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LINKED BENEFITS

LINKED BENEFITS. A Two Word Strategy for Protecting Your Retirement. Agenda. Understanding the facts about extended care. Why is now the time to consider a linked benefit product? How can a linked benefit product help leverage your retirement assets? What is a linked benefit product?

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LINKED BENEFITS

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  1. LINKED BENEFITS A Two Word Strategy for Protecting Your Retirement

  2. Agenda • Understanding the facts about extended care. • Why is now the time to consider a linked benefit product? • How can a linked benefit product help leverage your retirement assets? • What is a linked benefit product? • How does a linked benefit product work? • Open Discussion

  3. The Facts About Extended Care • 70% age 65 or older will need it temporarily or permanently • Nursing home* • $80,000/year private • $73,000/year semiprivate • Assisted living unit* • $3,100/month • Home care aide* • $25/hour • Adult daycare* • $60/day 70% Average cost of long-term care is high and increasing *National Averages. Actual costs vary by state.

  4. Activities of Daily Living • To better understand “extended” care, think of the activities that you performed when you woke up this morning. • You probably: • Climbed out of bed (Transferring) • Used the bath or shower (Bathing) • Walked to the bathroom (Continence) • Got dressed (Dressing) • Used the toilet (Toileting) • Ate breakfast (Eating)

  5. Activities of Daily Living • While we are healthy it is easy for us to take for granted the Activities of Daily Living (ADL's). However, when you or a loved one is stricken with a degenerative condition such as a stroke, performing these ADL's becomes impossible without the assistance of another person. This type of care is chronic (full-time) and thus becomes very expensive. • Cognitive Impairment, example Alzheimer’s, is a stand-alone trigger of benefits

  6. Claims Are Lasting Longer • Average duration of claim is 4.2 years • 75% of claims start at home • Carriers are seeing significant percentages of cognitive claims • Alzheimer’s/Dementia • These claims produce longer stays • Impact on caregivers, family, and friends • Emotional • Financial • Logistical • Family dynamics • Everyday life

  7. If You Needed Extended Care Today… Which Asset Would You Use First? While the actual proportions in this chart will differ based on a specific individual’s needs, it does show the different types of assets in a typical retirement-oriented portfolio.

  8. Are You Prepared • To spend down your retirement savings? • $80,000 X 4 years = $320,000 • $320,000 X 2 (includes spouse) = $640,000 • To Spend $640,000?

  9. Why Now? • 2011 represents the beginning of a new era in retirement planning • New Tax Advantages • New Products • Environmental factors • Low interest rates • Lower risk tolerance • Money is not working as hard as it could be • CDs • Savings Accounts • Cash • Your financial strategy is not complete without extended care planning

  10. Think About It If you could take $1.00 and make it worth more… Wouldn’t You?

  11. A Linked Benefit Product • Makes your money work harder; leveraging each dollar up to 5 times in the event of an extended care need • Provides a Death Benefit to beneficiaries if you don’t use all the money • Keeps you in control of your assets; a money back guarantee* • Offers a smart way to help protect your existing assets from an extended care event *Through the Return of Premium Rider on single premium and certain flexible premium universal life policies.

  12. What Is A Linked Benefit Product? • Linked benefit product: a base product such as life insurance or an annuity with a "rider" that provides long term care benefits if needed. • Provides multiple benefits, paying out the first benefit, as needed. • Qualified long-term care costs are reimbursed • Reimbursements intended to be income tax-free

  13. How A Linked Benefit Product Works Life Insurance to create a legacy Other Designated for long-term care costs CashReserves Investments / qualified plans While the actual proportions in this chart will differ based on a specific individual’s needs, it does show the different types of assets in a typical retirement-oriented portfolio.

  14. More Extended Care Protection Extended Care Reimbursement If you need extended care Up to 5 times premium dollars Reimbursements for qualified long-term care costs intended to be income tax-free Benefits paid up to the maximum monthly amount specified in your policy Specified amount of death benefit used to reimburse long-term care costs Optional rider can provide coverage for specified number of years after death benefit is depleted Cost of riders deducted from policy’s account value Long-term care reimbursements are generally income tax-free under IRC Section 104(a)(3).

  15. Income Tax-FreeDeath Benefit Extended Care Reimbursement Death Benefit If you never need extended care If you need extended care Up to 5 times premium dollars Reimbursements for qualified long-term care costs intended to be income tax-free Benefits paid up to the maximum monthly amount specified in your policy Specified amount of death benefit used to reimburse long-term care costs Optional rider can provide coverage for specified number of years after death benefit is depleted Cost of riders deducted from policy’s account value Income tax-free death benefit Any portion of guaranteed death benefit not used for long-term care benefits will pass to beneficiaries income tax-free Any money borrowed or withdrawn from the policy will reduce the death benefit Beneficiaries receive death benefits income tax-free Under IRC Section 101(a)(1)

  16. Money Back Guarantee Extended Care Reimbursement Return of Premium Death Benefit If you never need extended care If you change your mind If you need extended care Up to 5 times premium dollars Reimbursements for qualified long-term care costs intended to be income tax-free Benefits paid up to the maximum monthly amount specified in your policy Specified amount of death benefit used to reimburse long-term care costs Optional rider can provide coverage for specified number of years after death benefit is depleted Cost of riders deducted from policy’s account value Income tax-free death benefit Any portion of guaranteed death benefit not used for long-term care benefits will pass to beneficiaries income tax-free Any money borrowed or withdrawn from the policy will reduce the death benefit Provides a money back guarantee through the Return of Premium Rider on single premium and certain flexible premium universal life policies Your premium payment can be returned to you, minus any loans, withdrawals, or benefits paid, and is subject to the terms of the Return of Premium Rider Beneficiaries receive death benefits income tax-free Under IRC Section 101(a)(1) NOTE: This may have tax implications, so check with your tax professional.

  17. Hypothetical Case Study • Mary, Age 65 • Good Health, Non-smoker • $1 million retirement portfolio • Repositioned $100,000

  18. Leverage Up To 5 Times The Premium Extended Care Reimbursement If Mary needs extended care Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs. The total reimbursement could be up to $499,248 income tax-free. She still has money in her portfolio to leave to her beneficiaries. Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

  19. More Money To Mary’s Beneficiary Extended Care Reimbursement Death Benefit If Mary needs extended care If Mary doesn’t use her extended care benefits Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs. The total reimbursement could be up to $499,248 income tax-free. She still has money in her portfolio to leave to her beneficiaries. In addition to money remaining in Mary’s own portfolio, her beneficiaries will receive a $166,406 death benefit, minus any loans or withdrawals. Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

  20. Mary Can Change Her Mind Extended Care Reimbursement Return of Premium Death Benefit If Mary needs extended care If Mary changes her mind If Mary doesn’t use her extended care benefits Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs. The total reimbursement could be up to $499,248 income tax-free. She still has money in her portfolio to leave to her beneficiaries. In addition to money remaining in Mary’s own portfolio, her beneficiaries will receive a $166,406 death benefit, minus any loans or withdrawals. Mary would receive her original $100,000 single-premium payment, minus any loans, withdrawals, or benefits paid. * This may have tax implications *Through the Return of Premium Rider on single premium and certain flexible premium policies. Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

  21. Easy Process • Less than 20 simple pre-screening questions • 45 minute phone interview • No exams, lab work, or doctor’s statements

  22. So What’s Next?... Let’s Talk Thank You!

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