Pacific Estate Preserver III Last Survivor Universal Life Insurance Client Brochure

Pacific Life Insurance Company

Share Your Dreams and Your Legacy.

PEP3-1G

Share Your Dreams. And Your Legacy. You work hard to turn your hopes and dreams into reality. Along the way, your legacy is built one day at a time. Fly fishing trips. Little league games. Holiday meals. Shared moments like these last for generations. An estate can last generations, too. After all, you want the same success for those you care about. And together, you can make sure it happens.

Investment and Insurance Products: Not a Deposit Not FDIC Insured

Not Insured by any Federal Government Agency No Bank Guarantee

May Lose Value

Two Lives. One Policy. Pacific Estate Preserver III insures two lives with one product. Last survivor universal life insurance is designed for two people that share a common dream: protecting their legacy. Because the benefit is paid on the second death, last survivor insurance can be an effective way to help offset any estate taxes on what you leave behind. Whether your legacy is a large estate, a business or both, you can help protect the many things you built with one financial vehicle from Pacific Life Insurance Company: Pacific Estate Preserver III (Policy Form #P07PE3) last survivor universal life insurance.

1.

Flexible In Life. Flexible For Life. One key to sharing a happy life together is staying flexible and responsive to each other’s needs. Flexibility is also important as your financial situation changes. That’s why Pacific Estate Preserver III is adaptable. For as long as you own your policy, it can be adjusted to your changing circumstances and financial goals. Within the policy’s guidelines, you can:

e Choose your premium amounts and frequency to fit your timetable and budget. e Change your death benefit option, lower your life insurance coverage or both. e Benefit from built-in and optional riders that can enhance and protect your policy’s accumulated value and death benefit. Learn more about policy features and guidelines beginning on page 4.

2.

Shape Your Future. Or Take Care Of Today. With Pacific Estate Preserver III, death benefit proceeds are generally free of federal income tax,1 which is an important consideration if you’re both concerned about the impact of taxes on the estate as a whole2 when it eventually reaches those you care about. Yet, you may have more near-term financial needs. So, in addition to tax-free1 death benefits, a Pacific Estate Preserver III life insurance policy also offers living benefits that let you use your policy today. How you use it can both help and determine the legacy you want.

What’s Your Legacy? Pacific Estate Preserver III Can Help Protect It. Your Estate—Offset estate taxes2 when your assets change hands. Hard-Earned Wealth—Build your legacy year by year as policy accumulated value grows, which also helps your policy provide a source of supplemental income. Charitable Bequests—Bequeath a substantial gift to your favorite cause for simply the cost of paying premiums. A Challenged Loved One—Know that a child or grandchild with special care needs will be taken care of long after you’re gone. Tax Concerns—Structure your policy in an irrevocable trust and proceeds are usually not subject to estate taxes.2 Please talk with your life insurance producer, as well as your financial and tax advisors, about these and other objectives before purchasing a policy.

1 For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Situations include, but are not limited to: the transfer of a life insurance policy for valuable consideration unless the transfer qualifies for an exception under IRC Sec. 101(a)(2) (i.e., the “transfer-for-value rule”); arrangements that lack an insurable interest based on state law; and an employer-owned policy unless the policy qualifies for an exception under IRC Sec. 101(j). 2 According to the American Taxpayer Relief Act of 2012, the federal estate, gift and generation skipping transfer (GST) tax exemption amounts are all $5,000,000 (indexed for inflation effective for tax years after 2011); the maximum estate, gift and GST tax rates are 40%.

3.

Strong Protection. Flexible Policy. To help create your legacy, Pacific Estate Preserver III offers choices. Life At Your Pace Choose how often and how much for your premiums.3

As You Change, So Can Your Life Insurance Policy Choose or change your face amount for whatever course you’re on.

With Pacific Estate Preserver III, the amount and frequency of your premium payments are flexible. Your policy stays in force as long as it has enough accumulated value to pay monthly charges.

Pacific Estate Preserver III keeps in step with your financial goals. Whether you need more or less life insurance coverage, you can change your policy face amount on your policy anniversary.

However, if accumulated value is not sufficient to pay monthly charges,4 your policy will lapse. In this case, you would need to make additional premium payments to prevent the lapse.

In fact, you can schedule automatic increases at the time you purchase your policy so that the amount of your life insurance keeps up with your growing needs.

To help keep you on track, we will send you premium reminders on a regular basis.

Scheduled increases are possible if you purchase the Annual Renewable Term Rider–Last Survivor (Form #R07ARL).9

And you can choose the frequency of your reminders:

Essentially, the rider provides additional term life insurance on the same two individuals covered by the policy. Its death benefit would be paid on the second death, along with the base policy’s.

e Annually. e Semi-annually. e Quarterly. e Monthly. (With monthly payments, we

With the rider, you can schedule face amount increases from 5% to 20% annually, depending on the attained age of the younger insured.

conveniently transfer from your checking or savings account electronically.)

Keep in mind, this rider is available at policy issue. There are specific guidelines and limitations to consider when making coverage changes. Your life insurance producer and policy contract can provide more information.

3 Universal Life Insurance generally requires additional premium payments after the initial premium. If either no premiums are paid, or subsequent premiums are insufficient to continue coverage, it is possible that coverage will expire. 4 Administrative charge, Cost of Insurance charge, Coverage charge and rider charges, if applicable. Policy charges will reduce the policy’s effective rate of return. 4.

The Choice Is Yours. Three options help you match your death benefits to your goals. With three death benefit options to choose from (examples below), which one is best for you depends on your estate planning needs.

Option

Death benefit is the greater of the minimum death benefit or. . .

A

your policy’s face amount.

Face Amount

Benefit vary. Each works differently, which means the death benefit amount—and the relative cost to insure for that death Death benefit—will Net Amount at Risk

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your policy’s face amount plus its accumulated value.

C

your policy’s face amount plus all premiums paid less any withdrawals.5 Face Amount

B

Death Benefit

n e fi t Death Be Net Amount at Risk

Face Amount

If your needs change, you can switch to Option A or Option B. Once the younger insured turns 89, you can switch only to Option e A. Net Amount at Risk

V ted l atax also have u m Accu

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Making changes in your death benefit option may affect your monthly insurance charges. Policy changes may e lu Va consequences. Please note: your death benefit, regardless of death benefite doption, may be reduced by policy withdrawals, loans t ula m u c and unpaid loan interest. Please refer to your policy contract forA cmore information. Time Time

Option A

Option B

Option C Death Benefit

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5 The maximum issue age for Deathe Benefit Option C is 80 (for both insureds).The Option C death benefit is limited.The Option C death benefit actually paid will lu never be more than the Option policy specifications, V a C Death Benefit Limit stated in your Net Amount at Risk unless a greater amount is necessary in order to satisfy the IRC Section ted a l u 7702 Minimum Death Benefit requirements. m e u c Ac lu Va 6 Net Amount at Risk = Death benefit amount that exceeds accumulated value. d e t Time

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a

It’s Your Life: Add Value Or Access It. Pacific Estate Preserver III’s accumulated value grows tax-deferred.

Tax-deferred growth means more accumulated value stays in your policy today to work for you, rather than being lost to current income taxes. How Your Policy Grows

Using Your Accumulated Value

Two things help to grow your policy’s accumulated value: the timing and amounts of the premiums you pay and interest credits we provide. See page 7 for crediting rate information.

The accumulated value in your policy can play a role in future death benefit proceeds. But it also can be used for more immediate needs, through a withdrawal or policy loan.

And, as your policy’s accumulated value grows, you have options to access it.

Refer to the table below for more information on your policy withdrawal and loan options.

Distribution Options – At a Glance Withdrawals

Policy Loan

How it Works You take a portion of policy accumulated value, tax-free.7 Cost $25 each (currently waived).

You borrow from policy accumulated value, tax-free.7 Net annual charge of 0.25% of the loaned amount.8

Policy Withdrawal amount will reduce policy values and Impact may reduce benefits.

Loan amount and unpaid loan interest will reduce policy value and may reduce benefits.

Details $500 minimum. Remaining accumulated value must be $500 and enough to meet monthly charges and other costs.

$200 minimum (most states). Unless you indicate they are premiums, any payments are first applied to outstanding loan repayment.

7 Tax-free income assumes,among other things: (1) withdrawals do not exceed tax basis (generally, premiums paid less prior withdrawals); (2) policy remains in force until death; (3) withdrawals taken during the first 15 policy years do not occur at the time of, or during the two years prior to, any reduction in benefits; and (4) the policy does not become a modified endowment contract. See IRC §§ 72, 7702(f)(7)(B), 7702A. Any policy withdrawals, loans and loan interest will reduce policy values and may reduce benefits. 8 Charged in arrears. In policy year 6 and beyond, the net annual charge is 0% on a non-guaranteed basis. 6.

Certain Guarantees For Life’s Uncertainties. The Estate Preservation Rider (Form #R07EPR)9

Pacific Estate Preserver III offers several built-in and optional guarantees to help you manage, grow and protect your policy— and your legacy.

If you’re among the many who anticipate a substantial estate tax, the proceeds from a last survivor life insurance policy can help your estate offset this burden. Under current tax laws, however, a transfer of a life insurance policy within three years of your death may be considered a gift and placed back into your estate for estate tax purposes.

Crediting Rate Each year we guarantee your Pacific Estate Preserver III policy’s accumulated value will receive at least a 3% interest credit. We may provide a larger credit than 3%, but your interest credit will never be lower than 3%—guaranteed.

With this in mind, the Estate Preservation Rider can pay an additional death benefit if both insureds die within four years from the policy’s issue date. At no cost, this rider is added to the policy at issue. The rider’s face amount is fixed at issue and does not change, even if policy face amount is reduced. The rider is automatically included if both insureds are between 20 and 75 years old and meet minimum underwriting requirements. Check your contract for eligibility requirements.

Current Cost of Insurance (COI) Charges Cost of Insurance charges are one of several monthly fees deducted from your accumulated value. They are a rate per $1,000 multiplied by the net amount at risk. We guarantee that your current Cost of Insurance rates will not increase for a specific period of time. So, you’ll have a little more predictability in a world where the cost of practically everything is going up.

Current COI Rate Guarantees Age At Issue (older insured)

Guarantee Periods

Neither Insured Uninsurable < 66

10 years

66 - 80

5 years

> 80

1 year One Insured Uninsurable

< 66

5 years

≥ 66

1 year

9 Riders will likely incur additional charges and are subject to availability, restrictions and limitations. When considering a rider, request a policy illustration from your life insurance producer to see the rider’s impact on your policy’s values. 7.

Enhancing Your Policy. In life, sometimes a little goes a long way. You can add some basic but powerful riders that go far toward protecting your legacy.

Annual Renewable Term Rider–Last Survivor (Form #R07ARL)

Policy riders are subject to eligibility requirements and availability. Each of the riders9 listed here have charges associated with them that are deducted from the policy’s accumulated value. Request an illustration from your life insurance producer to see how certain riders would impact your policy’s value.

This rider adds term coverage on the same two lives covered by the base policy. Like the base policy, it pays upon the second insured’s death. This rider is available only at the time you buy your policy.

Surrender Value Enhancement Rider–Last Survivor (SVER-LS) (Form #R07SEL)10

Annual Renewable Term Rider–Individual (Form #R07ARI)

This rider provides additional life insurance coverage to establish higher earlier year cash surrender value, relative to premiums paid, but generally less cash surrender value in the later policy years, compared to base coverage only. The rider can only be added at the time you purchase your policy.

The rider adds term life insurance to one of the insureds on your policy. The rider’s death benefit is paid at the death of the party insured by the rider to the beneficiary. This rider can be issued on one or both lives covered by the base policy. However, this rider is not available on an uninsurable life. This rider is only available at the time you purchase the policy.

10 In Pennsylvania this rider is titled Term Insurance Rider–Last Survivor (Form #R07SEL).

8.

Other Helpful Riders.

9

Optional safety measures to help you cope with life’s sudden twists and turns. Accelerated Living Benefit Rider (Form #R06ALB)11

individual policies subject to full evidence of insurability for both insureds. It is automatically included at no charge on all policies. Utilizing this rider does not qualify as a tax-free 1035 exchange.12 Surrender charges on the old policy may apply. We reserve the right to charge a $200 administrative fee to use this rider. New surrender charges may apply to the new policy.

Gives the policyowner access to portions of the eligible death benefit after the first death of the two insureds, if the surviving insured is diagnosed as terminally ill with 12 months or fewer to live. We reserve the right to charge a $150 administrative fee to exercise this rider. Conversion Rider (Form #R06CON)

Enhanced Policy Split Option Rider (Form #R03ESO)

At any time during the eighth policy year, the base and any applicable SVER-LS coverage may be converted to any other policy of cash value life insurance that we make available at that time. The new policy will be issued at the same risk class as the original policy within certain guidelines.

Although many couples choose last survivor life insurance to help deal with potential estate taxes, the laws could change. With this in mind, this rider allows the policy to be split into two individual policies, while both insureds are alive and married up to age 80 of the older insured, without evidence of insurability, within 90 days after the occurrence of any of the Federal Estate Tax Law changes listed in the rider form. Surrender charges may apply on the old policy and new surrender charges will apply on the new policies. There is no charge for this rider.

Policy Split Option Rider (Form #R03PSO) If a last survivor life insurance policy should no longer suit you both, this rider allows the policy to be split into two

11 Benefits paid by accelerating the policy’s death benefit may or may not qualify for favorable tax treatment under Section 101(g) of the Internal Revenue Code of 1986.Tax treatment of an accelerated death benefit may depend on factors such as life expectancy at the time benefits are accelerated, the amount of benefits, the amount of qualified expenses incurred, or if similar benefits are being received under other contracts.Tax laws relating to accelerated death benefits are complex. Receipt of accelerated death benefits may affect eligibility for public assistance programs such as Medicaid. Clients are advised to consult with their qualified and independent legal and tax advisors for more information.The cost of exercising the rider is that the death benefit is reduced by an amount greater than the rider benefit payment itself to reflect the early payment of the death benefit. Rider benefit payments will reduce the death benefit, cash surrender value, and any policy debt.Additionally, rider benefit payments may adversely affect the benefits under other riders. 12 There are circumstances in which replacing your existing life insurance or annuity can benefit you.As a general rule, however, replacement is not in your best interest.Your life insurance producer can provide you with detailed information as to how a replacement may affect your plan of insurance.You should make a careful comparison of the costs and benefits, including any applicable surrender charges, of your existing policy and the proposed policy to determine whether replacement is in your best interest. 9.

Pacific Life—The Power to Help You Succeed. Offering insurance since 1868, Pacific Life provides a wide range of life insurance products, annuities, and mutual funds, and offers a variety of investment products and services to individuals, businesses, and pension plans. Pacific Life counts more than half of the 100 largest U.S. companies as its clients. For additional company information, including current financial strength ratings, visit Pacific Life online at www.PacificLife.com. Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Client count as of May 2013 is compiled by Pacific Life using the 2013 FORTUNE 500® list.

This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life Insurance Company, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Pacific Life Insurance Company Newport Beach, CA 92660 Visit us at our Web site: www.PacificLife.com Pacific Life Insurance Company is licensed to issue insurance products in all states except New York. Product availability and features may vary by state. Insurance products and their guarantees, including optional benefits and any fixed subaccount crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company. Non-guaranteed elements are not guaranteed by definition. As such, Pacific Life Insurance Company reserves the right to change or modify any non-guaranteed element. This right to change non-guaranteed elements is not limited to a specific time or reason. Pacific Life Insurance Company’s individual life insurance products are marketed exclusively through independent third-party life insurance producers, which may include bank affiliated entities. Some of these selling entities may limit availability of some optional riders based on their client’s age and other factors. Your life insurance producer can help you determine which optional riders are available and appropriate for you. PEP3-1G

Policy Form # P07PE3 15-27772-07 9/13