the ever evolving long term care marketplace€¦ · common consumer response regarding ltc...

Spring Conference Iselin, NJ

May 3, 2018

The Ever EvolvingLong Term Care Marketplace

Presented by: Mark D. Milbrod, CLU

PROPERTY OF AGENT SUPPORT GROUP

What we’ll be covering…

Myths about Long Term Care

The Long Term Care Dilemma

Portfolio Invasion Planning

The Long Term Care Quandry

The New Long Term Care Marketplace

Product Designs

Types of Benefit Payouts

Utilizing Policy Audits

Planning Opportunities


Qualifying BenefitsCognitive Impairment

Indemnity Benefits

Section 101(g)

LONG TERM CARE

Plan of Care

Informal Care

Blended Life Products

Section 7702

ADL’s

Stand Alone

Nursing Home Care

Facility Care

Chronic Illness

Reimbursement Method

Home Health Care


Health Insurance or Government Programs Will Pay For It

COMMON CONSUMER RESPONSE REGARDING LTC


Health Insurance will cover Doctor and Hospital bills

Medicare covers Short-Term Nursing Home Care

Medicaid only pays if assets are limited

THE REALITY…


SO, IF THERE WAS A LONG TERM CARE EVENT, WHERE WOULD YOU GO

TO WRITE THE CHECK?


70% OF PEOPLE OVER 65 WILL NEED AN AVERAGE

OF $250,000 FOR LTC EXPENSES

ALMOST 50% OF CHILDREN OF RETIREES EXPECT TO

EVENTUALLY TAKE CARE OF THEIR PARENTS

BY 2030, THERE WILL BE OVER 72 MILLION OLDER AMERICANS.70% OF WHICH WILL REQUIRE SOME TYPE OF LONG TERM CARE &

OVER 40% WILL NEED A NURSING HOME AT SOME PERIOD IN TIME.

Are you ready for

The Silver Tsunami?

72 MILLION BOOMERS

• WHERE WIL THE MONEY COME FROM ?• WHAT ABOUT RETIREMENT ASSETS ?• WHAT ABOUT THE CAREGIVERS ?• WILL THIS TEAR FAMILIES APART ?

Portfolio Invasion Planning


LONG TERM CARE QUANDRY

95% Sticker Shock

No Action


ONE LTC EVENT CAN BE CATOSTROPHIC !

ONE EVENT CAN WIPE OUT 95% OR MORE OF YOUR ASSETS


BEFORE YOU KNOW IT…

THE MONEY CAN BE GONE !!!


THE GOAL IS TOO STRETCHOUT THE DOLLAR

AS FAR AS WE CAN ANDGIVE THE MOST FLEXIBILITY !!!


AVERAGE NATIONAL COSTS OF LTC/CHRONIC CARE COSTS IN THE UNITED STATES:

$223/DAY FOR A SEMI-PRIVATE ROOM IN A NURSING HOME ($80,300/YEAR)

$253/DAY FOR A PRIVATE ROOM IN A NURSING HOME ($91,250/YEAR)

$3,600/MONTH FOR ONE BEDROOM UNIT IN AN ASSISTED LIVING FACILITY ($43,200/YEAR)

$30/HOUR FOR A LICENSED HOME HEALTH AIDE SERVICES ($43,200/YEAR AT 4 HOURS/DAY)

78 MILLION BABY BOOMERS WILL RETIRE OVER THE NEXT TWO DECADES

ABOUT 70% OF AMERICANS OVER AGE 65 WILL REQUIRE SOME TYPE OF CHRONIC CARE SERVICES DURING THEIR LIFETIME

15 MILLION AMERICANS CURRENTLY PROVIDE UNPAID CARE TO ADULTS WITH ALZHEIMER’S OR ANOTHER DEMENTIA (22 HOURS PER WEEK ON AVERAGE)

80% OF CARE PROVIDED AT HOME IS DELIVERED BY FAMILY CAREGIVERS

LESS THAN 10% OF OLDER ADULTS RECEIVE ALL THEIR CARE FROM PAID WORKERS


TRADITIONAL STANDALONE

LIFE INS.WITH LTCR/CIR

(IND. or SUR.)

BLENDED LIFE SINGLE OR MULTI PAY

ANNUITYBASED

PRODUCTS

THE LTC MARKETPLACE


SELF INSURE

CLAIM TRIGGERS(REGARDLESS OF PLAN)


2 OF 6 ADL DEFINITION BATHING EATING CONTINENCE

TOILETING DRESSING TRANSFERRING

OR COGNITIVE

TWO TYPES OF CLIENTS


WEALTH PRESERVATION

WEALTH CREATION

RISK MANAGEMENT

LTC PRODUCT BREAKDOWN



CARRIER CONTRACTION

ABOVE EXPECTED CLAIMS EXPERIENCE

LARGE PREMIUM INCREASES

CONSTANT REVIEW

NON‐GUARANTEED

USE IT OR LOSE IT

LTC Policy LTC Rider

Very Costly

Not Guaranteed

“Use it or lose it”

No Residual Benefit

Reimbursement

Limited Benefit



LIFE INS.WITH

LTCR/CIR(IND. or SUR.)

MORE USER FRIENDLY

GUARANTEED PREMIUM

EASY MAINTENANCE

NO LONGER USE IT OR LOSE IT

BENEFIT LEVERAGING

EASIER ACCESS TO BENEFITS

Modernize LTC Solutions Hybrid uses for retirement needs Full circle – Self completing Adds extra dimension 2 of 6 ADL Definition

(Bathing,Eating,Continence,Toileting,Dressing,Transferring or Cognitive)

Sub-standard LTC??? Survivorship Options

Long Term Care & Chronic Illness Riders…


LTC Policy LTC Rider

Very Costly

Not Guaranteed

“Use it or lose it”

No Residual Benefit

Reimbursement

Limited Benefit

Affordable

Guaranteed

Death Benefit

Indemnity Style Benefit

Multi‐use

Flexibility


LTC Rider ADB for CIR

§ 7702(b)

Pays on Temp or Perm claims

State CE usually required

Residual Death Benefit

Indemnity or Reimbursement

§ 101(g)

Typically only Perm claims

No State CE to sell

Residual Death Benefit

Indemnity only since reimbursement not possible


REIMBURSEMENTv.

INDEMNITYBENEFITS

LESS THAN 10% OF OLDER ADULTS RECEIVE ALL THEIR CARE FROM PAID WORKERS



INDEMNITYBENEFITS

AND INFORMAL CARE


In 2016, there were 15.9

Million Informal Caregivers

Providing 18.2 Billion Hours of

Unpaid Care

The equivalent cost of this care was

$230.1Billion

The Emotional, Physical &

Financial Cost of This is Staggering

ALZHEIMER’S & DEMENTIA


ALZHEIMER’S & DEMENTIA

THAT AMOUNTS TO 1,145 HOURS/CAREGIVER OR SIMPLIFIED EVEN FURTHER, 22 HOURS/WEEK

POST DIAGNOSIS, THE AVERAGE ALTHEIMER’S/DEMENTIA PATIENT HAS A LIFE EXPECTANCY OF 8 ‐ 10 YEARS


ADDITIONAL FACTS ASSOCIATED WITH ALZHEIMERS AND OTHER TYPES OF DEMENTIA

MORE THAN 5 MILLION AMERICANS ARE LIVING WITH ALZHEIMER‘S AND BY 2050 THAT NUMBER COULD RISE AS HIGH AS 16 MILLION.

TWO THIRDS OF CAREGIVERS ARE WOMEN, OF WHICH 34% ARE AGE 65 OR OVER.

ONE QUARTER OF CAREGIVERS ARE PART OF THE “SANDWICH GENERATION.”

35% OF CAREGIVERS HAVE DIMINISHING HEALTH DUE TO THE STRAIN PUT ON THEM.


REIMBURSEMENT v. INDEMNITY BENEFITS



+ =2YR

6YR

4YR

Company X = $5,000/mo. INDEMNITY ($360k Pool)Company Y = $6,000/mo. REIMBURSEMENT ($432k Pool)$3,500/mo. HHC Claim (40hrs. x $20/hr.)Average Claim = 4‐5 Years

$

$120k$84k

$240k$168k

$360k$252k


Total Total

Annual DB/LTC Max Mo. ISSUE Annual DB/LTC Max Mo.

Premium Pool LTC Ben. AGE Premium Pool LTC Ben.

3,468 360,000 7,200 45 4,284 500,000 10,000

4,173 360,000 7,200 50 5,307 500,000 10,000

5,339 360,000 7,200 55 7,062 500,000 10,000

7,120 360,000 7,200 60 9,075 500,000 10,000

Total Total

Annual DB/LTC Max Mo. ISSUE Annual DB/LTC Max Mo.

Premium Pool LTC Ben. AGE Premium Pool LTC Ben.

2,842 360,000 7,200 45 3,724 500,000 10,000

3,693 360,000 7,200 50 4,766 500,000 10,000

4,543 360,000 7,200 55 6,218 500,000 10,000

6,059 360,000 7,200 60 7,949 500,000 10,000

MALE ‐ PNT SAMPLE RATES ‐ GUAR. TO AGE 100

FEMALE ‐ PNT SAMPLE RATES ‐ GUAR. TO AGE 100

Sample Rates: Life Insurance w/LTCR’s

MAJOR DISTINCTION BETWEEN LTC RIDER &

ADB FOR CIR ?

Selling additional L.I.Wealth PreservationWealth Creation Business Insurance Planning Disability Protection Reopened “Cold-Cases”Matrimonial Cases Domestic Partners Protecting what you have built

Sales Opportunities w/LTCR & CIR





SINGLE PREMIUM OPTIONS

TRIPLE PLAY (DB/LTC/ROP)

UNDER IRC §7702

BENEFIT POOL LEVERAGING

GREAT FOR §1035 EXCHANGES

RETIREMENT PLANNING COMPLIMENT

SIMPLIFIED U/W PROCESS

BLENDED LIFE VALUE PROPOSITION

$100,000(Earning 1% or $1,000 Annually)

Option ATraditional LTC

Option BBlended Life

• No On-Going Premium• Tax-Free Death Benefit• Tax-Free LTC Benefit

(3 -5x leverage)• Guaranteed ROP

• Premium of $5 – 7k/Year• No Death Benefit• No Control• Forfeiture of Premium

COST = $5,000 - $7,000/Yr. v. $1,000/Yr.


BLENDED LIFE ROP LTC OPTIONS


NON‐NYYear 1………. 80%

Years 2 ‐5…. Vesting up

Years 6 +….. 100%

NEW YORKYear 1 + ..……. 100%

ORYears 1‐ 10 .…. 80% Years 11+ ……. Greater of 95% Prem. or 90% CSV



+ =2YR

6YR

4YR

Company X = $5,000/mo. INDEMNITY ($360k Pool)Company Y = $6,000/mo. REIMBURSEMENT ($432k Pool)$3,500/mo. HHC Claim (40hrs. x $20/hr.)Average Claim = 4‐5 Years

$

$120k$84k

$240k$168k

$360k$252k

Modest Death Benefit

Joint/Dual Life Pricing Husband & Wife Domestic Partners Parent/Child

LTC Pool Options Limited Year (25,33,50 Mo. or 2x Multiple) Uncapped Lifetime Benefit Available for both Waiver available on extension Individual Option Available

UNIQUE SURVIVORSHIP LTC OPTION




ANNUITYBASED

PRODUCTS

WHEN CLIENTS CANNOT QUAILIFY FOR LIFE INSURANCE BASED PRODUCTS

TAX‐FAVORED ACCESS TO FUNDS

SOME LEVEL OF PROTECTION

ASSETS WILL ACCUMULATE LIKE OTHER ANNUITY PRODUCTS



ANNUITYBASED

PRODUCTS

RMD OPPORTUNITIES SPIA/LIFE COMBO SPREAD TAX OVER 20 YEARS LEVERAGE $

NON‐QUALIFIED ROLLOVERS

PENSION PROTECTION ACT HIPAA QUALIFIED NEGATE LIFO TAXATION ON GAIN ANALOGOUS TO GIRs STILL EARNS CURRENT INTEREST


LIFE INS.WITH LTCR/CIR

(IND. or SUR.)


ANNUITYBASED

PRODUCTS

THE LTC MARKETPLACE


SELF INSURE

SELF INSURINGLTC BENEFITS


POWER OF LEVERAGING


AGE: 50 55 60 65

Total Pool 383,949 331,454 289,190 258,970

Mo. Benefit 7,999 6,905 6,025 5,395

Total Pool 442,360 362,546 321,808 275,754

Mo. Benefit 9,216 7,553 6,704 5,745

PER $100,000 ONE-TIME DEPOSIT4 YEAR BENEFIT w/RETURN OF PREMIUM – STANDARD RATES

MALE

FEMALE

POWER OF LEVERAGING


AGE: 50 55 60 65

Total Pool 418,890 328,110 230,750 176,190

Mo. Benefit 8,380 6,562 4,615 3,524

Total Pool 462,810 371,090 283,850 198,610

Mo. Benefit 9,256 7,422 5,677 3,972

PER $5,000 ANNUAL ON-GOING PREMIUM50 MO. BENEFIT & GUARANTED DEATH BENEFIT– PREFERRED RATES

MALE

FEMALE

Life Policy Audits

Life Insurance

Purpose

Product Health


Health Changes Rescue underwater contracts Increase Guarantees Needs Change Ownership Issues “Downsizing” Assist Fiduciaries Introduce product innovations LTC OPPORTUNITIES

Life Policy Audit Opportunities


LIFE POLICY AUDITS

Life Insurance

Purpose

Product Health


Life Policy Audit Case Study #1IN-FORCE SOLUTION

Clients: F43 F62Issued: 1997 2017

Face Amt: $186,000 $251,472

Plan Type: SPWL Blended Life

Rate Class: Standard Standard

CSV: $101,000 DB = $169,748LTC = $339,496ROP= $101,000

Additional Case Notes: Client was looking for LTCI but cost was too high. MG provides for a max mo. LTC benefit of $7,073. Since writing policy, agent has received 5 referrals and client is Comptroller for 100+ EE firm and broker is currently taking over the EE benefits plan.



Life Policy Audit Case Study # 1

Life Insurance

Purpose

Product Health

Life Policy Audit Case Study # 2IN-FORCE SOLUTION

Clients: M51 M52

Issued: 2017 2018

Face Amt: $500,000 $500,000

Plan Type: GUL GUL w/LTCR

Rate Class: Preferred NT Preferred NT

Premium: 6,211 $6,491

Additional Case Notes: Policy issued last year as GUL guaranteed to age 121.Presented GUL with LTC Rider. Same virtual premium. Client had LTC need. Solution: Multi-Use product creating guaranteed LTC pool, if needed.



Life Policy Audit Case Study # 2

Life Insurance

Purpose

Product Health

Closing Comments…

Discussed the LTC Marketplace

Went over the many available product designs

Modernization of LTC planning

Introduced some new ideas

Hopefully helped make you better at what you do

and let us not forget…



QUESTIONS ??

Mark D. Milbrod, [email protected]

(732) 917-6081WWW.ASGLIFE.COM


THANK YOU !!!

the ever evolving long term care marketplace€¦ · common consumer response regarding ltc...

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