LINKED BENEFITSA Two Word Strategy for Protecting Your Retirement

Agenda

Understanding the facts about extended care.

Why is now the time to consider a linked benefit product?

How can a linked benefit product help leverage your retirement assets?

What is a linked benefit product?

How does a linked benefit product work?

Open Discussion

The Facts About Extended Care

Average cost of long-term care is high and increasing

70% age 65 or older will need it temporarily or permanently

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10

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30

40

50

60

70

80

90

100

70%

Nursing home*$80,000/year private$73,000/year semiprivate

Assisted living unit*$3,100/month

Home care aide*$25/hour

Adult daycare*$60/day

*National Averages. Actual costs vary by state.

Activities of Daily Living

To better understand “extended” care, think of the activities that you performed when you woke up this morning. You probably:– Climbed out of bed (Transferring)– Used the bath or shower (Bathing)– Walked to the bathroom (Continence)– Got dressed (Dressing)– Used the toilet (Toileting)– Ate breakfast (Eating)

Activities of Daily Living

While we are healthy it is easy for us to take for granted the Activities of Daily Living (ADL's). However, when you or a loved one is stricken with a degenerative condition such as a stroke, performing these ADL's becomes impossible without the assistance of another person. This type of care is chronic (full-time) and thus becomes very expensive. Cognitive Impairment, example Alzheimer’s, is a stand-alone trigger of benefits

Claims Are Lasting Longer

Average duration of claim is 4.2 years– 75% of claims start at home

Carriers are seeing significant percentages of cognitive claims– Alzheimer’s/Dementia– These claims produce longer stays

Impact on caregivers, family, and friends– Emotional– Financial– Logistical– Family dynamics– Everyday life

If You Needed Extended Care Today…

Which Asset Would You Use First?While the actual proportions in this chart will differ based on a specific individual’s needs, it does show the different types of assets in a typical retirement-oriented portfolio.

Are You Prepared

To spend down your retirement savings?– $80,000 X 4 years = $320,000– $320,000 X 2 (includes spouse) = $640,000

To Spend $640,000?

Why Now?

2011 represents the beginning of a new era in retirement planning– New Tax Advantages– New Products

Environmental factors– Low interest rates – Lower risk tolerance– Money is not working as hard as it could be

• CDs• Savings Accounts• Cash

Your financial strategy is not complete without extended care planning

Think About It

If you could take $1.00 and make it worth more…

Wouldn’t You?

A Linked Benefit Product

Makes your money work harder; leveraging each dollar up to 5 times in the event of an extended care need

Provides a Death Benefit to beneficiaries if you don’t use all the money

Keeps you in control of your assets; a money back guarantee*

Offers a smart way to help protect your existing assets from an extended care event

*Through the Return of Premium Rider on single premium and certain flexible premium universal life policies.

What Is A Linked Benefit Product?

Linked benefit product: a base product such as life insurance or an annuity with a "rider" that provides long term care benefits if needed.

Provides multiple benefits, paying out the first benefit, as needed.

Qualified long-term care costs are reimbursed

Reimbursements intended to be income tax-free

How A Linked Benefit Product Works

While the actual proportions in this chart will differ based on a specific individual’s needs, it does show the different types of assets in a typical retirement-oriented portfolio.

OtherOther

Life Insurance to create a legacy

Investments / Investments / qualified plansqualified plans

CashCashReservesReserves

Designated for long-term care costs

More Extended Care Protection

Extended Care Reimbursement

Up to 5 times premium dollars

Reimbursements for qualified long-term care costs intended to be income tax-free

Benefits paid up to the maximum monthly amount specified in your policy

Specified amount of death benefit used to reimburse long-term care costs

Optional rider can provide coverage for specified number of years after death benefit is depleted

Cost of riders deducted from policy’s account value

If you need extended care

Long-term care reimbursements are generally income tax-free under IRC Section 104(a)(3).

Income Tax-FreeDeath Benefit

Extended Care Reimbursement

Up to 5 times premium dollars

Reimbursements for qualified long-term care costs intended to be income tax-free

Benefits paid up to the maximum monthly amount specified in your policy

Specified amount of death benefit used to reimburse long-term care costs

Optional rider can provide coverage for specified number of years after death benefit is depleted

Cost of riders deducted from policy’s account value

If you need extended care

Death Benefit

If you never need extended careIncome tax-free death benefit

Any portion of guaranteed death benefit not used for long-term care benefits will pass to beneficiaries income tax-free

Any money borrowed or withdrawn from the policy will reduce the death benefit

Beneficiaries receive death benefits income tax-free Under IRC Section 101(a)(1)

Money Back Guarantee

Extended Care Reimbursement

Up to 5 times premium dollars

Reimbursements for qualified long-term care costs intended to be income tax-free

Benefits paid up to the maximum monthly amount specified in your policy

Specified amount of death benefit used to reimburse long-term care costs

Optional rider can provide coverage for specified number of years after death benefit is depleted

Cost of riders deducted from policy’s account value

If you need extended care

Death Benefit

If you never need extended careIncome tax-free death benefit

Any portion of guaranteed death benefit not used for long-term care benefits will pass to beneficiaries income tax-free

Any money borrowed or withdrawn from the policy will reduce the death benefit

Provides a money back guarantee through the Return of Premium Rider on single premium and certain flexible premium universal life policies

Your premium payment can be returned to you, minus any loans, withdrawals, or benefits paid, and is subject to the terms of the Return of Premium Rider

Return of Premium

If you change your mind

Beneficiaries receive death benefits income tax-free Under IRC Section 101(a)(1)NOTE: This may have tax implications, so check with your tax professional.

Hypothetical Case Study Mary, Age 65Good Health, Non-smoker$1 million retirement portfolioRepositioned $100,000

Leverage Up To 5 Times The Premium

Extended Care Reimbursement

Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

If Mary needs extended care

Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs.

The total reimbursement could be up to $499,248 income tax-free.

She still has money in her portfolio to leave to her beneficiaries.

More Money To Mary’s Beneficiary

Extended Care Reimbursement

Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs.

The total reimbursement could be up to $499,248 income tax-free.

She still has money in her portfolio to leave to her beneficiaries.

Death Benefit

In addition to money remaining in Mary’s own portfolio, her beneficiaries will receive a $166,406 death benefit, minus any loans or withdrawals.

Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

If Mary needs extended care

If Mary doesn’t use her extended care benefits

Mary Can Change Her Mind

Mary would receive her original $100,000 single-premium payment, minus any loans, withdrawals, or benefits paid.

* This may have tax implications

Return of Premium

If Mary changes her mind

*Through the Return of Premium Rider on single premium and certain flexible premium policies. Hypothetical example only. Benefit amounts vary by product, age, gender, and health status.

Extended Care Reimbursement

Mary will get up to $83,208 every year ($6,934 per month) for six years to reimburse qualified long-term care costs.

The total reimbursement could be up to $499,248 income tax-free.

She still has money in her portfolio to leave to her beneficiaries.

If Mary needs extended care

Death Benefit

If Mary doesn’t use her extended care benefits

In addition to money remaining in Mary’s own portfolio, her beneficiaries will receive a $166,406 death benefit, minus any loans or withdrawals.

Easy Process

Less than 20 simple pre-screening questions

45 minute phone interview

No exams, lab work, or doctor’s statements

Thank You!So What’s Next?... Let’s Talk