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Meeting Chronic and Terminal Illness Care Needs with Life Insurance . PruLife ® Universal Protector featuring BenefitAccess Rider Mike Tollefsrud Title: Regional Life Consultant Date: Thursday, Aug. 8, 2013 .

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Meeting Chronic and Terminal Illness Care Needs with Life Insurance


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Meeting Chronic and Terminal Illness Care Needs with Life Insurance

PruLife® Universal Protector featuring BenefitAccessRider

Mike Tollefsrud

Title: Regional Life Consultant

Date: Thursday, Aug. 8, 2013

The Prudential Insurance Company of America, Newark NJ 07102

0248082-00001-00 Ed. 6/2013 Exp. 01/24/2015

NOT FOR CONSUMER USE.

important information
Important Information
  • Bank of America Corporation (“Bank of America”) is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and investment products and other financial services .
  • Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer and member SIPC, and other subsidiaries of Bank of America Corporation (“BAC”).
  • Investment products offered through MLPF&S and insurance and annuity products offered through Merrill Lynch Life Agency Inc.:
  • Merrill Lynch Life Agency Inc. is a licensed insurance agency and a wholly owned subsidiary of Bank of America Corporation.
  • The views and opinions expressed in this presentation are not necessarily those of Bank of America Corporation; Merrill Lynch, Pierce, Fenner & Smith Incorporated; or any affiliates.
  • Nothing discussed or suggested in these materials should be construed as permission to supersede or circumvent any Bank of America, Merrill Lynch, Pierce, Fenner & Smith Incorporated policies, procedures, rules, and guidelines.]

NOT FOR CONSUMER USE.

agenda
Agenda
  • The 5 Ws of chronic illness care
  • How PruLife® Universal Protector featuring the optional BenefitAccess Rider can help
  • Target markets and value proposition for your FPs
  • UL Protector Repricing

NOT FOR CONSUMER USE.

the realities of an aging population
The Realities of an Aging Population
  • 10,000

1 Baby Boomers Retire. Pew Research Center, December 2010. Last accessed on March 29, 2013.

NOT FOR CONSUMER USE.

what you don t know could hurt you understanding the 5 ws of chronic illness care
What you don’t know could hurt you:Understanding the 5 Ws of chronic illness care

Who

5 Ws

of Life Insurance

7 in 10 Americans age 65 and older will

require chronic care2

Why

What duration

?

Care can be

needed for many

years, sometimes

Decades3,4

  • Primarily for conditionsthat require care forlong durations:
  • Alzheimer’s Disease
  • Stroke
  • Arthritis

Where

When

73% of people who need

Chronic care receive it at

home from a family

member5

At older ages,often when alone

NOT FOR CONSUMER USE.

sources
Sources

1 Baby Boomers Retire. Pew Research Center, December 2010. Last accessed on March 29, 2013.

2 http://www.longtermcare.gov/LTC/Main_Site/index.aspx. Last accessed April 29, 2013.

3 Kemper P, et al. Long-term care over an uncertain future: What can current retirees expect? Inquiry Winter 2005/2006. Vol.42:335-50. Data derived from Tables 1 and 2.

4 http://longtermcare.gov/the-basics/how-much-care-will-you-need/. Last accessed April 29, 2013.

5 Redfoot DL, Houser A. More older people with disabilities living in the community: Trends from the National Long-Term Care Survey, 1984-2004 AARP Public Policy Institute. September 2010.

NOT FOR CONSUMER USE.

what is benefitaccess
What is BenefitAccess?
  • Life Insurance Accelerated Death Benefit Rider
  • BenefitAccess advances up to 100% of policy’s face amount if insured becomes chronically or terminally ill and otherwise satisfies terms of rider
    • It is not long-term care insurance nor is it intended to replace the need for long-term care insurance
    • It is an optional rider for an additional cost, that provides benefits if the insured is diagnosed as chronically and/or terminally ill by a Licensed Health Care Practitioner
    • Must be purchased at point of sale- requires additional underwriting
  • Benefit
  • Provides a maximum monthly benefit equal to lesser of the 2% of the face amount or the IRS Per Diem. Also provides an annual lump sum option. IRS Per Diem Limit (2013: $320/day) and IRS Per Diem Limit at issue compounded at 4% annually
  • Benefit payments reduce death benefit dollar-for-dollar and may eliminate it completely
  • Benefits may be used for any care, services or needs that the insured may have during their illness
  • Premium Impact
    • Generally, adding the rider increases premium about 5-15% for males and 15-20% for females of the base policy premium
  • Compensation
            • CTP is increased in relation to the rider

NOT FOR CONSUMER USE.

the reality
The Reality
  • Chronic illness is likely
  • Primary caretaker = family member
  • Emotional and financial sacrifices
  • Financial considerations need to address chronic illness care

NOT FOR CONSUMER USE.

a new choice
A New Choice
  • Introducing …
  • BenefitAccess on PruLife® Universal Protector (UL Protector)

UL Protector can provide lifetime death benefit protection. With the optional BenefitAccess Rider, the insured may also qualify for 100% acceleration of the policy’s face amount

NOT FOR CONSUMER USE.

ul protector benefitaccess answer to 5 ws
UL Protector + BenefitAccess = Answer to 5 Ws

Who

5 Ws

of Life Insurance

Clients who want to plan

for the future in case of a

chronic or terminal Illness

Why

What

BenefitAccess Rider

accelerates up to 100% of

the death benefit* if insured

becomes chronically or

terminally ill and qualifies

under the terms and

conditions of the rider.

5Ws with BenefitAccess Rider and UL Protector

Cost-effective way to

address clients’ death

benefit and chronic

and terminal illness

needs

Where

When

The insured has the

flexibility to receive

care at home.

No waiting period.

  • Any claims payments made for chronic or terminal illness will reduce
  • the amount the policy’s death benefit, which could be reduced to $0.
  • A discount factor is applied to payments made under the terminal illness option

*Face amount on UL Protector.

NOT FOR CONSUMER USE.

how benefitaccess works chronic illness
How BenefitAccess Works – Chronic illness

Qualification for Benefits

  • Certification of Chronic Illness by a Licensed Health Care Practitioner
  • The condition is expected to last the rest of the insured's life
  • Recertified annually

Maximum Monthly Benefit

  • Maximum Monthly Benefit is equal to 2% of the death benefit at the time of claim, not to exceed the lesser of:
        • The IRS per diem limit at the time of claim ($320 per day for 2013); or
        • The IRS per diem limit at the time of policy issue, compounded annually at 4%
  • Maximum Total Benefit = 100% of death benefit

BenefitAccess Benefit Payments—Impact on Policy

  • Death benefit reduced $ for $
  • Account Value reduced proportionately

Charge for the Rider

  • Generally, 5%to 20% increase of UL Protector, lifetime premium
  • Included as part of Monthly Deductions
  • We suggest that clients seek assistance from a personal tax advisor regarding the implications of receiving payments.

NOT FOR CONSUMER USE.

activities of daily living
Activities of Daily Living

Bathing

Continence

Transferring

Basic functions needed for self-care & independent living (BCDETT)

Dressing

Toileting

Eating

NOT FOR CONSUMER USE.

how benefitaccess works terminal illness
How BenefitAccess Works – Terminal illness
  • Qualification for Benefits
      • Certification by a Licensed Health Care Practitioner as being terminally ill with a life expectancy of six months or less
  • Benefit Payment Options
      • One-time total lump sum
      • One-time partial lump sum1
      • Available even if chronic illness option has been partially exercised2

Terminal Illness Benefit Payments—Impact on Policy

  • Benefit payment is reduced by a discount factor resulting in lower net payment to client
  • Account Value of policy is reduced proportionately

Charge for the Rider

  • No up-front charge for terminal illness benefit
  • Benefit payment is reduced by a discount factor, resulting in lower net payment to client
  • Fee = Max of $150 per transaction (may vary by state)

1If a partial lump sum is taken, $25,000 must remain as a death benefit in the policy. If a second and final acceleration is requested, it must be the full amount that remains available.

2Chronic illness benefits are not available after the terminal illness benefit has been exercised

NOT FOR CONSUMER USE.

benefitaccess vs living needs benefit sm
BenefitAccess vsLiving Needs BenefitSM
  • 1 Face amount on UL Protector.
            • 2 The IRS per diem limit at the time of claim ($320 per day for 2013); or The IRS per diem limit at the time of policy issue, compounded annually
            • at 4%
  • 3 Not available in all states
            • 4 Assumes the insured is chronically ill and meets the terms and conditions of the rider.

NOT FOR CONSUMER USE.

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BenefitAccess Rider Feature Chart

BenefitAccess rider will be available on repriced UL Protector, based upon state approval, beginning July 1, 2013

Qualifying Conditions

    • Insured is unable to perform 2 of the 6 ADL’s or has a severe cognitive impairment.
    • Chroniccondition is expected to last the rest of the insured's life

Elimination Period

    • None

Benefit Type

  • Indemnity
  • Compensation
    • CTP increases in relation to the rider

Issue ages

    • Minimum: 20
    • Maximum: 80
    • Maximum rating class: Class D

Face Amount Bands

  • Minimum: $ 100,000
  • Maximum: $5,000,000

Death Benefit option

    • Option A is only DB available on UL Protector starting July 1, 2013

Riders

    • Living Needs Benefit or Benefit Access
    • Enhanced disability benefit is not available with BenefitAccess Rider

NOT FOR CONSUMER USE.

target market
Target Market
  • Target Market
    • 45 to 70 year-olds
    • Consumers with annual household income of $75k+
    • Worried about chronic or terminal illness
    • See chronic and terminal illness rider as a complementary benefit in their life insurance policy
    • While life insurance sales are skewed towards males, buyers of chronic and terminal illness riders are skewed towards females
    • Generally, for face amounts between $100K and $1M
  • Potential Emotional Drivers
    • Desires flexibility in how to spend benefit payments
    • Experienced a loved one go through a chronic illness event
    • Desire to have a family member as a caregiver
    • Likes multiple benefits available in one policy
    • Skeptical of “use it or lose it” aspect and unpredictable cost of stand-alone LTC

NOT FOR CONSUMER USE.

value proposition for financial professionals
Value Proposition for Financial Professionals
  • Why PruLife Universal Protector with BenefitAccess?
      • Provide lifetime death benefit guaranteed protection with chronic and terminal illness benefits
      • Differentiate yourself to achieve a competitive edge
      • Grow your business

NOT FOR CONSUMER USE.

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Marketing Tools

]

NOT FOR CONSUMER USE.

slide19

BenefitAccess Concept Kit

  • Printed Chronic and Terminal Illness
  • Concept Kit
  • Provides a step-by-step action plan
    • Producer focused
    • Sets up chronic and terminal illness
    • care need
    • How to engage clients
    • Target client profiles
    • Talking points

]

NOT FOR CONSUMER USE.

marketing pieces for you
Marketing pieces for you
  • Fast Facts
  • FAQ’s
  • Talking Points

]

NOT FOR CONSUMER USE.

marketing pieces for your clients
Marketing pieces for your clients

]

NOT FOR CONSUMER USE.

next steps
Next Steps
  • Review the Kit
  • Familiarize yourself with the Talking Points, Fast Facts and FAQ
  • Check State Availability
  • Prospect with Kit’s Letter and/or Email text

Additional Resources:

  • Your CMG General Agency
  • PruXpress.com

NOT FOR CONSUMER USE.

important information1
Important Information
  • PruLife Universal Protector is issued by Pruco Life Insurance Company except in New York, where, if available, is issued by Pruco Life Insurance Company of New Jersey. Both Pruco Life companies are Prudential Financial companies and are located at 213 Washington Street, Newark, NJ 07102-2992. Each is solely responsible for its own financial condition and contractual obligations. These products may not be available in all states.
  • All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. Policy guarantees and benefits are not backed by the broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.
  • The BenefitAccess Rider is available for an extra premium. Additional underwriting requirements and limits may also apply. Obtaining benefits under the terms of the rider will reduce and may eliminate the death benefit.
  • Benefits paid under the BenefitAccess Rider are intended to be treated for federal tax purposes as accelerated life insurance death benefits under IRC §101(g)(1)(b). Tax laws related to the receipt of accelerated death benefits are complex and may be taxable in certain circumstances. Receipt of benefits may affect eligibility for public assistance programs such as Medicaid. Accelerated benefits paid under the terms of the Terminal Illness portion of the rider are subject to a $150 [($100 in FL)] processing fee. You should consult your tax and legal advisors prior to initiating any claim.

NOT FOR CONSUMER USE.

important information2
Important Information
  • A licensed health care practitioner must certify the chronic or terminal illness to qualify for benefits. Chronic illness claims will require recertification by a licensed health care practitioner. Other terms and conditions may apply. This rider is not long-term care (LTC) insurance and it is not intended to replace LTC. The rider may not cover all of the costs associated with chronic illness. The rider is a life insurance accelerated death benefit product, is generally not subject to health insurance requirements, and may not be available in all states.
  • The Living Needs Benefit is an accelerated death benefit and is not a health, nursing home, or long-term care insurance benefit and is not designed to eliminate the need for insurance of these types. There is no charge for this rider but, when a claim is paid under this rider, the death benefit is reduced for early payment, and a $150 processing fee ($100 in Florida) is deducted. If more than one policy is used for the claim, each policy will have a processing fee of up to $150 ($100 in Florida) deducted. Portions of the Living Needs Benefit payment may be taxable, and receiving an accelerated death benefit may affect your client’s eligibility for public assistance programs. The federal income tax treatment of payments made under this rider depends upon whether the insured is the recipient of the benefit and is considered “terminally ill” or “chronically ill.” We suggest that your clients seek assistance from a personal tax advisor regarding the implications of receiving Living Needs Benefit payments. This rider is not available in Minnesota to new purchasers over age 65 until the policy has been in force for one year, and the nursing home option is not available in Connecticut, Florida, Massachusetts, New York, or the District of Columbia. This rider is not available in Washington state. In Oregon, term policies must include the waiver of premium benefit to be eligible for this rider.

NOT FOR CONSUMER USE.

important information3
Important Information
  • This material is designed to provide general information about the subject matter covered. It should be used with the understanding that we are not rendering legal, accounting, or tax advice. Such services should be provided by the client’s own professional advisors. Accordingly, any information in this document cannot be used by any taxpayer for purposes of avoiding penalties under the Internal Revenue Code.
  • This marketing material includes an expiration date, and use of this material must be discontinued as of the expiration date.
  • Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc., and its related entities.
  • Securities and Insurance Products:
  • Not Insured by FDIC or Any Federal Government Agency. May Lose Value.
  • Not a Deposit of or Guaranteed by Any Bank or Bank Affiliate.

[ML #]

NOT FOR CONSUMER USE.

appendix
Appendix

[

]

NOT FOR CONSUMER USE.

slide27

[PruLife® UL Protector

UL Protector repricing, July 1, 2013

Repricing

  • Due to impacts of ongoing low interest environment that continues to impact Prudential and our competitors
    • Pricing Summary
    • Lifetime guarantee premiums
      • $250K: average of + 2%; range of ; - 3.0% to 9.0%
      • $1M : average of + 2%; range of; - 5.2 to 8.8%
    • Single pay, lifetime guarantee premiums*
      • $250K: average of + 5.3%; range of ; 2.0% to 12.0%
      • $1M: average of + 5.2%; range of ; 1.0% to 12.0%
    • Feature Changes
  • Benefit Access Rider available
  • Death Benefit B no longer be available
  • Changed the guaranteed interest rate to 1%

*Premium limitations apply]

NOT FOR CONSUMER USE.