Living Benefits Riders general guidelines

Size: px

Start display at page:

Download "Living Benefits Riders general guidelines"

Shana Brown
5 years ago
Views:

2 Living Benefits Riders general guidelines Withdrawal Rate: 5.50% Expected ROR: 5.00% Gross Estimated Fees: 0.50% Estimated Tax Bracket: 15.00% Net ROR: 3.83% Years of Benefits Positive Number indicates Living Benefit exceeds expected ROR Current Value as % of Benefit Base ## 70% 75% 80% 85% 90% 15 (15,086) (22,586) (30,086) (37,586) (45,086) 16 (11,118) (18,618) (26,118) (33,618) (41,118) 17 (7,338) (14,838) (22,338) (29,838) (37,338) 18 (3,739) (11,239) (18,739) (26,239) (33,739) 19 (311) (7,811) (15,311) (22,811) (30,311) 20 2,954 (4,546) (12,046) (19,546) (27,046) 21 6,063 (1,437) (8,937) (16,437) (23,937) 22 9,025 1,525 (5,975) (13,475) (20,975) 23 11,845 4,345 (3,155) (10,655) (18,155) 24 14,531 7,031 (469) (7,969) (15,469) 25 17,089 9,589 2,089 (5,411) (12,911) 26 19,525 12,025 4,525 (2,975) (10,475) 27 21,845 14,345 6,845 (655) (8,155) 28 24,055 16,555 9,055 1,555 (5,945) 29 26,160 18,660 11,160 3,660 (3,840) 30 28,164 20,664 13,164 5,664 (1,836) 31 30,073 22,573 15,073 7,573 73

3 Living Benefits Riders general guidelines Assumptions: Current Value: 120, % Benefit Base: 150, Withdrawal Rate: 5.00% Expected ROR: 5.00% Gross of fees and taxes Life Expectancy: Benefit Amount: 7,500 NPV Benefit Amount: 117,345 Rider Advantage: (2,655) [Positive numbers means LB is better] Estimated Fees: 1.50% [M&E, Rider or advisory fees] Estimated Tax Bracket: 15.00% Net ROR: 2.75% IRR of Living Benefit based on current value Breakeven ROR Net IRR: 2.48% Gross IRR: 4.69%

4 CLIENTS WORKS Annuity Intelligence Tool Guaranteed Income Calculator Rider Grids

5 ANNUITY INTELLIGENCE TOOL

6 GUARANTEED INCOME CALCULATOR Joint Life Enter values in shaded boxes below Age of Youngest Spouse 55 Age at First Withdrawal (if 59, assumes 59.5) 65 Initial Investment Amount $100,000 Deferral Period (Assumes no withdrawals are made. Please see column "W" for allowable number of deferral credit years) 10

7 GUARANTEED INCOME CALCULATOR Carrier (rider issue age) Lincoln (35-85) Rider Name Lifetime Income Edge (10+ YRS) Product Type FIA Deferral Credit Deferral Credit Accrual 5.0% Compound Cost 0.95% against the BB Benefit Base Amount Withdrawal Rate Annual Lifetime Income Amount $162, % $9,366 # of Deferral Credit Years 10 yrs/ age 85

8 RIDER GRIDS

9 RETIREMENT DISTRIBUTION PLANNING Asset positioning Tax optimization Annual updates spending, performance, inheritance, sale of 2 nd home, other contingencies Standard assumptions Life expectancy Inflation Long term care

10 MEDIAN AGE OF DEATH Source:

11 REMAINING LONGEVITY (MEDIAN) BY AGE Source:

12 BUCKET 1 FUNDING Cash Ultra Short Term Bonds AI Distributions to cash Structured Notes (short term) Dividends/Short term gains to cash

13 LONG TERM CARE COSTS Annual Costs/Average Inflation Home Health Care Adult Day Care Assisted Living Nursing Home Nursing Home Private Room Massachusetts 56,857/2% 17,116/2% 65,550/2% 135,050/3% 144,175/3% Maine 50,335/2% 28,080/3% 59,892/2% 100,375/1% 108,223/1% New Hampshire 54,912/2% 18,200/3% 57,600/4% 116,800/4% 123,370/4% Vermont 50,336/1% 32,032/1% 58,320/6% 103,295/3% 106,763/1% *Genworth 2016 Cost of Care Survey, conducted by CareScout, April 2016

14 PROJECTING THE COSTS Long Term Care Cost Estimator Assumptions: State: Type of Care: New Hampshire Nursing Home Client 1 Client 2 Current Age: Age need LTC: Age of death Current Cost of LTC: 116,800 Monthly: 9,733 Daily: Input Cost: [Note: can input estimated annual cost] LTC Inflation: 4.00% NPV Rate: 5.00% NPV of Costs: 281, , ,230 Self Insure Annual: 19,001 16,606 35,607 *Note: Amount to save annually to cover projected cost.

15 PARTNER LTC NH, ME, Mass NOT VERMONT Policies conforming to Partnership guidelines provide $ for $ protection from Medicaid asset spend down requirements Traditional policies only. Hybrid Asset based policies do not conform under the guidelines

16 METHODS OF FUNDING Self Insure LTC Insurance Hybrid LTC Continuing Care At Home (CCAH) Continuing Care Retirement Community (CCRC)

17 CONTINUING CARE AT HOME (CCAH) New Hampshire At Home by Hunt Affiliated with Silverstone Living 100% Coverage 100% Coverage, 50% refundable One Time Membership per person $35,000 $65,000 $53,400 $105,800 Monthly Service Fees $515 Single, $500 couple $515 Single, $500 couple Mass Connected for Life Affiliated with North Hill Assisted Living Facilities 100% Coverage 75% Coverage 50% Coverage One Time Membership per person $27,000 $66,000 $14,000 $50,000 $4,000 $36,000 Monthly Service Fees $500 $450 $425

18 COMPARISON OF COSTS Assumptions: $10,000 per month benefit 3% inflation rider LTC starts at 88 and goes for 3 years 5% Discount rate Male 65 Female 65 Combined Self Insure 226, , ,875 Hybrid LTC 184, , ,161 Traditional LTC 57,471 92, ,875 Trad LTC 3% Prem Inc 76, , ,590 CCAH 133, , ,327 Male 65 Female 65 Combined CCAH Self Insure 3% Monthly Hybrid LTC Inc Traditional LTC 167,864 Trad LTC 3% Prem Inc 153,227 CCAH CCAH 3% Monthly 321,092 Inc 500, , , , , , , , ,000 50,000 NET PRESENT VALUE OF OUTLAYS

19 COMPARISON OF COSTS Assumptions: $10,000 per month benefit 3% inflation rider LTC starts at 88 and goes for 3 years 5% Discount rate 600, , , , ,000 Male 70 Female 70 Combined Self Insure 249, , ,685 Hybrid LTC 221, , ,656 Traditional LTC 65, , ,431 Trad LTC 3% Prem Inc 81, , , ,000 NET PRESENT VALUE OF OUTLAYS CCAH 128, , ,947 Male 70 Female 70 Combined CCAH Self 3% InsureMonthly Hybrid LTC Inc Traditional LTC153,602 Trad 3% Prem Inc 139,122 CCAH CCAH 3% Monthly 292,725 Inc

20 COMPARISON OF COSTS Assumptions: $10,000 per month benefit 3% inflation rider LTC starts at 88 and goes for 3 years 5% Discount rate NET PRESENT Male VALUE 75 OF OUTLAYS Female 75 Combined 800, ,000 Self Insure 275, , , ,000 Hybrid LTC 339, , , , ,000 Traditional LTC 68, , , , ,000 Trad LTC 3% Prem Inc 80, , , ,000 CCAH 121, , ,756 Male 75 Female 75 Combined CCAH 3% Monthly Inc 137, , ,065 Self Insure Hybrid LTC Traditional LTC Trad LTC 3% Prem Inc CCAH CCAH 3% Monthly Inc

21 COMPARISON OF BENEFITS Funding method Traditional LTC Asset Based CCAH Self Insure Differentiators Least expensive, premiums can increase, no recovery If do not use, get full death benefit; if use all LTC benefits, nominal death benefit, or can surrender No limits on benefits, full in home and nursing home care if needed for life, monthly payments can increase, no recovery; 50% recovery of lump sum payment if elected Keep the money if not used

22 FUNDING LTC Tax qualified policies, premiums deductible 1035 opportunity From Life insurance or annuities Must be a tax qualified LTC policy Only non qualified annuities Must be a direct transfer All gains become tax free if used to meet LTC costs

23 TECHNICAL UPDATE Changes to Reverse Mortgage premiums effective 1 October Boston Bruins Big (Tax) Win Social Security Do Over Options

24 UPCOMING EVENTS Lunch with RREEF Property Trust COO: October 3 rd in Bedford, NH Regional Training: November 1 & 2

Your Asset-Based LTC Opportunity

Your Asset-Based LTC Opportunity Presented by Michelle Prather, National Accounts Vice President FOR AGENT USE ONLY; NOT FOR USE WITH CONSUMERS Product and rider availability, features and rates may vary