Supplemental Income Using Life Insurance

supplement your retirement income

Advanced Markets

Investment and Insurance Products:· Are Not Deposits of Any Bank · Are Not FDIC Insured · Are Not Insured By Any Federal Government Agency · Are Not Guaranteed by Any Bank or Savings Association · May Go Down In Value

your changing protection and financial needs Life never stands still. And, neither do your financial needs.

During your younger years, you may have a compelling need to protect your family from financial hardship should anything happen to you. Or, you may want to protect a business you’ve built.

As the years roll by, your emphasis may shift from protection to cash accumulation for any one of a number of reasons. You may want to build your dream house, provide for your children’s education, or create an additional source of retirement income. Later in life, the thought of leaving a legacy may be uppermost in your mind.

How do you best plan for such varied and changing needs? AXA Equitable can show you the way.

For more than 150 years, AXA Equitable has been a pioneer in creating innovative financial strategies that help people like you protect their financial well-being and build a sound financial future. AXA Equitable has enhanced another innovative, flexible life insurance policy that can grow with you, your family and/or your business to help provide the protection and cash accumulation you need in all stages of life.

Guarantees described in this brochure are based on the claims-paying ability of the issuing company, either AXA Equitable Life Insurance Company (New York, NY) or MONY Life Insurance Company of America, an Arizona Stock Company with its main administrative office in New York, NY.

supplemental income using life insurance 1

1 Excessive withdrawals may cause a contract to fail the definition of life insurance and trigger unintended tax consequences.

• The life insurance death benefit allows you to protect your family during your working years. With proper ownership, the death benefit can be received by your family income and estate tax-free.

• Under current tax law, your life insurance cash values can grow tax-free.

• During retirement, or possibly for other needs, the cash values can be accessed through withdrawals and loans free of income taxation.1

• Depending on the type of life insurance policy you select, you can build policy cash values out of the life insurer’s general assets, through a variety of managed investment options, or with interest crediting linked to major market indices.

• If you purchase an Indexed Universal Life policy, your credited interest earnings are based on the results of the index-linked interest options that you select with guaranteed downside protection.

• Within the parameters of the policy designed for you, you have control over the frequency of contributions and withdrawals, which allows you to better tailor your income and retirement income needs.

AXA Equitable’s portfolio of flexible premium universal life policies are primarily focused on providing death benefits to your beneficiaries. They have the secondary potential to build cash values. This cash value may vary based on product elections available in the life insurance policy.

benefits of supplemental income using life insurance

Will my 401(k) be enough for my retirement? How can I protect my family, save for retirement and still maintain my lifestyle?

“

”

2 retirement and life insurance

How Much Will You Need in Retirement?You work hard to help provide for your family and save for retirement. You may be funding your 401(k) to the maximum and contributing to you IRA, but is it enough?

Retirement income comes from three sources:

• Social Security Limited Control

• Pension Limited Control

• Personal Savings Total Control

If You Retire at 65

and Live Until: You’ll Need to Start With:

Age 75 $661,345

Age 80 $927,274

Age 85 $1,157,642

Age 90 $1,375,204

Age 95 $1,530,081

How much you need for retirement will greatly depend on how long you live. The chart to the left shows how much you need to have when you start retirement, assuming a starting retirement income of $75,000 each year.2

Retirement Myths Can Distort Your Planning

retirement and life insurance

2 The chart above assumes that you retire at 65 and live until the year described in the table. It assumes a starting retirement income of $75,000 and increases each year by 3% for inflation. This is a gross amount and you would pay income taxes on the income you withdraw each year. It assumes that your assets, the starting amount shown in the chart, would grow at 6% each year, after taxes.

JimI anticipate I will need only about 70% of my current income once I retire.

False! Children may be out of the house and the mortgage may be paid, but other expenses linger, such as medical expenses, insurance, vacations, gifts for grandchildren, just to name a few.

“”

I anticipate I will need only about 70% of my current income once I retire.

False! Children may be out of the house and the mortgage may be paid, but other expenses linger, such as medical expenses, insurance, vacations, gifts for grandchildren, just to name a few.

“”

4 how life insurance can help

You may often think of life insurance as a way to provide for your family in case something happens to you; this is its primary purpose. But, permanent life insurance, which builds cash value, might also help you move toward your retirement goals.

Death Benefit ProtectionIf you have established a need for life insurance, it can help you meet multiple objectives. In the event of an unexpected death during your working years, it helps protect your family with a benefit that can be received income tax-free.

Build Cash Value for RetirementAt the same time, the premiums you pay help build cash value. That cash value grows tax-free inside the life insurance contract. At retirement, when you may not need as high a death benefit, you can take withdrawals or loans from that contract to help supplement your income. Policy cash values can be withdrawn or borrowed in a tax-advantaged manner. This allows for tax-free withdrawals and loans; however, excessive loans may trigger tax implications. Excessive loans and withdrawals may cause a contract to fail to meet the definition of life insurance in the Internal Revenue Code. In that instance, you may face an unexpected income tax liability. Work with your insurance professional to tailor an income stream that meets your needs and allows the life insurance contract to remain intact. With proper planning, funds can be received free of income taxation. If you are in a 28% tax bracket, a $20,000 withdrawal or loan might be the equivalent of $27,778 taxable income.

Cash Value — A Roth IRA ComplementIf you are already funding your 401k and IRA, or a Roth IRA, but still have additional funds to put aside, consider the cash value of life insurance. Unlike these retirement assets, life insurance doesn’t have the strict maximum dollar limitations. With proper planning, life insurance cash values can be withdrawn or borrowed without income tax consequences.

Long-Term CareAdditionally, AXA Equitable offers the Long-Term Care ServicesSM Rider with certain life insurance policies. If you are unable to perform what are often referred to as the activities of daily living, this rider allows you to accelerate receipt of the death benefit for your long-term care needs. And, unlike traditional long-term care coverage, if you don’t use the benefit your family will still receive something in the form of a death benefit.

how life insurance can help

how life insurance can help 5

The Long-Term Care ServicesSM Rider has certain limitations that you should understand prior to any purchase. The rider comes at an additional cost, but it is important that you weigh the benefits and features of each type of policy rider. If you withdraw funds to supplement your retirement income you will reduce your life insurance death benefit. Ordinarily, if properly planned, this should not trigger adverse income tax consequences. However, if you also have a Long-Term Care ServicesSM Rider reducing the death benefit, will reduce the amount of long-term care benefit. You will need to make a choice between maximizing income from your life insurance policy and preserving the death benefit to draw on for future long-term care.

your complete lifestyle product

Few assets offer all the advantages that life insurance can offer, covering both your family’s needs during your working years and, possibly, your own personal income during retirement. How Supplemental Income Works

Please note: Surrender charges will apply if a contract is surrendered early. Please check the policy for the surrender schedule.

You contribute dollars to a life insurance contract as premiums

The insurance company will take out certain expenses for its operations

and state premium taxes

Any death benefit after your supplemental

income will be paid to your beneficiaries

Your remaining premium contributions

build cash value

You can take withdrawals & loans to help

supplement your retirement

Generally Ages 20–65

During your working years

When you have a life insurance need

During your retirement years

When you have a reduced life insurance need

Generally Ages 65 and Older

6 how life insurance can help

Dialing Your Tax BracketIt’s always important to diversify and spread your risk among many investments. Diversification can help protect you from fluctuations among different assets and asset classes.

Have You Considered Dialing Down Your Tax Bracket?

For tax payers with non-discretionary income sources, such as Social Security and qualified plan distributions, life insurance can help address income needs and avoid pushing income into higher tax brackets. By diversifying among different financial products you may have the ability to protect yourself against fluctuations in tax rates. Why is this important? During years with high tax rates you may want to have the option to take funds from tax-deferred or tax-free investments. In today’s uncertain tax and budget environment, planning for this is all the more important.

For example, see the difference in net after-tax income in the example below when life insurance cash values are used to supplement income.3

By diversifying via tax status, you can also make the choice and take income from taxable or non-taxable sources to reduce tax exposure and optimize your supplemental income.

Lower Tax Brackets Filled First: Social Security, IRA and Pension Distributions,

and Other Taxable Income

Higher Tax Brackets: There is a Choice — Taxable Income, or Cash Values,

Roth IRAs and Municipal Bond InterestTotal

First $17,850 + Next $54,650 Next $27,500 = $100,000

Without Life Insurance Planning

Tax Rate

10% + 15% 25%

Taxes Due

$1,785 + $8,198 $6,875 = $16,858

With Life Insurance Planning

Tax Rate

10% + 15% 0%

Taxes Due

$1,785 + $8,198 $0 = $9,983

41% Savings = $6,875

3 Assumes tax calculations made in 2013, filing jointly.

how life insurance can help 7

Taking It One Step Further Personally Owned Life Insurance (POLI):Life insurance is a flexible planning device. You can tailor your life insurance contract to meet many of your planning needs simply through the way you set up ownership of the policy, the way in which you fund the premiums and even through the type of policy you purchase. Depending on how you own your policy, you can receive a range of protections.

• Family Protection: The classic way to own life insurance is to personally own the contract and name your spouse, or family, as beneficiary of the death benefit. That way you maintain maximum control over the policy.

• Supplement Income: If you reach retirement and want to access the cash value, you can begin to withdraw any value that exists through loans or withdrawals. This is the easiest and most common approach.

• Asset Protection: In many states, both the cash surrender value and the death benefit receive special protection from creditors. This may vary widely from state to state, so always work with your tax and financial advisors.

• Estate Protection: If you have estate planning issues, you can take additional steps to enhance your planning:

• You can keep the death benefits outside your estate by having the policy owned by your spouse. Through your spouse and during retirement you can still have the benefits of policy income.

• You can set up what is sometimes called a “Stand-By” trust. While you are working and both spouses are alive, you can retain ownership of the policy. On the first death, if you still want to keep the policy out of your estate, the trust that has been standing by all these years is available to take over ownership. You can do this through gifts, the way you titled the ownership of the policy or even estate planning devices intended to pre-fund the “Stand-By” trust. Depending on the order of deaths, the transfer to the trust might be considered a gift. Under current estate tax law, property, such as life insurance that is gifted away, might still be pulled back into your estate if you die within three years of the gift. Your insurance professional might be able to set up additional planning to help minimize this effect.

• Your insurance professional and other tax advisors can work with you on the approach that might work best for your situation.

Remember, estate planning doesn’t always mean estate taxes! Review different ownership options, such as trusts, if you want to do specialized planning to:

• Protect your surviving spouse from creditors,

• Protect children from a prior marriage while providing for your current spouse,

• Provide funds for a special needs child.

8 important tax benefits and considerations

important tax benefits and considerations

Tax BenefitsWith proper planning, your life insurance policy offers some amazing tax advantages.

• The death benefit in a life insurance contract can be received income tax-free by your beneficiaries.4

• Life insurance policy cash values can grow income tax-free.

• Policy values received in retirement can maximize your dollars. Under current tax law, funds received from a policy can be received income tax-free. Tax-free means more in your pocket. If you are in the 28% tax bracket, $20,000 out of your life insurance policy in retirement is the equivalent of $27,778 of income during your working years.

• If you have an estate tax problem, with proper planning the death benefit can also be free of estate taxes.

Tax Considerations• This approach makes sense only if you have a life insurance need. Although the cash values grow income

tax-free, your premium dollars are assessed state premium taxes and the policy values are charged annual costs of insurance. Without the added need for life insurance, other saving options may be more appropriate.

• Care must be taken when taking withdrawals or loans. Excessive withdrawals and loans may erode your death benefit or cause a life insurance contract to fail, resulting in unexpected income taxes.

• Although the cash surrender values accumulate income tax-free, life insurance contracts also carry charges not associated with investment products, such as a cost of insurance. These charges increase over time, so careful planning is required.

The Supplemental Income strategy discussed in this brochure involves life insurance. Life insurance can be a complex financial instrument. It is primarily intended to provide a death benefit. The added benefits of tax-free cash value accumulation, as well as the withdrawals and loans that supplement your income, are predicated on the life insurance contract maintaining its status.

4 This is controlled by Tax Code Section 101. To receive this tax-free death benefit, the contract cannot fall into what is considered “transfer-for-value” status. Work with your life insurance professional and other tax advisors before you make any ownership change to help assure this continued tax-advantaged status.

For More Information, Contact Your Financial Professional or Visit www.axa-equitable.com.

Life Insurance professionals can help you design and select a life insurance product that is ideal for your needs, handling your life insurance protection as well as accumulating cash values. During retirement, your life insurance professional can help you determine the best way to access your cash values. Special care must be taken when withdrawing your funds. If you withdraw or borrow too much, the life insurance contract may fail to meet the definition of life insurance. That could result in unexpected income taxes. Be sure to work with your life insurance professional to help monitor your policy and help maintain your life insurance policy.

Before considering a variable universal life purchase, all costs of the product should be considered including, but not limited to, guaranteed and current interest rates, surrender charges, insurance charges, features, benefits and riders in the contract and their charges.

Fixed life insurance is issued by AXA Equitable Life Insurance Company and is co-distributed through AXA Distributors, LLC and AXA Network, LLC and its subsidiaries. AXA Equitable, AXA Distributors and AXA Network are affiliated companies.

All guarantees are based on the claims-paying ability of AXA Equitable Life Insurance Company or MONY Life Insurance Company of America.

AXA Equitable, AXA Network and AXA Distributors do not provide tax or legal advice.

© 2013 AXA Equitable Life Insurance Company. All rights reserved.

1290 Avenue of the Americas, New York, NY 10104, (212) 554-1234

G31176 GE-84560 (5/13) (Exp. 5/15) Cat. #144684 (5/13)