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Prudential Long-Term Care Insurance Selling to Businesses and Associations

Prudential Long-Term Care Insurance Selling to Businesses and Associations. Fred Sherman, CLU, ChFC, Regional Sales Manager. For Financial Professional Use Only – Not for distribution to the general public. Multi-life Opportunity.

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Prudential Long-Term Care Insurance Selling to Businesses and Associations

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  1. Prudential Long-Term Care InsuranceSelling to Businesses and Associations Fred Sherman, CLU, ChFC, Regional Sales Manager For Financial Professional Use Only – Not for distribution to the general public.

  2. Multi-life Opportunity • The “multi-life” LTC market is one of the fastest growing components of LTCi sales • Executive Carve Outs • Employee Benefits • Opens door for cross-selling approach • Prudential offers LTCi products to: • Individuals (small employer groups) • Associations • Large corporations

  3. Why LTC Insurance? • One of the newest employee benefits being used to attract and retain top-talent • Awareness and interest in LTC is increasing: • Media attention • LTC Awareness programs • Baby boomers seeing parents needing help • Facing their own futures • Employers can have a positive effect on employees in planning for their future needs • Help diminish the negative effects of caregiving • LTC market is untapped with only 3% of small businesses offering LTCi

  4. LTC Advantages for Businesses • Group discounts • Tax advantages • Deductible premiums • No income / tax-free benefits • Executive benefit perk (carve outs) • Employers pay premiums for select employee groups • Benefits received by employee are not taxable • Employee owns policy and it’s portable • Method of providing a “raise” to key employees • Multiple “employee” classes with no nondiscrimination requirements* • Ease of administration (list billing) *Source: http://www.irs.gov/publications/p15b/ar02.html#d0e731.

  5. Maximum Tax-Deductible Premiums (2006) 2006 Eligible Premiums Age 40 or below $280 Age 41 to 50 $530 Age 51 to 60 $1,060 Age 61 to 70 $2,830 Age 71 and above $3,530

  6. Tax Advantages for C-Corporations • Premiums are 100% deductible as business expense • Fully deductible to firm, not taxable to employee • Spouse premiums are fully deductible to the firm, not taxable to the employee

  7. What to Ask C-Corporations • Why do you want to pay for LTC yourself when your company can pay it for you? • Corporate paid premium after taxes is approximately 60% of actual premium (assume 40% personal and corporate tax bracket) • Example: • $8,000 premium is discounted to $4,800 • Personal after-tax paid premium approximately 140% of actual premium • $8,000 premium would cost $11,200 in after-tax dollars

  8. Tax Advantages: • S-Corporations • Premiums are deductible for owners, limited to an age-based amount • Fully deductible to firm, not taxable to employee • Greater than 2% of owners, eligible premium is deductible above the line*; all other fully deductible to firm, not taxable to employee • Spouse premiums are fully deductible to firm, not taxable to employee * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder. * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

  9. Tax Advantages: • Partnerships • Fully deductible to firm, not taxable to employee • Eligible premium is deductible above the line* • Spouse premiums are fully deductible to firm, not taxable to employee • Premiums reported as guaranteed income on Schedule K-1 • LLCs • Fully deductible to firm, not taxable to employee • Eligible premium is deductible above the line* • Spouse premiums are fully deductible to firm, not taxable to employee • Income reporting depends on Corp or Partnership status * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

  10. The Solution: Prudential Multi-Life Programs Employer-Sponsored Affiliations

  11. Employer Sponsored Program (ESP) Highlights • Employer group size requirement • Three to nine employees (all must be insured) • 10 to 500 lives (must work minimum of 30+ hours per week) • Minimum participation requirement • The greater of 5% of the group or 10 lives (including spouses) • Discounts • 10% discount to employees & spouse/partner • 5% discount to family members* • No maximum on discounts • Preferred health rate class not available to employees under ESP • Modified underwriting (employees ages 18 - 70*) • Customized plan design for every client • Buy-ups available * Parents, in-laws, aunts, uncles, siblings, grandparents, grandparents in-law, and children ages 18 and older.

  12. ESP Plan Design • Options with modified underwriting • $50 - $300 Facility: daily, monthly, or cash benefit • 50%, 75% or 100% home care • Benefit periods: 2, 3, 4, 5 or 6 years • Elimination period: 60, 90, 120, 180, or 365 days • All Inflation options available • Accelerated premium options available • 10 pay • Paid-up at 65 • Buy-ups available • Lifetime, 150% Home Care, etc…

  13. Optional Riders* • With modified underwriting • Flexible cash benefit rider • Cash benefit rider • Return of premium upon death benefit • Shared Care Benefit • Available as buy-up with full underwriting • 150% home care daily benefit • Joint waiver of premiums benefit • Survivor waiver of premiums benefit * For the Prudential LTC3 product only. Contact your Regional Sales Manager with questions on LTC By DesignSM.

  14. ESP Modified Underwriting Questions • Do you use: walker, oxygen, respirator, or kidney dialysis? • Within past 12 months have you: used adult day care, needed home health care, or been medically advised to enter or been confined to nursing home, assisted living facility, or other LTC facility? • Do you currently need assistance or supervision by another person in performing any of the following activities: bathing, eating, toileting, bowel or bladder control, moving in and out of bed or chair, dressing, or taking your medication? • Have you had, do you currently have, or have you ever been diagnosed as having any of the following medical conditions: • Organic Brain Syndrome, Dementia, Senility, Confusion, Memory Loss, or Alzheimer’s Disease? • Metastatic Cancer (cancer that has spread from original site or location?) • Multiple Sclerosis (MS), Muscular Dystrophy, Multiple Transient Ischemic Attacks (TIA), Parkinson’s Disease, Amyotrophic Lateral Sclerosis, Stroke, or Cerebrovascular Accident (CVA)?

  15. ESP Billing Options • List bill • Monthly payment sent to Prudential by mail or electronic transfer • All participants premium is sub-totaled on one bill • Direct bill • Employees deducted monthly with or without EFT • Quarterly, semi-annual, or annual available

  16. Affiliation/Association Program Highlights • Qualification • Minimum 100 Association members and formed for common purpose* • Businesses may also qualify for discount** • Participation requirement • 5 lives within a 6-month period • Program Features • 5% discount for members & extended family • Full underwriting • Unlimited benefits and riders available *Other than to buy insurance. Other restrictions may apply. **May not be used in combination with ESP.

  17. Opening Doors • Who are your clients? • Do they own a business? • Are they executives with a company? • Do they belong to professional or personal associations? • What associations do you or someone in your personal network belong to? • Can you conduct a seminar?

  18. Who to partner with? Property/Casualty Agents Accounting Firms Trade Associations Employee Benefit Consultants Chambers of Commerce Corporate Attorneys What industry to target? Favorable: Higher Education Physicians Law Firms Accounting Engineering Challenging: Retail Hospitals Manufacturing Finding the Right Businesses

  19. Sample Opening Statements “I work with businesses to help the owners protect against unexpected personal financial risks and build tax-free cash so that they retire with peace of mind and security.” “I help business owners and key employees build large pools of cash so they are protected from unexpected financial risks and can retire with complete confidence and peace of mind.” “Did you know that you can extend the current limits of your healthcare before you retire?” “I help business owners & management build tax-free cash funds to ensure a risk free retirement.” “I help companies provide their owners, employees and families with cash protection for the biggest threat to their financial security.” “I work with business owners and key staff to help them maximize their personal compensation by using pretax dollars to fund million dollar tax-free benefits.”

  20. Why Prudential? Effortlessly Handling All of Your Long-Term Care Insurance Needs Long-term care insurance is underwritten by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102 (800-732-0416). Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ, USA and its affiliates. For Broker/Producer Use Only. Not to be distributed to the public.

  21. Questions & Answers Fred Sherman, CLU, ChFC Regional Sales Manager 763-553-8707

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