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