How to Fund a Tax Free Retirement with Guaranteed Returns

2013
Bison Business &
Technology Solutions,
LLC
Walter Hines,
Chief Executive Officer
HOW TO FUND A TAX FREE RETIEMENT WITH GUARANTEED RETURNS
Many baby boomers are facing tremendous shortcomings when it comes down to their retirement plans. While, market crashes
in 1981, 2001, and 2008 have provided a rollercoaster of ups and downs in most portfolio plans resulting in below average
returns. Poor choices in selecting age appropriate risk have been another factor in below average returns for most retirement
plans. Investors are looking for a solution that will provide guarantees against market collapses. Index Universal Life insurance
policies offer a viable solution to the problems that many people face with poor returns on their investments and disabilities.

How to Fund a Tax Free Retirement with Guaranteed Returns
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© 2013 Bison Business & Technology Solutions, LLC
Problem Overview
Many baby boomers are facing tremendous shortcomings when it comes down to their retirement
plans. During the Reagan era, corporations phased out the generous pension plans that were
available to them and their parents for many years. To compensate, many sought employment
from municipalities and government agencies that promised benefits during retirement, and this
was a viable option for many years. Unfortunately, auditors of government, state, and city
pension funds have discovered that these plans are now grossly underfunded.
Furthermore, market crashes in 1981, 2001, and 2008 caused a rollercoaster of ups and downs in
most portfolio plans resulting in below average returns. Poor choices in selecting age
appropriate risk has been another factor in below average returns for most retirement plans. The
latest market crash caused many small businesses to stop offering retirement plans due to a lack
of participation among employees. Even employees that were faithfully contributing to their
retirement plans have contributed far less than the maximum contribution limits. As a result
many baby boomers and generation X’ers will have to work well into their 70’s in order to save
enough money for a decent retirement. Many won’t be able to retire at all. They will have to
work until they are forced into retirement or can no longer provide the minimal amount of
production levels to satisfy company policies.
Why Your 401(k) Isn’t Good Enough
Due to their expenses, pensions were basically phased out by large corporations during the
Reagan era and were replaced by 401(k) plans. These plans were a cheaper solution and didn’t
require employers to offer guaranteed benefits to their employees during retirement. The
company was no longer responsible for the employee during their retirement even after years of
faithful service. Unfortunately, this left the employee that faithfully contributed to this “new”
plan with an assumption that it was similar to their old plan. Nothing could be further from the
truth! Qualified 401(k) plans and other similar company packages such as 457 plans, and 403(b)
plans are subjected to the fluctuations of the stock market and offer no guarantees of payment to
the owners after retirement. Though 403(b) plans are offered by public institutions and non-

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profits, portfolio performances are still directly related to the stock market causing fluctuations in
account balances. Moreover, the state and local municipalities that offer these funds are grossly
underfunded (94% of Pension Plans Underfunded: Wilshire – John Sullivan). Three main
reasons for these pensions being underfunded are: poor market performance, higher ratio of
retirees to new employees resulting in fewer contributions to the funds, and increases in life
spans as a result of technology and healthier lifestyles.
Poor market performance isn’t the only reason for low retirement account balances. Lifestyles
have changed, and people have also decided not to save as much money as their parents.
Employees have chosen not to maximize the contributions (currently $17,500 for 401(k) plans)
allotted for these plans. They have, instead, chosen to contribute just a “little bit” and not a “lot”
to their retirement funds. This drastic mistake has given people the illusion of a true retirement
package while, in truth, the average American will have just over $150,000 saved for their
retirement. According to a study done in 2009, by Kevin Drum, in an Article published by
Mother Jones, entitled Raw Data: 401(k) Account Balances for Workers Near Retirement, the
mean (average) 401(k) balance was just over $160,000 for pre-retirees between the ages of 60-
69. Since the life expectancy for a United States citizen is 78.64 years, as of 2011, one can
assume that having $16,000 per year (10% of $160,000) for next the ten years combined with
Social Security income may not be such a bad thing for the baby boomer generation.
Unfortunately, new data suggest that generation X’ers will reach 80 years of age, rather easily,
and many will live to reach 90 with today’s medicine and technology. Also, the enactment of the
Affordable Care Act (Obamacare) guarantees that virtually every United States citizen will have
healthcare coverage by 2015. This will all but guarantee 10 additional years to the average
person’s lifespan. Additionally, one must take into consideration that the monetary values listed
in these retirement accounts are the mean or “average” value meaning they were most likely
skewed by the minority of people in the study with much higher amounts in their retirement
plans. One does not have hold a Series 6 or Series 7 Securities license to understand that
$160,000 won’t last more than 10 years, and what happens if there is another market crash?
There have been three (so far) during the lifetime of the author. Given the factual and historical
data of the performance of most unprofessionally managed 401(k) plans, when not combined

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with any other investments or permanent insurance policies, they are not a very good solution for
the average American.
Retirement Plans offer No Protection against Disability
According to statistics provided by the website Disabled World, 12.1% of Americans between
the ages of 21-64 reported having a disability in 2008, and 14.8% of the population, age 5 and
over, have some sort of disability. These statistics include patients with chronic and critical
illnesses. Chronic and Critical illnesses such as cancer, kidney and liver diseases, and diabetes
have forced many people, and not just seniors, into bankruptcy. Most qualified and non-
qualified retirement plans offer no coverage for sickness and disease. Combine a critical illness
suffered pre-retirement with long term care costs, and the situation becomes daunting even if one
has worked closely with an Investment Advisor to maximize gains. An entire retirement plan and
other investments into real estate can be wiped out in as little as 3-5 years after a major
disability.
A Viable Solution
Index Universal Life Insurance policies offer a viable solution to the problems that many people
face with poor returns on their investments and disabilities. They also can provide money for
long term care expenses. These products may be used as the sole option for retirement; however,
they work best as a supplemental plan to group or individual retirement plans, Social Security,
and other investments such as trusts and real estate (in other words, every retirement plan should
be well diversified). Index products are unknown to most outside of the insurance industry, and
were overlooked for years until variable investment products such as equities, bonds, and
Variable Universal Life policies took a steep nose dive during the last market collapse. Since
then, Insurance Agents and Investment Advisers have suggested a more stable and higher
performing option. This is why Index Annuities and Index Universal Life insurance products
have taken off since 2009. The reason for the increase in sales of these products is simple…they
offer guarantees.

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Caution! When someone speaks of offering guarantees or an unrealistic return on an investment,
they should always be viewed with skepticism. Index Universal Life insurance policies do offer
guaranteed returns, but you have to follow the rules! Most insurance companies that offer IULs,
state that the historical returns for these products are somewhere around 7-8%. There is a 10
year surrender fee to offset expenses and to encourage long term saving. So, if someone takes out
money during the first ten years, they will incur withdrawal fees. The guaranteed return feature
maybe lost depending on how much money is withdrawn. However, the upside to these plans
are tremendous when compared to other investment products such as company administered
retirement plans. For one, many of the insurance companies that offer IULs, such as National
Life Group, offer a guaranteed minimum interest rate of 2% on their products as long as there are
no withdrawals on the product during the first ten years. The “Cap” rate or maximum allotted
interest is usually between 12 -14% , depending on the elected product, which means that one is
able to get up to 14% interest per year on their money. There is also something called a “Floor”
rate which is always equal to 0%. This means that money placed into these policies will not be
affected by downturns in the market (i.e. you won’t lose your money when the market drops).
This is referred to in the industry as “downside” protection. In fact your money isn’t even placed
in the market. Index based products credit interest to the account based on changes in the value
of market indexes.
Say What? Index Universal Life products also offer protection against market losses as they have
a credit/no credit interest strategy. If it sounds confusing, here is a simple analogy. Think of
taking a credit/no credit course in college (typically during the summer) where one receives a
“P” if they pass the course or an “F” if they fail the course, but they won’t receive a letter grade
(A, B, C, etc.). This is the essence of index crediting. Owners of Index Universal Life insurance
policies will not lose money during downturns in the stock market. For example, if your
insurance company uses the Standard and Poor’s 500 Index (S&P 500) and it registers a positive
gain in its index for the year, the owner of an Index policy will get credit equal to that amount or
up to 14%, depending on the policy, for that year. If the S&P 500 suffers a lost, the holder of the
insurance policy will receive no interest on their money for that year. However, they will not
lose any money either, and that is the plan. In 2008, when the stock market crashed, many

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people lost 40% of their entire lifetime savings. Owners of Index Universal Life policies lost
nothing. That’s right, ZERO! There are several interest crediting strategies; however, the one
just described is called the point to point method, and it is the most common method selected by
policy owners, and the easiest to explain and analogize.
Perhaps the best real life example would be to examine two people that have saved $500,000 for
retirement, and each has been saving for retirement for at least 20 years. One has a 401(k), and
the other has an Index Universal Life policy. Since the 401(k) plan has no guarantees to hedge
against market collapses or poor performance, Investment Advisers, as a rule of thumb, will
advise their client not to take out more than 7% - 10% each year during retirement. The logic is
that by taking 10% or less each year from the retirement account, the owner will have a hedge
against inflation and should not outlive their money. This means that the retiree would have to
live on an income of $50,000 a year in addition to their Social Security benefits. Not bad, in
theory. However, this leaves the owner of that account with only 10-12 years of income minus
Social Security, barring no market collapses. But, there have been 3 in the last 32 years (an
average of 1 per decade). Imagine going through a market crash at 69 years of age and losing
30-40% of your retirement income!
In comparison, the owner of the IUL, with that same amount of cash value, and a Face Value of
$1,000,000 in death benefits, can expect to receive interest on their money without fear of loss
(providing they don’t take any withdrawals during the first 10 years), and have the option to
receive $40,000 - $50,000 per year for life or at least up until the cut off age of 120 (this is
known as the Lifetime Benefit Rider). They can also choose to take their distributions in the form
of loans and receive their money monthly, semi-annual, or annual distributions tax free. The IRS
allows permanent life insurance policy owners to take loans from their insurance policy free of
taxes as long as it has not been deemed a Modified Endowment Contract. Thus, the owner of the
IUL policy will have money for living expenses, including long term care expenses, and their
heirs will still receive some money from the policy upon their death. Though the Lifetime
Income Benefit Rider (LIBR) does add to the cost of the policy, and reduces the Face Value

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(death benefit) of the policy once the policy owner begins taking distributions. It is a free option,
and it does not entail a major upgrade in cost to the policy owner.
Index Universal Life Policies offer Protection
As mentioned, Index Universal Life policies offer financial protection against market collapses.
They also provide money for the payment of medical bills for cancer patients and others that
suffer from chronic illness. Policies provided by the National Life Group, Pacific Life, and
American National Insurance Company (ANICO) allow owners to have access to up to 2% of the
Face Value of their policies per month as long as minimum premium payments are made on the
policy. In the hypothetical example of the owner with $500,000 of cash value saved in their IUL
policy, they would have access to $10,000 (equals 2% of $500,000) per month to help with
expenses for cancer. Also, there are allotments for the care of owners that experience critical
illnesses suffered from car accidents, surgeries, and other injuries. The owner can also take up to
2% of their Face Value for these illnesses, as well, as long as they continue to pay the minimum
premium amount for their policy. Additionally, there is a Terminal Illness Rider which allows
anyone that is diagnosed with a terminal illness, and given two years or less to live, the option to
take up to 90% of the Face Value of their policy in cash. These riders are available without
extraordinary expenses to the policy owner.
Long term care is another issue that becomes a challenge for families that have elderly parents
and grandparents. By utilizing the LIBR, policy owners won’t have all of the financial concerns
of their parents should they require assistance in their advanced age, because they will have the
option of having a lifetime of income to offset the expenses of long term care. Even after
receiving income for over 20 years after the last premium payment has been made, income will
not stop until the death of the owner. Owners can choose the Lifetime Income Benefit Rider and
receive money up until the age of 120. Yes, by law, insurance companies that offer Index
Universal Life policies must guarantee the income until the age of 120!

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Finding the Right Adviser
There are positives and negatives to every product; however, used alone or combined with a
qualified retirement plan, IULs offer the best strategy for retirement available at this time. No
other product, including Variable Annuities, can offer minimum guarantees of 2% and cap rates
up to 14% per year (cap rates determined the maximum interest rate that can be earned each
year).
Being able to partake in market gains without the downside of market loses will have an
incredible impact on your money. Never suffering a loss due to poor market performance will
mean the difference between being able to retire on time and not being able to retire at all for
many people. An Index Universal Life policy combined with a group or individual retirement
plan along with Social Security benefits offers the best possible chance of not running out of
money during retirement. However, unlike other retirement plans, IULs offer guaranteed
returns, lifetime income options, and protection against disabilities. This is the best way to fund
a tax free retirement with guaranteed returns. To get more information on Index Universal Life
insurance policies, retirement planning, and strategies for tax reduction, contact Bison Business
& Technology Solutions at (310) 631- 1106 or (310) 346 -0850. You may also visit our website
at http://www.bisonbiz.com or email us at info@bisonbiz.com.

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Terms & Definitions
Qualified Plans - A plan that meets requirements (non-discriminatory) of the Internal Revenue
Code and as a result, is eligible to receive certain tax benefits. These plans
must be for the exclusive benefit of employees or their beneficiaries.
Non-Qualified Plans –
Any type of tax-deferred, employer-sponsored retirement plan that falls
outside of the Employee Retirement Income Security Act (ERISA) guidelines.
Non-qualified plans are designed to meet specialized retirement needs for key
executives and other select employees. These plans also are exempt from the
non-discriminatory and top-heavy testing of qualified plans.
401(k) plans - A (qualified) retirement savings plan that is funded by employee contributions
and (often) matching contributions from the employer. Contributions are made
before taxes and the funds grow tax-free until they are withdrawn.
457 plans - A type of non-qualified tax advantaged deferred-compensation retirement plan
that is available for governmental and certain non-governmental employers in
the United States. The employer provides the plan and the employee defers
compensation into it on a pre-tax basis.
403(b)- A retirement investment plan for employees of certain non-profit
organizations in which a contributor defers taxation on contributions until
after withdrawal. 403(b)s are employee benefits, and workers must have a
sponsoring employer such as a public school or a church in order to take
advantage of one.
Index Universal Life insurance policy -
A type of permanent life insurance, primarily in the United States of America.
Under the terms of the policy, the excess of premium payments above the
current cost of insurance are credited to the cash value of the policy. The cash
value is credited each month with interest, and the policy is debited each
month by a cost of insurance (COI) charge, as well as any other policy
charges and fees which are drawn from the cash value, even if no premium
payment is made that month. Interest credited to the account is determined by
the insurer, but has a contractual minimum rate of between 2% and 4%. When
an earnings rate is pegged to a financial index such as a stock, bond or other
interest rate index, the policy is an "Equity Indexed Universal Life" contract.

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Annuity - An annuity is a terminating "stream" of fixed payments, i.e., a collection of
payments to be periodically received over a specified period of time. The
valuation of such a stream of payments entails concepts such as the time value
of money, interest rate, and future value.
Variable Annuity -An insurance contract in which, at the end of the accumulation stage, the
insurance company guarantees a minimum payment. The remaining income
payments can vary depending on the performance of the managed portfolio.
Series 6 License - A general securities license that allows the licensee to sell mutual funds,
closed-end funds, and unit investment trusts. The National Association of
Securities Dealers (NASD) issues the license after the applicant passes the
appropriate test. Continuing education requirements also must be met.
Series 7 License -The Series 7 license is the most comprehensive of several securities licenses
that permit an agent to communicate with retail investors. For this reason,
many account managers, analysts, and other executives in the employ of a
registered Broker/Dealer hold Series 7 licenses. To satisfy the securities
dealing requirements of some states, Series 7 license holders must also hold
either the Series 63 license or the Series 66 license, depending on the state the
licensee works in as well as the state his/her clients reside in. To provide
investment advice for a fee, a stockbroker or series 7 holder is required to
complete the investment advisor law exam.
Lifetime Income Benefit Rider –
Provides a cash benefit for the life of the insured, in most cases, if certain
conditions are met, including but not limited to the insured's attained age
being between age 60 -85. Insufficient policy values, outstanding policy loans
and other considerations may also restrict exercising the rider.
Modified Endowment Contract –
Type of life insurance policy whereby the premiums are greater than that
required to pay seven annual premiums for an ordinary life insurance policy.
(This is better known as the seven-pay test.) This test is used in an effort to
eliminate the dumping of large sums of money into limited payment life
insurance in order to gain a tax advantage investment. Prior to the passage of
legislation in 1988, the policy owner could make withdrawals from the cash
surrender value on a tax-free basis. If the policy does not pass the seven-pay
test, withdrawals from the cash value are taxed as ordinary income plus a 10%
surcharge.

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Companies
American National Life Insurance Company (http://www.anico.com/) - American National
offers a broad variety of life insurance, retirement annuities, accident and health insurance,
pension plan products and services, credit insurance, and property/casualty insurance for
personal lines, agribusiness and targeted commercial exposures. Products are distributed through
career agents, independent marketing organizations and multiple line exclusive agents as well as
direct distribution channels.
Bison Business & Technology Solutions (http://www.bisonbiz.com/) - A privately held
company, Bison Business Solutions, was founded in 2009, and incorporated in 2010 as a Limited
Liability Company and renamed Bison Business & Technology Solutions, LLC by Walter M.
Hines and Henry Akinlude. Today, Bison Business & Technology Solutions provides Life,
Health, Disability, Long Term Care, Medicare Advantage, Worker’s Compensation, and
Retirement Planning to individuals, families, and small businesses. Our affiliates provide
services in Accountancy, SEO, Social Media, and Informational Technology.
National Life Group (https://www.nationallifegroup.com) - National Life Group is a diversified
family of financial service companies that has successfully forged a strong identity as a product
innovator offering personalized service. Companies in the group offer a comprehensive portfolio
of life insurance, annuity and investment products to help individuals, families and
businesses pursue their financial goals.
Pacific Life (http://www.pacificlife.com/PL/) - For more than 145 years, Pacific Life has been
helping to protect individuals and families from financial risks that can affect their investments,
retirement savings, and businesses. Pacific Life offers life insurance, annuities, and mutual
funds, with a variety of investment products and services, all of which provide. . . The Power to
Help You Succeed.
Bibliography
Raw Data: 401(k) Account Balances for Workers Near Retirement
Other helpful info - by Kevin Drum, (http://www.motherjones.com/kevin-drum/2013/02/raw-
data-401k-account-balances-workers-near-retirement)
94% of Pension Plans Underfunded: Wilshire – John Sullivan,
(http://www.advisorone.com/2013/04/11/94-of-pension-plans-underfunded-wilshire )
Disabled World (www.disabled-world.com),
*The actual cumulative average performance of an IUL product with a 12% cap rate, along with a 100% participation rate, and
an 0% Floor rate based on historical values of the S&P 500 from 1984 – 2010 equals 7% per year.

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