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LTC Planning Discussion: Industry Update & Sales Strategies. Steve Cain Principal | National Sales Leader LTCI Partners, LLC. US Department of Health & Human Services, 2010. John Hancock Cost of Care Survey, 2011. For Today’s Discussion Let’s Assume…. You know what long-term care (LTC) is

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LTC Planning Discussion:

Industry Update & Sales Strategies

Steve Cain

Principal | National Sales Leader

LTCI Partners, LLC


US Department of Health & Human Services, 2010.

John Hancock Cost of Care Survey, 2011.

for today s discussion let s assume
For Today’s DiscussionLet’s Assume…
  • You know what long-term care (LTC) is
  • You understand:

-- The likelihood of needing care

-- The cost

-- The impact of inflation

-- The impact on caregivers

  • You are the best hope of helping your clients manage this risk
today s agenda
Today’s Agenda
  • Industry Update
  • Positioning LTC Planning
  • Dissecting The LTC Sale
  • Traditional vs. Linked-Benefit Products
  • Working with Affluent Clients
  • Questions & Answers
industry update an analysis of the marketplace1
Industry UpdateAn Analysis of the Marketplace
  • Challenges from Low Interest Rate Environment

-- The yield on the 10-year Treasury note closed last Friday (3/29/13) at 1.88%1

-- 20 years ago (3/29/92), the yield was 7.28% 1

  • Change on electronic applications and simplified processing
  • More and more people have stand alone coverage in-force (high persistency)
  • Year 2000

-- Of new nursing home entrants, 6.4% used private LTCI and 32% used Medicaid

  • Year 2010

-- 14% used private LTCI and 30% were using Medicaid 2

  • Carriers announcing they are no longer offering lifetime benefits and limited payment options (10-pays)
  • Carrier entries & exits

1Treasury Department

2 ERBI Issue Brief, September 2012

industry update 2013 pricing underwriting changes
Industry Update2013 Pricing & Underwriting Changes
  • Gender-based rates (most carriers)
  • Para-meds
  • Family history underwriting
  • New generation of products (conservative pricing)
  • Innovative inflation protection options
  • Hedging vs. fully covering the risk

1Treasury Department

2 ERBI Issue Brief, September 2012

positioning ltc insurance planning
Positioning LTC Insurance Planning
  • Planning for retirement should also take into account the unique risks associated with retirement, including:
  • LongevityThe good news is people are living longer, healthier lives. The bad news is that many underestimate how long that might be. Doing so may put you at risk of outliving your retirement savings.
  • MarketInvestments provide growth potential to keep pace with rising costs. However, all investments carry some risk of loss, and the market can be volatile in the short-term; impacting how much money you’ll have in retirement.
  • Inflation and TaxesBoth inflation and taxes can take a bite out of your retirement savings—inflation by reducing the purchasing power of what you have and taxes by reducing the amount of income you have left to spend or invest.
  • Health Care CostsUnexpected health care costs can quickly derail retirement savings, as can rapidly rising medical costs, fewer employer-sponsored retiree health plans and limited government health benefits.
  • Long-Term Care NeedsThe expenses associated with a prolonged illness that requires special care can take a toll on a retirement income plan, depleting assets you’ve worked hard to accumulate.
  • Leaving a LegacyFulfilling the goal to leave a financial legacy for loved ones or charitable organization often involves tradeoffs: striking a balance between meeting your retirement income needs and satisfying your legacy desires.
long term care planning a three step process

Step 1

Establish the Need or

Identify the Risk

(financial, medical or emotional)

Step 2

Assess Planning Options

Step 3

Implement the Strategy

Long-Term Care Planning: A Three-Step Process
the tax treatment of ltc insurance
The Tax Treatment of LTC Insurance
  • IRS Code Sections:
  • 7702B– defined QLTC (accident & health insurance / tax-free benefits)
  • 162– ability to deduct accident & health insurance (c-corp owners are treated as employees)
  • 213– age-based deductibility for pass-through entities (s-corps, LLCs or LLPs)
  • 106– premium is not included /counted as imputed income
  • Treasury Regulation 1.105-5 – employer can create a class of select employees to offer this coverage to (ability to carve-out or “discriminate”)
  • 223– LTC Premiums can be deducted through an HSA on a pre-tax basis, subject to age based premium limits:
  • 40 or less – $350
  • More than 40 but not more than 50 – $660
  • More than 50 but not more than 60 – $1,310
  • More than 60 but not more than 70 – $3,500
  • More than 70 – $4,370
strategies for affluent clients
Strategies for Affluent Clients
  • Yes – your client can self-insure and handle a LTC event financially…but this is about healthcare
  • LTC is not a vehicle for asset protection for wealthy clients…the planning can be considered concierge healthcare
  • Before and during a claim, the insurance contract provides the insured access to team of advocates who can assist in designing, developing and managing a plan of care
strategies for affluent clients1
Strategies for Affluent Clients
  • These advocates are RNs, LVNs or geriatric care managers (not employed by the insurance company) who will come to your home for an assessment, negotiate provider discounts on your behalf and help you interview home healthcare agencies or perform site-visits at facilities to help you determine the right fit
  • These clients might be sufficiently liquid in the event of an extended healthcare need, but who is going to manage, monitor and adjust their plan of care (with their physicians & caregivers)?
  • If your clients self-insure…do they have a bona-fide plan for an extended healthcare event? Who is going to manage the “stuff” that comes along with a loved one with a chronic ailment?
strategies for affluent clients2
Strategies for Affluent Clients
  • Considerations when self-insuring – timing (never know when it might happen), liquidity (is their money tied up into their business, real estate or the stock market…will there be a state and federal capital gains event?) and the lack of a bona-fide healthcare plan
  • Most HNW clients are entrepreneurial – they can deduct the LTC premium if written through their business (tax treatment/ incentives)
  • This coverage can be viewed as an estate planning tool vs. reimbursements for nursing care
  • 24-hour care can cost up to $500/day at home for HNW clients
conversation starters
Conversation StartersGetting Started…

You can contact LTCI Partners by calling us toll free at 1-877-949-4582and asking for an associates extension below or choosing the following workgroup options:

Helpful Extensions

National Sales Office: Option 3New Business/Pending Applications: Option 4 Contracting and Licensing: Option 5 Commissions: Option 6