NQnext – Initial Case Study

$1,666,666.67 Lump Sum Distribution – Case Study

Let’s start the week by looking at an example of how NQnext might work. A 60 year old executive is receiving a Non-Qualified Plan lump sum distribution due to a change in employers. The executive is in a 2013 40% marginal tax bracket resulting in income tax of $666,666 leaving a net lump sum of $1,000,000. Up to now most NQ Plan TPA’s and Plan Sponsors provide no suggestions about the best way to leverage the receipt of this money. Take the time to consider the case example. Perhaps we should try to provide more guidance.

I believe people want to tell a story about themselves and they do so when they make financial decisions. One of the greatest challenges facing American society today is longevity. My Father who recently passed away at 82 may not have lived beyond 75 if it were not for medical science. We are enabling people to live longer however we have not come up with many brilliant ideas about how to afford it. I also believe people do not want to become a burden to their children yet fear the unknown of their last few years.

NQnext is a way to help people tell a story of care and love to their family. Go back to the executive who receives $1,000,000 after-tax. If healthy (healthy is important and I will elaborate on this in future discussions) the executive can purchase a 10 Pay $1,000,000 Life Insurance Policy with a Long Term Care Rider.

Summary of Purchase –

Coverage – $1,000,000 Life Insurance with Long Term Care Rider (LTC)

LTC provides for a $20,000 Monthly Benefit. Every LTC benefit reduces the Life Insurance Policy Death Benefit by the amount paid under the LTC Rider.

Cost – A 60 year old with a Preferred Non-Smoker rating can purchase the policy for ten annual payments of $30,000.

The math is compelling. From the $1,000,000 After-Tax the executive has created $1,000,000 of a combined Life Insurance/LTC benefit and still has $700,000 to use for other purposes.

Will executives be receptive to this story? I believe the answer is yes for these two reasons:

1 – They care about their family and want to tell a story about themselves.
2 – They are likely to be at an age where they have recently had to help parents in their last years or they have parent’s of friends in similar situations.

NQnext is committed to helping people tell their stories to their families and friends in a simple way. In the days to come I will be expanding this discussion about the need and the delivery systems of NQnext. Enjoy the day!

REMEMBERING MY FATHER J. MURRAY MARSHALL – 1930 to 2013 – One of my inspirations for the story of NQnext.



About Doug Marshall
Constant Learner

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