ones after I die [This slide has automatic animations.] Once you determine your life’s needs, you can better assess how much life insurance you will need to protect you and your family’s standard of living. Usually with life insurance, we’re trying to fill in a gap. Where are the gaps you need to fill? What assets do you own that might need protection against loss? [Wait for audience response.] Needs are different for every person. Do you need to build a cash reserve you can borrow against or is your goal to provide for family members after your demise? How much life insurance you purchase also depends on how much you can afford. Also, keep in mind that assets can reduce your overall life insurance needs. If you are considering your needs in retirement, you should subtract the income you expect to receive from Social Security payments and any savings or investments. Working through the life insurance worksheet on the following slides can help you determine how much life insurance you will need and can afford. And, if you need help, I’m happy to sit down with you. 36

37 Calculating your life insurance needsManaging risk Calculating your life insurance needs Could your family get by without your income? Annual Income Expenses Need/Surplus $ 60,000 – = Sources of monthly income Spouse’s income Income from assets: Investments, rental property income, etc. Social Security survivor benefits (Social Security statement estimate) Other Total monthly income (Add items above) Annual income (x 12) $ 4,000 200 800 [This slide has animations.] With the death of a family member traumatically impacting a family, it’s a terrible time to add new financial burdens, as well. Yet, that’s what often happens when we don’t plan ahead and minimize the risk. What would be the impact of your death or your spouse’s on your family finances? Let’s work through an example together that will help you see how to estimate your life insurance needs. We’ll start by looking at an example of one family’s annual income and ability to meet expenses after the death of a wage-earning spouse. There’s a simple formula we can use to see how much a family might fall behind each year following the death of a wage earner. [Click to reveal formula.] First, we calculate the family’s income each month, to which the spouse who died would no longer be contributing. [Click to reveal income.] Then multiply this number by 12 to get the total annual income. $ 5,000 $ 60,000 $ 60,000

38 Calculating your life insurance needsManaging risk Calculating your life insurance needs Would your family have sufficient assets to cover the income shortfall? Annual Long-term Income Expenses Need/Surplus Years Income Need – $ 72,000 = ($12,000) x = $ 60,000 30 $ 360,000 Everyday monthly expenses Mortgage or rent Insurance coverage: Premiums for auto, home, medical insurance, etc. Household expenses: Car payment(s), groceries, utilities, maintenance, etc. Other: Child care, tuition, etc. Total monthly expenses (Add items above) Annual expenses (x 12) $ 2,500 1,000 1,000 [This slide has animations.] Next, consider the family’s monthly expenses. [Click to reveal expenses.] Multiply the total by 12 to get the family’s annual expenses. If you subtract the total annual expenses from the total annual income, you can see how much the family would come up short each year. Now multiply that number by the number of years you estimate you will need to provide income for your family. This is now the income replacement your family will need in the event you are no longer able to provide for them. Keep in mind that it’s possible for the family to have a surplus instead of a shortfall, which would mean income replacement might not be a priority for the family. 1,500 $ 6,000 $ 72,000 $ 72,000

39 Calculating your life insurance needsManaging risk Calculating your life insurance needs Estimate long-term expenses Long-term Income Need Other Expenses Final expenses Current debt: Credit card balances, loans, etc. Child(ren)’s future: Education, wedding, etc. Elder care Other Total Other Expenses (Add items above) $ 360,000 $ 12,000 Other Expenses 45,000 + $ 267,000 180,000 30,000 Family Need [This slide has animations.] Also consider that there might be additional expenses and debt that your family could find difficult to manage without your income. These may include: [Click and review “Other Expenses.”] By adding together the long-term income needs and other expenses, you find the family’s total need. [Click for total “Family Need.”] $ 627,000 $ 267,000 $ 267,000

40 Calculating your life insurance needsManaging risk Calculating your life insurance needs Would family assets cover the income shortfall? Long-term Income Need $ 360,000 Other Expenses + $ 267,000 Family Need Available Assets Current life insurance Cash, savings, bonds, investments Retirement funds Other Total Available Assets(Add items above) [This slide has animations.] Of course, whatever assets the family has available could be used to replace the missing income and cover additional expenses, so we need to look at these assets to see if they meet the family’s needs. Here are some additional sources of funds to consider. [Click and review “Available Assets.”] By considering the availability of income and assets versus needs and expenses, you can determine the amount of life insurance coverage that would protect the family against the wage earner’s death. [Click to reveal life insurance needs.] These same calculations can be run with the other spouse’s income to determine the spouse’s need for life insurance that would minimize the financial impact of his/her death to the family’s finances. $ 627,000 $ 100,000 200,000 Family Assets – $ 300,000 $ 300,000 $ 300,000 Life Insurance Need $ 327,000

41 3. What types of insurance are available?Managing risk 3. What types of insurance are available? Term Insurance Purpose Suitable for temporary needs such as mortgage insurance or final expenses Length of coverage Specific term, generally 20 years Premiums Based on age and health. Usually much cheaper when first purchased Death benefit Temporary Cash value None Advantages Lowest premium Disadvantages Death benefit and premium guarantees are temporary Once you determine how much life insurance you need, you should then select the best life insurance that suits your needs. Keep in mind your purpose for purchasing life insurance and the length of time you expect to need it. There are two categories of life insurance: First, term life insurance [review chart], which provides protection for a specified period of time, such as one, 10 or 20 years, and is well-suited for short-range goals such as to pay off a loan or provide extra life insurance protection during the child-raising years. There is no "accumulation" element, or cash value. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed.

42 3. What types of insurance are available?Managing risk 3. What types of insurance are available? Permanent Insurance Purpose Cash value can assist with educational expenses, business opportunities, or serve as a supplement to retirement income Length of coverage Long-term, as long as the premiums are paid Premiums At first, much higher than term premiums, but usually levels off for life Death benefit Guaranteed permanent Cash value Accumulates over time with tax-deferred payments Advantages Permanent death benefit; guaranteed cash value Disadvantages Higher premiums than term Permanent life insurance [review chart] combines protection for your family with cash value that builds over time. Once it accumulates, the cash value becomes a “living benefit” that can be tapped to improve your life and meet your goals. Some of its features include lifetime coverage, fixed premiums and tax-deferred cash value.

43 Permanent life insuranceManaging risk Permanent life insurance Types Whole Premiums are fixed for life Death benefit and rate of return on your cash values are guaranteed Universal Earns interest at a money market rate Provides considerable flexibility as to the amount and timing of premium payments Funds not paying for insurance earn tax-deferred interest Variable Life Allows you to control the investment of your cash value Death benefit cannot fall below the amount of insurance initially purchased Premiums are fixed, and you can borrow against the policy at fixed or variable rates Variable Universal Life Allows you to raise or lower your premiums in a single policy Choose how your cash value will be invested The most common types of permanent life insurance include: Whole life insurance premiums are fixed for life, and the death benefit and rate of return on your cash values are guaranteed. Universal life insurance earns interest at a money market rate. It provides considerable flexibility as to the amount and timing of premium payments. Funds not paying for insurance earn tax-deferred interest. Variable life insurance allows you to control the investment of your cash value, which will vary depending on what your investment fund does. The death benefit cannot fall below the amount of insurance you first bought. You pay fixed premiums and can borrow against the policy at fixed or variable rates. Variable universal life insurance allows you to raise or lower your premiums in a single policy and choose how your cash value will be invested. However, since the value of your cash fund is tied to the market value of the assets in the cash value fund, you run the risk of losing your insurance coverage.

44 4. When does life insurance make sense?Managing risk 4. When does life insurance make sense? Golden years Estate planning Young and single Wealth creation Married and/or have children Family’s needs and retirement savings Near or living in retirement Medical and retirement living expenses Business continuity Business owner [This slide has automatic animations.] Your need for life insurance changes as your life changes. One of the main reasons that permanent insurance is so much more expensive is that it’s meant to cover you for your entire life, while less expensive term policies tend to cover you when you’re younger and least likely to use one. When you're young and single, you might be less focused on acquiring life insurance and more interested in building wealth. At this stage, your need for life insurance may be low, but still exists. You might need it to assist someone who depends on you financially – such as an aging or disabled parent or sibling, or if you’re carrying debt that you wouldn’t want to pass on to family members who survive you. And if you’re young, healthy, and have a good family health history, your insurability is at its peak, and you can take advantage of the best rates on life insurance. As you take on more responsibility and your family grows, you may need to ensure your family is financially protected in the event of your death. It is also helpful to ensure your children receive money at key stages of their education even in your absence. If you happen to be a single parent, all responsibility falls on you, therefore you need to be even more prepared to safeguard your children’s financial future. As you retire or enter your golden years, your responsibilities may once again begin to diminish and your need for life insurance may decrease. Perhaps you don’t have dependents, and your spouse will have enough income to live on from Social Security, pensions and/or assets. However, life insurance may assist in supplementing your retirement income and medical expenses. It can help insure you against outliving your resources. You can use it to fund your estate plan, including helping reduce your beneficiaries’ tax burden. Besides taking care of your family, life insurance can also protect your business. A life insurance policy can be structured to fund a buy-sell agreement which ensures that, in the event one business owner dies, the remaining business owners have the funds to buy the company interests at a previously agreed upon price. This allows the owners to get the business while the family of the deceased gets the money. To protect a business in case of the death of a key employee, key person insurance, payable to the company, provides the owners with the financial flexibility needed to either hire a replacement or work out an alternative arrangement. You might consider talking to a financial advisor to assess your insurance needs.

45 Life insurance in retirementManaging risk Life insurance in retirement Protect yourself if you Lack assets to cover final expenses Have dependents with limited assets Have a taxable estate Protect yourself against [This slide has animations.] Life insurance can be a very useful tool in retirement planning. Anyone who generally falls within any of these categories can benefit from purchasing life insurance [click for each category to appear]: Retirees who won’t have enough assets to cover final expenses―like funeral costs―may want a small policy to avoid burdening family with these expenses. Some retirees with dependents who won’t have enough income to live on in the event of the retiree’s death buy insurance to supplement the dependent’s income. For example, some people decide to choose a higher “life only” payout on their pension, which leaves nothing to their spouse after they pass away, and then use the extra pension income to pay for a life insurance policy instead. This is called “pension maximization” and can be beneficial if the policy holder is in really good health and can get a relatively low-cost policy. Someone who has a taxable estate (currently one worth over $5 million) and wants to use a life insurance policy to pay the estate tax. This is particularly useful if they don’t want their heirs to have to make taxable retirement account withdrawals or sell a business or a piece of real estate in order to make those tax payments. Needless to say, this is a very small percentage of the population. If none of these scenarios apply, you may not need life insurance for your entire life. A low-cost term policy might be sufficient. Other considerations for purchasing life insurance in retirement include [click for each consideration to appear]:the possibility of dying too soon, living too long or getting sick along the way. Dying too soon Living too long Getting sick along the way

46 Retirement planning benefitsManaging risk Retirement planning benefits Scenario 1: Jeff Jeff wants to save for retirement He has already invested the maximum in his workplace retirement plan, Roth IRA and other vehicles How can life insurance help? He can choose a permanent life insurance product He can borrow against the cash value in the insurance contract [Optional slide.] Let’s take a look at a specific scenario of how life insurance can help in retirement. Jeff has already invested the maximum in his workplace retirement plan, Roth IRA, and other vehicles and wants to save more for retirement. How can life insurance help? A permanent insurance product provides both a death benefit and savings component. The cash value portion grows tax-deferred after fees and expenses. Jeff can borrow against the cash value in the insurance contract for a low-cost loan. He will pay a specified interest rate for the loan, and if not paid back, the death benefit is reduced by the loan amount. Because retirement needs differ, you may want to consult with a financial professional who can assess your particular situation and advise on the best insurance options to help meet your retirement needs. The cash-value portion of life insurance grows tax-free, after fees and expenses. 46

47 Estate planning benefitsManaging risk Estate planning benefits Scenario 2: Ann Ann has a business worth $3 million When she dies, she wants the business to pass to her son How can life insurance help? Ann places business in a trust, with her son as trustee Buys $750,000 life insurance Upon Ann’s death, trust uses $750,000 policy to pay estate taxes The son now owns the business free of estate taxes [Optional slide.] Here’s an example of how life insurance can assist in estate planning. Ann has a business worth $3 million. When she dies, she wants the business to pass to her son. How can life insurance help? Ann can put the business in a trust, with her son as trustee, and buy a single-payment $750,000 life insurance policy, with the trust as beneficiary. When she dies, the trust takes the $750,000 policy (insurance proceeds are income-tax free) and pays the estate taxes. Her son is the beneficiary of the trust and now owns the business free of estate taxes. The size of your estate determines the estate taxes owed. You might consider talking to a financial advisor or estate planning professional to discuss your particular situation. Life insurance products can be helpful in making sure there are sufficient funds for estate tax purposes.

48 Forced savings Managing riskScenario 3: Bob Bob is diligent about paying his bills Has been unsuccessful saving for emergencies and retirement How can life insurance help? Bob purchases a permanent life insurance product with low fees and expenses Upon retirement (or even before), Bob can borrow against the account [Optional slide.] Now, let’s take a look at Bob’s situation. He is unable to save for retirement, although he is good at paying his bills. How can life insurance help him? Bob could purchase a permanent life insurance product with low fees and expenses, and can direct, to a degree, where the assets are invested. This becomes forced savings to aid in achieving his goals. Bob, upon retirement (or even before), can then borrow against the account. Keep in mind that life insurance can be an expensive type of forced savings. You might consider consulting with a financial advisor for other less expensive ways to save for retirement. Life insurance can help Bob take a more disciplined approach to saving for the future.

49 Purchasing life insuranceManaging risk Purchasing life insurance The cost of procrastination Purchase when you are young and relatively healthy Delaying may cost you 5% more in coverage each year As you grow older, insurance companies charge more for the same level of coverage, up to 15%-75% more if your health deteriorates You may become uninsurable by the time you need it So when should you buy life insurance? Preferably when you are young and relatively healthy. That's when you have the best shot at getting the lowest rates and paying less for coverage. If you wait until later in life, medical problems can increase your monthly premiums, or worse yet, prevent you from buying a term life insurance policy at any price. That's why, when it comes to buying term life insurance, the earlier the better. Here are some facts about purchasing life insurance: As previously noted, buy when you are young and in good health. Because insurance premiums are based on your age at the time of purchase, you'll pay lower premiums the younger you are. If insurance costs continue rising at the same pace, you will need to buy 5% more coverage each year you delay your purchase. To keep up with rising healthcare costs, insurance companies increase their initial premiums on a regular basis. Additionally, companies change and update their plans every couple of years and the rates for the new plans are typically higher. If your health deteriorates, insurance companies may charge you 15%-75% more for the same level of coverage. The rule of thumb is that you choose your policy's benefit amount based on the current cost of care. If you already need coverage, insurance companies may consider you uninsurable and prohibit you from purchasing a policy. Source: Skloff Financial Group. Long Term Care University – Question of the Month. Retrieved January 2017.

50 Action steps Now, let’s review the action steps necessary to make the right choice for your insurance coverage needs.

51 Determine your insurance needsAction steps Assess your risks Determine your insurance needs Look for highly rated insurance companies Review policies to ensure proper coverage When you are purchasing any kind of insurance, you should closely review the rates and options offered to ensure they fit your needs. Keep the following tips in mind: Assess your risks. Insurance companies determine the level of risk they'll accept when issuing policies. The higher your risks—for example, poor health condition or spotty driving record—the higher the premiums you will be charged to compensate for the coverage. However, you can decide to lower your premium by paying a higher deductible, but keep in mind that taking on a high deductible also involves some financial risk. So, it's important to assess your own risks before you go shopping. Determine your insurance needs. Whether you are shopping for home or life insurance, you need to list your specific needs so you can more easily and successfully conduct your research. Look for highly rated insurance companies. An insurance company’s rating is important to assess its creditworthiness, to evaluate and compare its performance and financial condition. Some independent rating companies, such as A.M. Best Rating Services, provide a rating scale to evaluate an insurance company’s financial health and performance. Many insurance companies use this rating method as a strategic tool to enhance consumers' confidence in the organization's stability, as well as its attractiveness to investors. Review policies to ensure proper coverage. A policy review is a critical component of a sound financial planning strategy. If you haven't taken a good look at your life insurance policies lately, you need to do so to ensure that their products are among the most competitive and cost-effective on the market. Perform an annual review to make sure you are getting the most benefit possible out of your coverage and that you have the right type of insurance to meet your specific needs today.

52 Consider working with VALIC Financial Advisors, Inc. (VFA)Action steps Consider working with VALIC Financial Advisors, Inc. (VFA) Prioritize your investment goals Determine the time horizon needed to achieve your goals Determine a financial strategy to help meet your goals If what we’ve talked about today has you wondering how to get started, let us help. A financial advisor can help get your salary deferrals started contributing to your employer’s tax-qualified plan. He/she can also develop an overall financial plan to help you: Prioritize your investment goals Determine the time horizon needed to achieve your goals Determine a financial strategy to help meet your goals *Source: LIMRA SRI Not-for-Profit Retirement Market Survey 12/31/2016. Based on total assets in a survey of 25 major companies. For more than half a century, VALIC has helped Americans plan for and enjoy a more secure financial future. 52

53 Benefits of financial planningAction steps Benefits of financial planning Provides a big picture view of your current financial situation Helps identify your financial goals and objectives Allows you to understand the impact of your decisions So, what are some of the benefits of financial planning? A financial plan: Provides a big picture view of your current financial situation. Helps identify what’s important to you (your goals and objectives). Allows you to understand how the financial decisions you make could impact other areas of your finances, short and long term. Helps your goals stay on track, if reviewed regularly, and finally Offers a course of action to help you achieve your goals. With a financial plan in place, you’re more likely to adapt easily to life’s changes and feel more secure about your finances. Helps your goals stay on track, if reviewed regularly Offers you a course of action needed to achieve your financial goals

54 Financial 360 Plan Action stepsProvides a customized analysis of your financial situation [OPTIONAL Slide.] Once you’ve consulted with a financial advisor, he/she can create a customized plan for you. The Financial 360 Plan provides a side-by-side comparison of your current asset allocation and a suggested, diversified investment program based on information you provide. It is also designed to recommend how to overcome the five major risks in retirement, which are inflation risk, longevity risk, investment risk, healthcare costs and withdrawal risks. Investment efficiency and its impact on retirement are also addressed.

55 Financial 360 Plan - retirement summary sample planAction steps Financial 360 Plan - retirement summary sample plan [OPTIONAL Slide.] This table is a hypothetical example of a retirement summary like the one that you would find included in your Financial 360 plan. It compares your estimated need for annual retirement income against the projected values of your retirement benefits and investments each year, starting at retirement, assuming retirement income sources such as Social Security, retirement plans, other savings and investments, and earned income, if applicable. It shows the categories from which payments are taken and reflects any estimated IRS minimum distribution requirements from retirement plans. This table assumes a hypothetical 4.5% rate of growth on investments (based on the geometric mean rate of return of your current portfolio). 1 Estimates of pension values are only an approximation of the future amount(s) you may receive, and many things can affect the accuracy of the estimate, such as pensionable earnings, interest rates and plan changes, among others. 2 This report approximates taxes by applying the effective tax rate furnished by the client to payments that are received from tax-deferred accounts as well as to any other taxable income. The taxes column also includes estimated capital gains taxes on any equity nonretirement assets withdrawn. Taxes on the growth of non-retirement assets are not included in this column. Instead, the effect of taxes on the amounts shown in the Non-retirement balances column is estimated by using an after-tax rate of return to grow taxable investments.

56 Retirement Pathfinder®Action steps Retirement Pathfinder® Get real-time answers to your questions: Can I retire when I planned? How much monthly income will I need? Am I currently saving enough? Is it possible to guarantee my retirement income? Will I outlive my retirement savings? What happens if I die prematurely? [OPTIONAL Slide.] Retirement Pathfinder offered through VALIC Financial Advisors, Inc. (VFA) is an interactive retirement income planning tool that can help you see your retirement plan like you’ve never seen it before. It is designed to dynamically build your retirement plan while sitting shoulder-to-shoulder with your financial advisor. Retirement Pathfinder can illustrate numerous retirement scenarios and can identify potential retirement pitfalls. In just minutes I can start generating the answers you need to determine where you stand and where you might need to make changes. This can provide clarity about your progress, choices for creating adequate retirement income and confidence in your plan. Please check “yes” on your Evaluation Form if you would like to learn more. Financial Planning offered through VALIC Financial Advisors, Inc. (VFA). 56

57 Evaluation Action steps[This slide has animations. Click for images to appear.] Thank you so much for your time today. Please take a moment now to complete the evaluation form. Your feedback is very important to me. If you would like to set up an appointment with me, check the box on the evaluation and I will contact you within 48 hours. Also, included is a helpful checklist you can use to start the process of figuring out your finances. If you set an appointment with me, you can bring it with you. Thanks again!

58 This information is general in nature, may be subject to change, and does not constitute legal, tax or accounting advice from any company, its employees, financial professionals or other representatives. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For advice concerning your individual circumstances, consult a professional attorney, tax advisor or accountant. Securities and investment advisory services offered through VALIC Financial Advisors, Inc. (“VFA”), member FINRA, SIPC and an SEC-registered investment advisor. VFA registered representatives offer securities and other products under retirement plans and IRAs, and to clients outside of such arrangements. Annuities issued by The Variable Annuity Life Insurance Company (“VALIC”). Variable annuities distributed by its affiliate, AIG Capital Services, Inc. (“ACS”), member FINRA. VALIC, VFA and ACS are members of American International Group, Inc. (“AIG”). American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, today AIG member companies provide a wide range of property casualty insurance, life insurance, retirement products and other financial services to customers in more than 80 countries and jurisdictions. Copyright © The Variable Annuity Life Insurance Company. All rights reserved. VALIC.com VC (06/2017) J EE

59 Planning for Financial SecurityRisk Management Photo collage Planning for Financial Security Thank you!