Hello, my name is [Name]. I m here to talk about planning for long-term care expenses and the importance of helping to protect your clients' wealth and their loved ones. 1
We ll talk about: [Read from slide.] 2
Every day more than 10,000 baby boomers reach age 65. [CLICK] Over the next 18 years (until 2030), this population is expected to grow to approximately 70 million. [CLICK] In 3 years (2017), those age 50 and up will compose one-half of the U.S. population [CLICK] and control 70% of the disposable income. This will result in a large shift from a client population in the accumulation phase to the distribution phase. As a result, this drives the need for planning strategies to help protect the portfolio from risk, including health-related long-term care expenses. 3
Americans are becoming more aware of the need to plan for long-term care costs. According to a recent Associated Press article on long-term care, Americans age 40 and over count on their families to be there for them as they age but those currently receiving long-term care, or who have received it in the past, are less likely to believe they can rely on their families in a time of need. If your clients need care, the last thing they want to do is make tough decisions about: Who would take care of them? How much would it cost? And what assets would they need to sell to cover long-term care costs if they don t have a plan. 4
Clients should consider that they may need long-term care at some point in their lives. As they age, they may become ill and require in-home, long-term care services. [CLICK] Eventually, their children may be concerned about their safety at home, and the client needs to move to an assisted living facility. [CLICK] Finally, if they need more intensive care, they may need to live in a nursing home. [CLICK] This could become a tremendous financial burden to your clients and their loved ones. 5
Health-related expenses can increase considerably, especially if a client develops a health problem that requires long-term care. The national cost averages are staggering. [Read from slide.] 6
So, why don t more clients purchase traditional long-term care insurance? The big word here is traditional. 1. Some don t like the idea that traditional long-term care insurance is a use-it or lose-it policy. If they don t need care, they pay premiums and get nothing in return. They may feel they could be throwing money out the window. 2. Premiums can increase substantially over time, and there are no guarantees. 3. Some policies have an elimination period before the client becomes eligible for coverage. 4. It s expensive. 5. And some clients think they can self-insure. But they are taking on all the financial risk. 7
What if I can show you another way one that provides tax-advantaged reimbursements for qualified long-term care expenses? What if there s a solution that offers benefits even if your clients never need longterm care? What if your clients never need to be concerned about premium increases as they get older or need care, because their policy s premiums are set at issue and guaranteed never to increase? And there s no elimination period? 8
Those are some of the advantages of Lincoln MoneyGuard II. Lincoln MoneyGuard solutions is the hybrid that s been trusted by advisors and their clients for more than 25 years. 9
Lincoln MoneyGuard II gives clients: 1. Tax-advantaged long-term care benefits if they need care worth much more than their premium payments. OR 2. An income tax-free death benefit for their children or beneficiaries if they don t need care. OR 3. Return of premium options. They could choose to maximize their benefits, and get more from their policy with an increased death benefit and increased monthly benefits if they need long-term care. Or they could choose to maximize their return of premium. A full return of premium is available to them after year 5, provided all their planned premiums are paid. The return of premium is through the Value Protection Rider, available at issue. The Rider contains complete terms and conditions. If their policy is surrendered before the planned premiums are paid, the surrender value will be paid to them. If they surrender their policy for the return of premium, there may be tax implications, and they should consult a qualified tax advisor. 10
Clients like having options. When they choose the return of premium Option 1, if they need long-term care, they ll have a greater benefit amount than with Option 2. The second option gives them more liquidity through the return of premium vesting schedule. [Read from slide.] The return of premium option must be selected at issue. Once selected it cannot be changed. 11
To receive benefits, an individual must be certified by a Licensed Health Care Practitioner (LHCP) as chronically ill. The LHCP certifies that the insured is unable to perform at least two of six of the activities of daily living (ADLs) without substantial assistance from another person. The ADLs are: Bathing Continence Dressing Eating Toileting, and Transferring An insured may also be certified chronically ill as a result of severe cognitive impairment. Certification must be reconfirmed by a LHCP every 12 months for reimbursement eligibility. Qualified long-term care benefits will continue as long as the individual is certified as chronically ill or until the long-term care benefits are completely exhausted. 12
Now let s take a look at four Lincoln MoneyGuard client profiles with the flex-pay options that may work best. <Review the four quadrants on the slide> Ask your client these questions, and we ll help you customize a plan. Which is more important to them: liquidity or greater leverage for long-term care costs? Will they supplement their healthcare protection from cash savings or cash flow? Is your client married or single? What is their local cost of care? 13
As you just saw, with Lincoln MoneyGuard II, you have planning flexibility with a choice of payment options. Your clients can choose from payment options of 1 through 10 years. This can open up more opportunities for your business. Let s look at how this flexibility can work for your client. Meet Nancy, a hypothetical client. She s married, age 60, and is a healthy nonsmoker with 2 adult children. Nancy has assets for potential long-term care expenses, but she s not sure if a prolonged illness or the need for care would erode her savings. Let s look at how Nancy might benefit from a Lincoln MoneyGuard II policy. 14
In this hypothetical example, Nancy wants to make one premium payment. If Nancy wants more liquidity, she can choose this Return of Premium Option. She could receive up to $478,956 of income tax-free reimbursements for qualified long-term care expenses. Her maximum available benefit is $6,652 per month for 6 years. If she doesn t need long-term care, her policy provides a $159,652 income taxfree death benefit (less any loans, withdrawals and benefits paid), and If she decides she wants a return of premium, she can have $100,000 after year 5 once all her planned premiums are paid. With the return of premium, any funds returned will be adjusted for any loans, withdrawals and benefits paid, and may have tax implications. 15
If Nancy wants to gain more leverage for her long-term care dollars, she can choose this Return of Premium Option. If she needs long-term care, she could receive up to $519,921 of income tax-free reimbursements for qualified long-term care expenses. Her maximum available benefit is $86,654 per year for 6 years ($7,221 per month). If she doesn t need long-term care, her policy provides a $173,307 income taxfree death benefit that she could pass along to her children. Or if she uses a portion of the death benefit for long-term care expense reimbursements, her children or beneficiaries would receive the balance, income tax-free (less any loans, withdrawals and benefits paid). If she decides she wants a return of premium, she can have $80,000 once all her planned premiums are paid. 16
Let s look In this hypothetical example, Nancy has more than she needs in an annuity. Her advisor recommends that she turn on its income stream and purchase a 10-pay Lincoln MoneyGuard II policy with a two-year Long-Term Care Acceleration of Benefits Rider (LABR) and a four-year Long-Term Care Extension of Benefits Rider (LEBR). This will provide at least six years of long-term care benefits. She ll make annual payments of $10,000 for 10 years. She spreads out her income tax exposure over that 10-year period. If she wants more liquidity, she can choose this Return of Premium Option. She could receive up to $412,272 of income tax-free reimbursements for qualified long-term care expenses. Her maximum available benefit is $5,726 per month for 6 years. If she doesn t need long-term care, her policy provides a $137,424 income taxfree death benefit (less any loans, withdrawals and benefits paid). If she decides she wants a return of premium, she could have $100,000 after year 5 once all her planned premiums are paid. With the return of premium, any funds returned will be adjusted for any loans, withdrawals and benefits paid, and may have tax implications. 17
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To maximize her long-term care benefits, Nancy could choose this Return of Premium Option. She could receive up to $447,531 of income tax-free reimbursements for qualified long-term care expenses. Her maximum available benefit is $6,216 per month for 6 years. If she doesn t need long-term care, her policy provides a $149,177 income taxfree death benefit (less any loans, withdrawals and benefits paid). If she decides she wants a return of premium, she could have $80,000 once all her planned premiums are paid. 18
Now take a look at some clients who could benefit from a strategy that lets them hold on to their money and spread out their payments over time. 1. Highly compensated professionals Their concerns are: I want to plan and save for my future. or I don t have a lump sum, but I am concerned about long-term care expenses. Why a Lincoln MoneyGuard flexible premium strategy: They have sufficient income to make payments for 1 through 10 years. They gain more asset leverage when they are young and healthy. [CLICK] 2. Sandwich generation Their concerns are: I m juggling children s tuitions and helping with parents LTC expenses. or I know what a LTC experience is like and I don t want to be a burden to my children. Why a Lincoln MoneyGuard flexible premium strategy: An LTC strategy that fits their budget. It provides financial flexibility with premiums that are locked in at issue. And their children feel confident that their parents are prepared for the future. [CLICK] 3. Clients nearing retirement Their concerns are: I ve maxed out my retirement contributions and need a way to prepare for LTC expenses. Why a Lincoln MoneyGuard flexible premium strategy: Financial flexibility with annuity funding. The income stream pays the flexible premium payments for 1 through 10 years. [CLICK] 4. Retirees with concentrated tax-qualified assets Their concerns are: I want to protect my retirement savings. or Maintaining financial independence is important to me. Why a Lincoln MoneyGuard flexible premium strategy: They have sufficient retirement income and taking distributions from tax-qualified investments over time will spread out their tax burden. 19
5. Executives/top-earners Their concerns are: Taxes are a big deal to me. or I saved a lot. I want to protect those savings. Why a Lincoln MoneyGuard single premium strategy: Move tax-exposed assets to fund their LTC planning strategy. They ll gain more leverage for their LTC dollars when they are younger and healthier, and in the future, they ll have tax-advantaged benefits. [CLICK] 6. Single females Their concerns are: Who will take care of me? or I don t want to be a burden to my family. Why a Lincoln MoneyGuard single premium strategy: In one move, you can alleviate the concern of being a burden and help your clients maintain financial independence. [CLICK] 7. Clients in or near retirement Their concerns are: I have savings for long-term care, but I m worried about rising healthcare costs and exposure to market volatility. Why a Lincoln MoneyGuard single premium strategy: Portfolio protection. A single reallocation of the money parked for self-insuring helps protect their cash reserves and other assets from LTC expenses. Inflation options can help address concerns about rising healthcare costs. and [CLICK] 8. High net worth clients Their concerns are: I have enough money for LTC expenses. or I don t like insurance. Why a Lincoln MoneyGuard single premium strategy: Some risks of exposure to LTC expense are off-loaded to Lincoln. It provides tax efficiencies. It also helps avert conflicts of interest. Children don t have to choose between quality of care and their inheritance. 20
With Lincoln MoneyGuard solutions, you ll help protect your clients, their loved ones and their savings with the trusted name in LTC expense protection. It s the leading hybrid from a company committed to the industry. And Lincoln has more than 100 years of financial stability. We support you with a dedicated internal and external support team. And, we go the extra mile for your clients when they really need it. They ll be happy to know that most Lincoln MoneyGuard claims, once received in good order and approved, are paid within five days or less. 21
Let s recap. We reviewed three important things today. 1. The growing concern of rising health-related and long-term care costs, and the need to protect wealth. 2. Options for planning. Some of your clients may take on all the financial risks of self-insuring. With Lincoln MoneyGuard II, they can maintain control of their assets, and you have planning flexibility with flexible premium options. When your clients need care, they can choose the services they want even care in the comfort of their own home. 3. Prospective clients. Think about the range of client examples we reviewed and consider your practice. I m sure you can identify a number of clients who could benefit from all of the Lincoln MoneyGuard II advantages. 22
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