Product Reference Guide

Transcription

1 FOR LIFE Product Reference Guide Lincoln MoneyGuard Reserve Plus This information was compiled by Product & Distribution Support. For questions contact Annie Raasch Hello future. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. For Agent/Broker Use Only Not For Use With The Public. LCN:

2 Table of Contents Policy Specifications p. 2-5 Key Points p. 6-7 Additional Benefits p General Information p Streamlined Underwriting Guidelines p Training Material 1 of 24

3 Lincoln MoneyGuard Reserve Plus Policy Specifications Base Policy Policy Type: Policy Form Number(s): Premium Structure: Issue Ages: (Age Last Birthday) Underwriting Classes: Minimum Specified Amount: Maximum Specified Amount: Additional Deposits: Premium Load: Current/Guaranteed Interest: Expense Charge: Single Life Universal Life insurance policy with riders providing reimbursement for qualified long-term care expenses. If a contract meets the requirements of Internal Revenue Code Section 7702B(b) for Qualified Long-Term Care Insurance, the LTC benefits paid-out from the policy are received tax-free. Lincoln MoneyGuard Reserve Plus is categorized as a Qualified Long- Term Care Insurance policy. Base Policy: LN870 CCBR: LR870 EOBR: LR871 Enhanced Surrender Value Endorsement: B10465F Nonforfeiture Benefit Rider: LR872 Single Premium, or, Flexible Premiums paid for 3, 5, 7 or 10 year period (State variations apply). Non-Tobacco and Tobacco $25,000 (State variations apply). Single Premium: $500,000 Specified Amount for a 2-year CCBR $750,000 Specified Amount for a 3-year CCBR Flexible Premium: $500,000 Specified Amount Allowed under Single Premium structure only but will not increase the Specified Amount/Monthly Maximum. Additional deposits will not be included in the Enhanced Surrender Value (ESV). A level Premium Load, not to exceed 5%, is assessed on all premiums in all years. The Premium Load is commissionable. (State variations apply). 4% A monthly per thousand charge, based on the Insured s Issue Age, gender, and policy duration is assessed for the first 20 years of the policy. No charges are incurred after Attained Age 95. (State variations apply). Training Material 2 of 24

4 Surrender Charge Duration: Surrender Charge Schedule: Monthly Cost of Insurance (COI) Charges: Partial Withdrawals: Policy Loan Interest: Interest Credited on Loans: Lincoln MoneyGuard Reserve Plus Policy Specifications 10 years Per thousand dollars of Specified Amount. The surrender charge set in any given year is level throughout the policy year. Actual surrender charges are shown in the insured s contract. (State variations apply). Separate deductions are made each month to cover the cost of the various insurance elements. No COI or rider charges are incurred after Attained Age 95. Universal Life (Base Policy): The rates are based on the Insured s Issue Age, gender, smoker status, and attained age based on the guaranteed rates shown in the Policy Schedule. Rider Charges: CCBR: Per thousand charge based on the Insured s Issue Age, gender, the CCBR duration selected and the CCBR Base Benefit Limit. EOBR: Per thousand charge based on the Insured s Issue Age, the CCBR duration selected, the EOBR duration selected and the CCBR Base Benefit Limit. (State variations apply). One allowed per year. No withdrawal fee. Minimum: $500 Maximum: Surrender Value less $500 Variable in arrears 4% Training Material 3 of 24

5 Benefits / Riders Enhanced Surrender Value: Lincoln MoneyGuard Reserve Plus Policy Specifications Available at policy issue only through the Enhanced Surrender Value (ESV) Endorsement. There is no additional charge assessed. For single premium policies: The ESV will equal the initial planned policy premium plus any additional rollover at issue (i.e money). For flexible premium policies (Issue Ages only): ESV will equal the ESV Threshold (the sum of planned premiums plus any additional rollover at issue). If the policy is surrendered before the sum of all premiums paid equals the Enhanced Surrender Value Threshold (ESV Threshold), the owner will receive the Surrender Value. If the policy is surrendered on or after the sum of all premiums paid equals the ESV Threshold, the owner will receive the greater of the Surrender Value or the ESV Threshold less any indebtedness, less the amount of any withdrawals, less amount paid under any accelerated benefits rider. Loans and withdrawals before Threshold is met will automatically terminate the ESVE. (State variations may apply). Convalescent Care Benefits Rider (CCBR): Extension of Benefits Rider (EOBR): CCBR/EOBR Benefit Period Options: Nonforfeiture Benefit: International Benefits Provision: Accelerates the Specified Amount up to the CCBR Benefit Limit for covered long-term care expenses for 2 years (24 months) or 3 years (36 months). The CCBR Benefit Limit is equal to the Specified Amount of coverage selected by the owner at issue. Extends long-term care benefits for 2 years or 4 years with benefits payable after the entire benefit under the CCBR has been exhausted. Owner selects the duration at issue. Benefits are payable monthly for a specified number of years, determined at issue. A combination of the riders and durations may provide benefits as follows: 2 years (2-year CCBR + no EOBR) 3 years (3-year CCBR + no EOBR) 4 years (2-year CCBR + 2-year EOBR) 5 years (3-year CCBR + 2-year EOBR) 6 years (2-year CCBR + 4-year EOBR) 7 years (3-year CCBR + 4-year EOBR) Available by rider on the EOBR. Provides benefits if client is confined to a Nursing Home or Assisted Living Facility outside of the US, its territories, or possessions. Benefits are limited to 50% of the maximum monthly benefit that would otherwise be paid. The full CCBR Benefit Limit may be used for this purpose. Not available on the EOBR. Training Material 4 of 24

6 Benefits / Riders (cont.) Inflation Protection: Residual Death Benefit: Deductible Period: Lincoln MoneyGuard Reserve Plus Policy Specifications Three options are available: 3% Simple inflation 3% Compound inflation 5% Compound inflation Monthly maximum LTC benefits increase annually starting on the first policy anniversary. Annual increases only apply to the LTC benefits and not the death benefit. If client elects inflation protection on the CCBR, they must have the same type of protection on the EOBR (i.e. both simple or both compound). See allowable combinations in the Additional Benefits Section that follows. If the applicant is not purchasing an increase option, he/she must decline the inflation option on the application. (State variations apply). Included in every policy that has the CCBR. If LTC benefits are paid, the Residual Death Benefit guarantees that the Death Benefit will be no less than a stated amount, initially 10% of the Specified Amount. Thereafter, the benefit is adjusted for loans, loan interest and withdrawals. There is no Residual Death Benefit remaining if any benefits have been paid under the Benefits After Lapse provision. None. All benefits are available on the first day of eligibility. Training Material 5 of 24

7 Lincoln MoneyGuard Reserve Plus: Key Points Lincoln MoneyGuard Reserve Plus is a flexible premium, guaranteed universal life insurance product that provides a death benefit as well as long-term care (LTC) coverage through policy riders. The Convalescent Care Benefits Rider (CCBR) provides benefits for long-term care by accelerating the Specified Amount of life insurance coverage. The Extension of Benefits Rider (EOBR) increases the Total Benefit Limit for long-term care, thereby extending the length of time that LTC benefits are available by 2 years or 4 years. Lincoln MoneyGuard Reserve Plus has various funding options, including a single premium payment or scheduled payments over 3, 5, 7 or 10 years. The CCBR and EOBR riders are available with any funding option. Refund of planned premiums is provided through the Enhanced Surrender Value Endorsement which is available at issue on single premium policies and for flexible premium policies for issue ages Benefits Lifetime Benefit Guarantee Lincoln MoneyGuard Reserve Plus provides fully guaranteed death and long-term care benefits which are backed by the financial strength of The Lincoln National Life Insurance Company and Lincoln Life & Annuity Company of New York (both of which will be referred to as Lincoln). Taking loans and withdrawals from the policy may jeopardize policy performance and guarantees. The policy is based on a primary guarantee. All current mortality charges equal guaranteed mortality charges and current interest crediting equals guaranteed interest crediting. Lincoln may credit more interest than guaranteed, but the policy will support itself based on an assumed credited rate of 4%. Qualified Long-Term Care Benefit Long-term care benefits paid from life insurance policies or riders that satisfy certain Federal standards are designated as Qualified Long-Term Care Insurance. Longterm care benefits paid from Qualified Long-Term Care Insurance are not taxed as income under IRC Section 104(a)(3). The Lincoln MoneyGuard Reserve Plus CCBR and EOBR meet the Federal criteria for qualified long-term care insurance. Income Tax-Free Death Benefit The Lincoln MoneyGuard Reserve Plus death benefit, normally a part of the owner s estate for estate tax purposes, is paid to the beneficiary income tax-free under IRC Section 101(a)(1). However, the beneficiary will be taxed on any interest earned on the death benefit following the death of the insured until the death benefit is paid. The death benefit is free of probate when the beneficiary is not the insured s estate. If the insured dies while the policy is in force, the death benefit paid will be equal to the greater of: (continued) Training Material 6 of 24

8 Income Tax-Free Death Benefit (continued) 1. The Specified Amount on the date of death, less any indebtedness; 2. The Minimum Required Death Benefit, less any indebtedness; or 3. Residual Death Benefit (If applicable). Residual Death Benefit Long-term care benefit payments under the Convalescent Care Benefits Rider (CCBR) actually represent the death benefit proceeds paid out during the insured s lifetime. Each long-term care payment received will serve to reduce the remaining death benefit available. A Residual Death Benefit will be included in every policy that has the CCBR. If LTC benefits are paid, the Residual Death Benefit guarantees that the death benefit will be no less than a stated amount. While the CCBR is in force, the policy s Death Benefit will be the greatest of: a) The Specified Amount on the date of death, less any indebtedness; b) The Minimum Required Death Benefit, less any indebtedness; or c) The Residual Death Benefit as described below. The Residual Death Benefit at issue is equal to 10% of the Initial Specified Amount shown on the Policy Schedule. If the Specified Amount is reduced after issue due to a withdrawal, the Residual Death Benefit will be changed to 10% of the new Reduced Specified Amount. Policy loans and unpaid loan interest will decrease the Residual Death Benefit by an amount equal to 10% of the loan or loan interest. Loan repayments, including loan interest paid will increase the Residual Death Benefit by an amount equal to 10% of the loan repayment. There is no Residual Death Benefit remaining if any benefits have been paid under the Benefits After Lapse provision. (Subject to state availability). Training Material 7 of 24

9 Lincoln MoneyGuard Reserve Plus: Additional Benefits Enhanced Surrender Value (ESV) Endorsement Refund of initial premium is available through the Enhanced Surrender Value Endorsement which is available at issue only and provided at no additional charge. Single Premium: The ESV will equal the initial planned policy premium plus any additional rollover money at issue (i.e money). Any premium payments made in addition to the initial premium will not be included in the Enhanced Surrender Value amount. Flexible Premium: The ESV will equal the ESV Threshold (the sum of planned premiums, calculated at issue). Loans or withdrawals taken prior to meeting the ESV Threshold will terminate the ESVE. (State variations may apply). If the policy is surrendered before the sum of all premiums paid equals the Enhanced Surrender Value Threshold (ESV Threshold): The owner will receive the Surrender Value. If the policy is surrendered on or after the sum of all premiums paid equals the ESV Threshold: The owner will receive the greatest of the Surrender Value or the ESV Threshold less any indebtedness, less the amount of any withdrawals, less any amount paid under the CCBR. Convalescent Care Benefits Rider (CCBR) This Rider, available at an additional cost, provides for reimbursement of expenses for Qualified Long-Term Care Services. The amount of the CCBR is equal to the Specified Amount at issue. Benefit payments will reduce the Specified Amount on a dollar-fordollar basis, since these payments represent an acceleration of the Specified Amount. The death benefit is paid out as a living benefit to reimburse the expenses of long-term care. The CCBR is available for either 2 years (24 months) or 3 years (36 months). - CCBR Base Benefit Limit equal to the Specified Amount at issue. - CCBR Base Maximum Monthly Limit equal to the Base Benefit Limit divided by the number of months of the duration selected. Training Material 8 of 24

10 For example, if a 2-year CCBR is selected, the Base Maximum Monthly Limit would be equal to the Base Benefit Limit divided by 24. For example: Specified Amount = $200,000 Base Benefit Limit = $200,000 Base Maximum Monthly Limit for a 2-year CCBR = $200,000 / 24 = $8,333 Base Maximum Monthly Limit for a 3-year CCBR = $200,000 / 36 = $5,556 If death occurs during payment of CCBR benefits, the death benefit is the greatest of: - The Remaining Specified Amount - The Required Minimum Death Benefit - The Residual Death Benefit (State variations apply). Benefits After Lapse If the policy and the CCBR lapse while the insured is confined to a Nursing Home or Assisted Living Facility and the insured is receiving benefits for services under the CCBR, benefits will continue to be paid until the earlier of the following: The date the insured is discharged from the Nursing Home or Assisted Living Facility; or The date the CCBR Benefit Limit is reached. The CCBR Benefit Limit is equal to the CCBR Benefit Limit in effect at the date of Lapse. Benefits are not payable if any loans or withdrawals have been taken from the policy. (State variations apply). Guaranteed Benefit After the policy and the CCBR have been in force for 3 Policy Years, an additional guaranteed benefit will be payable to cover eligible claims for Covered Services if the CCBR lapses. The Guaranteed Benefit Limit under this provision is the greater of: One month s Maximum Monthly CCBR Benefit in effect when the rider lapses; or An amount equal to the sum of all rider charges and inflation charges, if any, paid for this rider, less any indebtedness and withdrawals. Inflation protection increases do not apply to this benefit. The Guaranteed Benefit will continue as paid-up long-term care coverage until the earlier of: The death of the Insured or; The date the Guaranteed Benefit Limit under this provision is reached. Rider Charge (CCBR) Guaranteed level charge Deducted monthly Per $1,000 of CCBR Base Benefit Limit Based on Insured s Issue Age, gender and CCBR duration selected at the time of issue (State variations apply). Training Material 9 of 24

11 Extension of Benefits Rider (EOBR) This Rider provides for an extension of benefits and is available at an additional cost. The Rider will continue benefits once benefits under the CCBR are exhausted. The EOBR will provide benefits even though the Specified Amount has been reduced to zero. The EOBR is available for either 2 years (24 months) or 4 years (48 months). The EOBR Benefit Limit is based on: - Current CCBR Benefit Limit (at issue this is equal to the Specified Amount - CCBR Duration - EOBR Duration After policy issue the EOBR Benefit Limit may change based on withdrawals, loans/loan interest or claim payments made. The EOBR Benefit Limit may increase or decrease. Rider Charge (EOBR) Guaranteed level charge Deducted monthly Per $1,000 of CCBR Base Benefit Limit Based on Insured s age and CCBR duration selected, the EOBR duration selected and the CCBR Base Benefit Limit The EOBR represents the total amount for which Lincoln is at risk. At the point the EOBR benefit is paid out, the Specified Amount has already been reduced to zero. For example: Specified Amount = $200,000 2-year CCBR; 2-year EOBR 4 Years Minimum Coverage EOBR Base Benefit Limit = $200,000 X [2 divided by 2] = $200,000 X 1 = $200,000 Total LTC Benefit = CCBR + EOBR = $400,000 EOBR Base Maximum Monthly Limit equal to the EOBR Base Benefit Limit divided by the number of months of the duration selected. EOBR Base Maximum Monthly Limit for a 2-year EOBR = $200,000 / 24 = $8,333. From the previous 2-year CCBR example, a $200,000 Specified Amount would result in a Monthly Maximum Benefit of $8, The EOBR Rider will provide the same Monthly Maximum Benefit for the duration specified. A 2-year CCBR and a 2-year EOBR would provide coverage for a minimum of 48 months; $8, X 48 = $400,000. Inflation Protection Optional Inflation Protection, available at an additional cost, provides for annual increases in the Maximum Benefit Limit and the Monthly Maximum Benefit. There are several choices available to help the client tailor the coverage to his or her LTC needs. (State variations apply). Training Material 10 of 24

12 Choices: No Inflation (Level Benefits) Simple Increases CCBR Inflation Protection Rejected 3% Simple Increases EOBR Inflation Protection Rejected 3% Simple Increases Compound Increases 3% or 5%* Compound Increases 3% or 5%* Compound Increases * Default option. The client must elect the same type of inflation protection under both coverages: No inflation protection (Inflation Protection Rejected ) Simple increases for both the CCBR and EOBR Compound increases for both the CCBR and EOBR (either both 3% or both 5%) The CCBR has 2 durations available: 2 years and 3 years, and can be elected with no inflation protection, 3% Simple increases, or 3% or 5% Compound increases. The EOBR has 2 durations available: 2 years and 4 years, and can be elected with no inflation protection, 3% Simple increases, or 3% or 5% Compound increases. Allowable Inflation Protection Combinations (subject to state variations) include: Minimum Total Number of Years 2 yrs CCBR / No EOBR 2 Yrs 3 yrs CCBR / No EOBR 3 Yrs 2 yrs CCBR / 2 yrs EOBR 4 Yrs 2 yrs CCBR / 4 yrs EOBR 6 Yrs 3 yrs CCBR / 2 yrs EOBR 5 Yrs 3 yrs CCBR / 4 yrs EOBR 7 Yrs No Increases for Inflation 2N + 0 3N + 0 2N + 2N 2N + 4N 3N + 2N 3N + 4N 3% Simple Increases 2S + 0 3S + 0 2S + 2S 2S + 4S 3S + 2S 3S + 4S 3% Compound Increases 2C + 0 3C + 0 2C + 2C 2C + 4C 3C + 2C 3C + 4C 5% Compound Increases 2D + 0 3D + 0 2D + 2D 2D +4D 3D + 2D 3D + 4D N = No inflation increases; S = 3% Simple increases; C = 3% Compound increases; D = 5% Compound increases. The first number represents the number of years for the CCBR coverage, the second number is for the EOBR coverage. Training Material 11 of 24

13 Note: Depending on the age of the client, the different combinations may result in either a higher overall LTC benefit, a higher death benefit or a higher monthly LTC maximum. Example of Simple Increases (3% available) Simple increases would only have the interest rate applied to the initial amount. For example, $3,000 with a 3% Simple increase would result in the following values: $3,000 $3,090 ($3000 x 3% = $90) ($ $90 = $3090) $3,180 ($3000 x 3% = $90) ($ $90 = $3180) $3,270 ($3000 x 3% = $90) ($ $90 = $3270) $3,360 ($3000 x 3% = $90) ($ $90 + $3360), etc. Example of Compound Increases (3% or 5% available for CCBR and EOBR) Compound increases would apply the interest rate to the accumulating value interest earned each year will also earn interest in future years. To demonstrate the impact of compound inflation, this example uses a 3% rate for comparison purposes. However, the Optional Inflation Protection offers either a 3% or 5% Compound inflation rate. $3,000 with a 3% Compound increase would result in the following values: $3,000 $3,090 ($3000 x 3% = $90) ($ $90 = $3090) $3, ($3090 x 3% = $92.70) ($ $92.70 = $ ) $3, ($ x 3% = $95.48) ($ $95.48 = $ ) $3, ($ x 3% = $98.35) ($ $98.35 = ), etc. In general, if the rates are the same, the longer the timeframe involved, the greater the impact of compound interest (versus simple interest). Non-Forfeiture Benefit Rider (NFO) Available as a separate rider at issue only, the Non-Forfeiture Benefit Rider will provide benefits for Covered Services under the EOBR, if elected. The Policy and EOBR must have been In Force for at least 3 Policy Years. The rider will cover eligible claims for covered services up to the Non-Forfeiture Benefit Limit which begin after the policy and EOBR have lapsed. The Non-Forfeiture Benefit under this rider will be payable after all benefits payable under the Convalescent Care Benefits Rider and Extension of Benefits Rider have been paid. Training Material 12 of 24

14 The NFO limit will be the greater of: One month s Maximum Monthly EOBR benefit in effect on the date the EOBR lapses; or An amount equal to the sum of all rider charges and inflation charges, if any, paid for the EOBR, plus the sum of all charges for the NFO rider, less any indebtedness and withdrawals. Total benefits paid under the Benefits After Lapse and Non-forfeiture Option will never be greater than those paid if the policy and riders had remained inforce. There is a monthly charge for this rider. International Benefits Provision An International Benefits Provision will be included automatically in the CCBR. An insured who is confined to a Nursing Home or Assisted Living Facility outside the US, its territories, or possessions and is receiveing Qualified Long-Term Care Services may receive CCBR Benefits for those services: at a maximum rate of 50% of whatever monthly maximum the CCBR would otherwise pay, up to the corresponding CCBR Benefit Limit. International benefits are not available under the Extension of Benefits Rider. This benefit is not outlined in the illustration system. Training Material 13 of 24

15 Lincoln MoneyGuard Reserve Plus: General Information Lincoln MoneyGuard Reserve Plus is a universal life insurance policy with riders that provide benefits for reimbursement of qualified long-term care expenses. Benefit Period Options (CCBR and EOBR) 2 years (2+0) 3 years (3+0) 4 years (2+2) 5 years (3+2) 6 years (2+4) 7 years (3+4) Benefits Provided Long-term care benefits paid from insurance policies or riders that satisfy certain federal standards are designated as Qualified Long-Term Care Insurance. Long-term care benefits paid from Qualified Long-Term Care Insurance are not taxed as income under IRC Section 104(a)(3). The Lincoln MoneyGuard Reserve Plus CCBR and EOBR meet the federal criteria for qualified long-term care insurance. The client would receive a 1099-LTC for benefits received under the CCBR/EOBR; the benefits would be reportable, but not taxable. Long-term care benefits are paid for qualified long-term care services required as the result of a chronic illness. Covered Services Covered Services are those services that would be eligible for payment under the terms of the CCBR / EOBR. The Covered Services would have to be categorized as Qualified Long Term Care expenses. This includes expenses categorized as: Necessary Diagnostic Preventative Therapeutic Curing Treating Mitigating Rehabilitative Maintenance or Personal Care Services These expenses or services must be required due to the Insured being chronically ill, or, prescribed under a Plan of Care by a physician. A chronically ill person is any individual who has been certified by the attending physician, within the preceding 12 months, as being unable to perform without substantial assistance from another individual at least 2 out of 6 activities of daily living (ADLs) for a period of at least 90 days. The ADLs are: Training Material 14 of 24

16 Bathing Dressing Toileting Continence Eating Transferring A person is also considered chronically ill if, within the preceding 12 months, they have been certified by a physician as requiring substantial supervision due to severe cognitive impairment for example, as a result of Alzheimer s disease or irreversible dementia. Prior hospitalization is not required. Care must be provided pursuant to a plan of care prescribed by the attending physician. At least once every 12 months thereafter, and for as long as the care continues to be needed, the attending physician must again certify that the insured remains chronically ill and reconfirm the plan of care. Qualified long-term care services provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community or in the home required by a chronically ill individual and provided pursuant to a plan of care prescribed by the attending physician. The Lincoln MoneyGuard Reserve Plus policy reimburses actual expenses for eligible qualified services up to the monthly maximums shown for each type of service. These reimbursements are received income tax free (under IRC Sec 104(a) (3)). Skilled, intermediate and custodial nursing home care is reimbursed up to the monthly maximum; includes Assisted Living, Alternative Care and Bed Reservation. Reimbursement for Bed Reservation is limited to 1/30 of the monthly maximum for each day the bed is reserved, not to exceed a maximum of 30 days per calendar year. Professional and personal care services provided in your home by a home health care agency are reimbursed up to the monthly maximum; includes Homemaker Services, Hospice Services and Personal Care. Health, social and related support services in an adult day care center are reimbursed up to the monthly maximum. Respite care to relieve the primary caregiver providing care outside of a hospital or nursing home in an institution, at home or a community-based program is reimbursed up to 1/30 th of the monthly maximum for each day of care, not to exceed 21 days per calendar year. Care planning assistance provided by a care planning agency is reimbursed up to the monthly max. Caregiver training is reimbursed up to a lifetime benefit amount of $500. Training Material 15 of 24

17 Exclusions, Exceptions and Limitations Lincoln MoneyGuard Reserve Plus reimburses out-of-pocket eligible long-term care expenses. The following are excluded from benefit payments: Care provided in facilities operated primarily for the treatment of mental or nervous disorders. This exclusion does NOT apply to qualifying stays or care resulting from a clinical diagnosis of Alzheimer s Disease or similar forms of irreversible dementia. Treatment for alcoholism, drug addiction or chemical dependency (unless the drug addiction or chemical dependency is a result of medication taken in doses as prescribed by a physician). Treatment arising out of an attempt (while sane) at suicide or an intentionally selfinflicted injury. Treatment provided in a Veteran s Administration or government facility, unless the Insured or the Insured s estate is charged for the confinement or services or unless otherwise required by law. Loss to the extent that benefits are payable under any of the following: Medicare (including that which would have been payable but for the application of a deductible or a coinsurance amount), other governmental programs (except Medicaid), workers compensation laws, employer s liability laws, occupational disease laws, and motor vehicle no-fault laws. Services provided by a facility or an agency that does not meet the rider definition for such facility or agency, except as provided in the Alternative Care Services provision in the Convalescent Care Benefits Rider. Services provided by a member of the Insured s immediate family or for which no charge is normally made in the absence of insurance. Reimbursement Once qualified for benefits, clients can send bills or can arrange for service providers to send bills directly to The Lincoln National Life Insurance Company (Lincoln). Billed expenses for eligible qualified long-term care services will be reimbursed up to the maximum monthly benefit. As the policyowner, the client can direct that benefit payments be sent directly to them or their legal representative, or they can choose to assign benefits and have payments sent directly to service providers. With Lincoln MoneyGuard Reserve Plus, there is no elimination period to qualify for benefits. Issue Ages Policies/Riders can be issued to ages 35 through age 80 (age last birthday). (State variations apply). Training Material 16 of 24

18 Premium Information Lincoln MoneyGuard Reserve Plus policies allow for several different premium structures. Single Premium a lump sum premium, either from a 1035 exchange or from a transfer of assets, and Flexible Premium schedules of 3, 5, 7 or 10 year periods, with modal premium payments available on a monthly, quarterly, semi-annual or annual basis. Lincoln MoneyGuard Reserve Plus is uniquely designed so that all policy values are guaranteed and can be sustained by contract values. In the case of a flexible premium schedule, all illustrated premiums must be paid in the amount and frequency shown in order to guarantee the contract values. Flexible Premium schedules may not be supported in all firms. Specified Amount The Specified Amount is the amount of the death benefit applied for at policy issue, and determines the amount available for LTC benefits under the accelerated benefits rider (Convalescent Care Benefit Rider CCBR). At policy issue, the Specified Amount must be within contract limits. The actual death benefit paid may be different than the Specified Amount if the policy goes on claim, has loans or withdrawals, or if the corridor death benefit applies. The minimum Specified Amount for Lincoln MoneyGuard Reserve Plus is $25,000. (State variations apply). The maximum Specified Amount is determined by the length of the Convalescent Care Benefit Rider (CCBR): - $500,000 for the 2 year CCBR - $750,000 for the 3 year CCBR - Note: This provides approximately $20,833 as a maximum monthly LTC benefit. Rate Classes There are two rate classes for this product: Non-Tobacco and Tobacco. Tobacco rates will be higher and will be reflected in the amount of coverage provided by a particular premium (or premium for a particular Specified Amount). A change from Tobacco class to Non-tobacco class is permitted after the first policy year and before attained age 95. The insured must be tobacco free for 12 months post issue in order to qualify. Interest Crediting Guaranteed annual interest rate of 4.00% Free-Look Period Lincoln MoneyGuard Reserve Plus policies provide a free-look period of 30 days. (State variations may apply). The free-look period begins on the date the owner receives the policy and the policy receipt is signed and dated. Lincoln will return the premium paid into the policy (less any loans, unpaid interest and withdrawals) upon receipt of the written request for cancellation and the returned contract. Canceling the contract will void it from the beginning. Training Material 17 of 24

19 Loans Loans are allowed; however, taking a loan jeopardizes policy performance, long-term care benefits, and guarantees, as well as having adverse tax consequences. Loans taken before the ESV Threshold is reached will terminate the ESVE. (State variations may apply). Premium Load The Premium Load is a percentage of the premium paid, and is used to defray the cost of setting up the policy, paying commissions and other expenses. A level Premium Load, not to exceed 5% will be deducted from all premiums paid in all years. The premium load is waived for Internal Replacements (except in New York). (State variations apply). Monthly Deductions The monthly deductions will continue to the insured s age 95 and consist of the: Monthly Cost of Insurance Monthly Expense Charge CCBR Charge EOBR/NFO Charge (if selected) Optional Inflation Protection (if selected) Monthly Cost of Insurance Separate deductions are made each month to cover the cost of the base life insurance protection. The charge is determined by issue age, attained age, the gender of the insured, tobacco/non-tobacco and the guaranteed rates shown in the Policy Schedule. This factor will be applied per $1,000 of Net Amount at Risk (Net Amount at Risk is defined as the Death Benefit minus the Cash Value of the policy). Surrender Charges Surrender charges are incurred for early surrenders and are in effect for the first 10 years of the policy. The surrender charge is per thousand dollars of Specified Amount. The maximum rate per thousand is being used. The surrender charge set in any given year is level throughout the policy year. Withdrawal/Partial Surrender Charge There is no partial surrender charge. Commission Information Commission is based on the target and excess premium. Commission chargebacks: Months 1-12 Months Months 25+ Withdrawal 100% 50% 0% Full Surrender (ESV) 100% 50% 0% Lapse 100% 50% 0% Death Claim 0% 0% 0% 1 st 12 months: 100% 2 nd 12 months: 50% Training Material 18 of 24

20 The Premium Load will be waived on Internal Replacements (except in New York). Replacements of policies issued by affiliated companies of Lincoln will be considered an internal replacement. There is a different schedule for single and flexible premium MoneyGuard policies. Refer to the Life Internal Replacement Guidelines which can be found on the producer website under the Policies and Procedures section under the New Business and Underwriting tab. Long-Term Care Benefit Payments Policies may be issued with the Convalescent Care Benefit Rider (CCBR) alone, or in conjunction with the Extension of Benefits Rider (EOBR). Several combinations of benefit durations are available (all combinations may not be available in all states). The CCBR has 2 durations available: 2 years and 3 years. The EOBR has 2 durations available: 2 years and 4 years. CCBR EOBR Total Minimum* Number Years * If the reimbursement amount is less than the maximum monthly benefit, the length of time may be extended beyond the years shown above. Receiving benefit payments under the CCBR will reduce the maximum benefit limit on a dollar for dollar basis. If less than the maximum monthly benefit is paid out, the rider benefits will be extended beyond the specified duration. Once the maximum amount has been received under the CCBR Rider, payments may continue if the EOBR Rider has been elected. Let s look at a scenario of a policy on claim: Training Material 19 of 24

21 Hypothetical Example: EOBR elected (2N + 4N) $200,000 Initial Specified Amount $200,000 Maximum CCBR Limit (2 years), Inflation Protection Rejected $400,000 Maximum EOBR Limit (4 years), Inflation Protection Rejected Year Maximum LTC Maximum LTC Annual LTC Benefit Payment Benefit (CCBR) Benefit (EOBR) Max Actual 1 $200,000 $100, $200, ,000 85,000 3 $115, ,000 85,000 4 $ 30,000 30,000 30,000 At this point, benefits under the CCBR have been reduced to zero. Benefits will now be payable under the EOBR. Year 4, Continued $400,000 70,000 55, $345, ,000 85, $260, ,000 85, $175, ,000 85, $ 90,000 90,000 85, $ 5,000 5,000 5,000 At this point, there are no LTC benefits from the policy. Year 9, Continued Total LTC benefits from policy: $ 600,000 In Policy Year 4, the maximum benefit from the CCBR has been exceeded. Coverage for LTC benefits will be provided by the EOBR, and only the Residual Death Benefit remains as the death benefit (in states where applicable). In year 9, the EOBR benefits are exhausted. There are no additional living benefits, and only the Residual Death Benefit remains as the death benefit. Training Material 20 of 24

22 Lincoln MoneyGuard Reserve Plus: Streamlined Underwriting Guidelines The Lincoln MoneyGuard Reserve Plus product uses a Streamlined Underwriting process which is basically an accept or reject form of underwriting. Following are the step-by-step underwriting process and the pre-qualifying questions used to determine a good candidate for Lincoln MoneyGuard Reserve Plus. The use of pre-qualifying questions is not available in all states. LINCOLN MONEYGUARD RESERVE PLUS STEP-BY-STEP OUTLINE Key point You must be licensed and appointed with Lincoln before submitting business. Turnaround times are guaranteed for validated producers only. Step 1 Identify prospect. Step 2 Conduct field underwriting by having client answer the prequalification questions. Unfortunately, if the individual answers yes to any of the prequalifying questions, Lincoln MoneyGuard Reserve Plus is not the right fit for them. Be sure to keep a copy of the client s answers for their file. Step 3 If ALL questions on the prequalification tool are answered no, then Complete the Lincoln MoneyGuard Reserve Plus Ticket (advisor signature required). Obtain a full illustration or simplified quote. Signatures are required on full illustrations. Provide outline of coverage The state specific form along with the Outline of Coverage Table from the illustration or quote must be given to the client for their files. Complete and submit the LTC Personal Worksheet and any state required forms. Important notice for NAIC states: Replacement of Life Insurance Annuities Form is required when a client has life insurance or annuities whether the client is replacing or not. If the contract state is New York, you are required to follow Reg 60 guidelines. Reg 60 forms must be submitted in good order with the ticket. Please contact your Lincoln Representative for more information. Ensure that the client is committed to the sale by: 1. Collecting premium and completing a Temporary Insurance Agreement. Note: The Temporary Life Insurance Agreement must be signed by the client and witnessed by the advisor; or, 2. Executing a 1035 Policy Exchange Agreement/Absolute Assignment. The following paperwork is required to be completed: Policy Exchange Agreement/Absolute Assignment Form LF06591 (state variations apply; this form is not required for a Nonqualified Replacement). Replacement Appropriateness Form (Continued) Training Material 21 of 24

23 Important Notice: Replacement of Life Insurance or Annuities Form is required by some states. Check the forms bundles in your state regarding whether this form is required and the appropriate state variation of this form. (This document must be signed by the client and the advisor. A copy must be left with the client.) Internal Exchanges ONLY Life Policy Exchange Form (State variations apply). If policy is replacing an LTC policy or another linked benefit life/ltc product Long Term Care Replacement Form LTC06291 (State variations apply); or 2. Identifying the funds to purchase Lincoln MoneyGuard Reserve Plus and obtaining authorization to move those funds if approved for coverage. Step 4 Explain to the individual that a Personal History Interview (PHI) will be conducted in order to determine whether or not Lincoln will accept the application. This call will take at least 45 minutes. During this time, the application will be completed and all information needed to complete the underwriting process will be obtained. It is imperative that the client be prepared for this interview. Provide the Personal History Interview Instructions to your client. Questions in the PHI will cover the following: Medical History (as stated on the application) Environment Lifestyle Cognitive ability Activity level/activities of daily living Note: Our underwriting process hinges on the client s ability to answer questions in English over the phone. If your client is hearing or speech impaired, we will make a reasonable effort to conduct the PHI through alternate means. If your client is unable or unwilling to participate in the interview, we may be unable to offer Lincoln MoneyGuard Reserve Plus. If your client does not speak English fluently, we may be unable to offer Lincoln MoneyGuard Reserve Plus as there are many important disclosure documents (which are currently only available in English) that the client needs to read and understand before making the decision to purchase Lincoln MoneyGuard Reserve Plus. Note: If we have difficulty reaching the client to conduct the PHI we will contact you for assistance. Step 5 Overnight the following to your company as listed on the Lincoln MoneyGuard Reserve Plus Ticket. A copy of the full illustration or simplified quote. Note: If the full illustration was presented to the client, that is what should be submitted. The full illustration MUST BE SIGNED by the client and the advisor. The following paperwork is required depending on the type of commitment obtained: Premium with Temporary Life Insurance Agreement 1035 Exchange paperwork LTC Personal Worksheet If required by the state Important Notice: Replacement of Life Insurance or Annuities In New York, any additional paperwork associated with the NY Reg 60 Guidelines is needed State required forms. Training Material 22 of 24

24 Step 6 If the case is approved, the policy and application package will be sent to the contact individual noted on the ticket within 6-8 days of when Lincoln received the initial paperwork. Deliver the policy and application package to the client and obtain necessary signatures. Step 7 If NO premium is due: Fax back all delivery requirements (as noted on the checklist sent with the policy and application package) to the company listed on the Lincoln MoneyGuard Reserve Plus Ticket. This paperwork must be faxed back within 30 calendar days of the date the policy was sent to you via overnight mail. If they are not received within 30 days, the case will be closed and any money received will be refunded to the client. If premium IS due: Within 30 days of the date the policy was sent to you via overnight mail, you should overnight mail the check, along with all delivery requirements (as noted on the checklist sent with the policy application package) to the company listed on the Lincoln MoneyGuard Reserve Plus Ticket. We will not in force the case until the entire single premium is received. Training Material 23 of 24

25 Important Disclosures, please read. Lincoln MoneyGuard Reserve Plus is a universal life insurance policy with a rider that accelerates the specified amount of death benefit to pay for covered long-term care expenses. An Extension of Benefits Rider (EOBR) is available to continue long-term care benefit payments after the entire Specified Amount of death benefit has been paid. The Enhanced Surrender Value Endorsement (ESVE) is included in the policy cost for all single premium policies and for flexible premium policies for issue ages The additional surrender benefit provided will be adjusted by any loans/loan interest/loan repayments, withdrawals taken, or claim payments made. The cost of riders will be deducted monthly from the policy cash value. The insurance policy and riders have limitations, exclusions, and/or reductions. Lincoln MoneyGuard Reserve Plus is issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, on policy form LN870 with a Convalescent Care Benefits Rider (CCBR) on Rider Form LR870, an optional Enhanced Surrender Value Endorsement on Endorsement Form B01465F, an optional Extension of Benefits Rider (EOBR) on Rider Form LR871, and an optional Non-forfeiture Benefit Rider (NFO) on Rider Form LR872. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claimspaying ability of The Lincoln National Life Insurance Company. Products and features, including benefits, exclusions, limitations, terms, and definitions, may vary by state. Contracts are issued by The Lincoln National Life Insurance Company (Lincoln). All features may not be available in all states. This material was prepared to support the promotion and marketing of a life insurance product. Lincoln Financial Group affiliates, their distributors, and their respective employees, representatives and/or insurance agents do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Clients should consult their own independent advisor as to any tax, accounting or legal statements made herein. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Training Material 24 of 24