For Financial Professional Use Only. Not for Use With Consumers. 1For Financial Professional Use Only. Not for Use With Consumers.
Risk Management Solutions:
Asset Based Long-Term Care
September 17, 2019
Jay Stubbs, CLU
FPLAG.654973.06.17
For Financial Professional Use Only. Not for Use With Consumers. 2
Jay Stubbs, CLU
• Helping Advisors Since 1997• Obtained CLU 2006• Former President Mobile EPC• Current President NAIFA AL• Board Member FPA Gulf States• L’Arche Planned Giving• USA Planned Giving
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Incorporating Risk Management Solutions
Why?
Protect your client’s financial
stability.
Your client is already
considering it.
How?
Ask the right questions.
Gather the right information.
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The Long-Term Care Dilemma
About 70% of all people over age 65 will require some type of chronic illness or long-term care during their lifetime.
(2017 Medicare & You, Centers for Medicare & Medicaid Services)
A 65-year-old couple who retired in 2016 needed about $260,000 to cover medical expenses throughout retirement. This estimate applies to retirees with traditional Medicare coverage and does not include costs of dental care, long-term care or over-the counter medicines.
(2016 Retiree Health Care Costs Estimate, Fidelity Investments)
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Other Realizations
People that live alone need a plan
Women outlive men, and are more likely to live alone and need care
People are living longer
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Getting the Conversation Started
Do you have a plan in place to protect your
family’s assets in the event that you have an
extended health care incident?
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What’s an Extended Incident?
You are UNABLE to perform 2 of 6 activities of daily living
which are eating, dressing, toileting, bathing, walking, and
continence
OR
You experience a severe cognitive impairment such as
Alzheimer’s or dementia
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Follow-Up Questions for Each Conversation
When was the last time that you reviewed this with a professional advisor?
Does that concern you?
If they say “no,” then move on.
If “yes,” then ask, “Do you mind if we take a few more minutes? I would like to ask you a few questions that can help me identify what you need.”
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Common Questions from Clients
Doesn’t Medicare or Medicaid Pay for this?
Isn’t Long-Term Care insurance expensive?
What options do we ( I ) have?
How much protection do we ( I ) need?
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How much…https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Or Google Genworth Cost of Care
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How much…Mobile, AL
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How much…Mobile, AL…in 20 years (3%)
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Common Questions from Clients
What options do we ( I ) have?
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Long Term Care
Traditional
Long Term Care
Fully Underwritten Life Ins. with Chronic Illness Riders
Annuities with LTC Riders
Simplified Life Insurance with LTC Riders
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Long Term Care
Traditional
Long Term Care
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Long Term Care
Fully Underwritten Life Insurance with Chronic Illness Riders
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What is it an LTC or CI Rider?
Optional rider that can advance your life insurance policy’s death benefit
Similar to self-insuring, but using a life insurance policy death benefit instead of your own assets
Available with certain life insurance policies
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101(g) vs. 7702(b)
▪ Early acceleration of death benefits (IRS)
▪ Designed to pay costs for care that are permanent
▪ Riders considered “life insurance” and can expire once 100% used
▪ Health Insurance Laws do not apply
▪ No additional CE or licensing
• Under LTC definition (IRS)
• Designed to pay costs for
care that last at least 90
days
• Riders considered “health
insurance” and can exceed
100% of benefit
• Health Insurance Laws
apply
• Additional CE or licensing
(state specific) may be
required
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Understanding a Rider Example 101g
Potential Benefit Breakdown
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
Year 1 Year 3 Year 5 Year 7 Year 9
$940,000
$820,000
$700,000
$580,000
$460,000
$60,000 $180,000
$300,000
$420,000
$540,000
Rider
UL Death Benefit
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Long Term Care
Annuities with LTC Riders
Simplified Life Insurance with LTC Riders
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Asset Based Long Term Care Options
Coverage using idle assets such as CD’s, life cash values or existing annuity
Tax free distribution (Annuity & Life rules)
Return of premium options available
Options for other family members planning
A guarantee that someone always benefits from the policy
Built-in residual death benefits
Cash value access
Coverage options from healthy to unhealthy
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Long Term Care
Annuities with LTC Riders
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Pension Protection Act (PPA)
• This was passed in 2006 and went effective in 2010.
• This allows non-qualified annuity money to be used tax-free
for LTC purposes if you use a certain PPA product.
• To qualify, the company must have the ability to make LTC
claims.
• Great if someone has gains and wants to avoid paying taxes if
they use the asset for LTC
• You can still add a spouse rider
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Long Term Care
Simplified Life Insurance with LTC Riders
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Asset Based Long Term Care FYI
Ages 40-75, some up to Age 80
Single payment, short pay & life pay options
Return of premium options available
Reimbursement Plans & Indemnity Plans
Options for other family members planning SPOUSE
A guarantee that someone always benefits from the policy
Built-in residual death benefits
Cash value access
Underwriting - coverage options from healthy to unhealthy
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Let’s Talk About Long Term Care
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Questions
and Answers
Jay Stubbs, CLU
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Jay Stubbs, CLU
www.JayStubbs.com