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
Living Benefits Riders general guidelines Assumptions: Current Value: 120,000.00 80% Benefit Base: 150,000.00 Withdrawal Rate: 5.00% Expected ROR: 5.00% Gross of fees and taxes Life Expectancy: 20.00 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%
CLIENTS WORKS Annuity Intelligence Tool Guaranteed Income Calculator Rider Grids
ANNUITY INTELLIGENCE TOOL
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
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 $162,889 5.75% $9,366 # of Deferral Credit Years 10 yrs/ age 85
RIDER GRIDS
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
MEDIAN AGE OF DEATH Source: www.retirementresearcher.com
REMAINING LONGEVITY (MEDIAN) BY AGE Source: www.retirementresearcher.com
BUCKET 1 FUNDING Cash Ultra Short Term Bonds AI Distributions to cash Structured Notes (short term) Dividends/Short term gains to cash
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
PROJECTING THE COSTS Long Term Care Cost Estimator Assumptions: State: Type of Care: New Hampshire Nursing Home Client 1 Client 2 Current Age: 65 65 Age need LTC: 87 92 Age of death 90 95 Current Cost of LTC: 116,800 Monthly: 9,733 Daily: 324.44 Input Cost: [Note: can input estimated annual cost] LTC Inflation: 4.00% NPV Rate: 5.00% NPV of Costs: 281,184 268,047 549,230 Self Insure Annual: 19,001 16,606 35,607 *Note: Amount to save annually to cover projected cost.
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
METHODS OF FUNDING Self Insure LTC Insurance Hybrid LTC Continuing Care At Home (CCAH) Continuing Care Retirement Community (CCRC)
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
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 226,937 226,937 453,875 Hybrid LTC 184,161 207,816 424,161 Traditional LTC 57,471 92,405 149,875 Trad LTC 3% Prem Inc 76,151 122,439 198,590 CCAH 133,481 120,847 254,327 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 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 NET PRESENT VALUE OF OUTLAYS
COMPARISON OF COSTS Assumptions: $10,000 per month benefit 3% inflation rider LTC starts at 88 and goes for 3 years 5% Discount rate 600,000 500,000 400,000 300,000 200,000 Male 70 Female 70 Combined Self Insure 249,843 249,843 499,685 Hybrid LTC 221,656 272,793 461,656 Traditional LTC 65,158 101,273 166,431 Trad LTC 3% Prem Inc 81,549 126,750 208,298 100,000 NET PRESENT VALUE OF OUTLAYS CCAH 128,996 115,950 244,947 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
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 800,000 700,000 Self Insure 275,060 275,060 550,119 600,000 Hybrid LTC 339,405 430,471 678,810 500,000 400,000 Traditional LTC 68,543 118,754 187,296 300,000 200,000 Trad LTC 3% Prem Inc 80,704 139,824 220,528 100,000 CCAH 121,526 108,230 229,756 Male 75 Female 75 Combined CCAH 3% Monthly Inc 137,136 122,930 260,065 Self Insure Hybrid LTC Traditional LTC Trad LTC 3% Prem Inc CCAH CCAH 3% Monthly Inc
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
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
TECHNICAL UPDATE Changes to Reverse Mortgage premiums effective 1 October Boston Bruins Big (Tax) Win Social Security Do Over Options
UPCOMING EVENTS Lunch with RREEF Property Trust COO: October 3 rd in Bedford, NH Regional Training: November 1 & 2