Lincoln MoneyGuard Reserve Plus A smarter alternative to self-insuring SM Long-term care funding

Transcription

1 LINCOLN FOR LIFE Lincoln MoneyGuard Reserve Plus A smarter alternative to self-insuring SM Long-term care funding The Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York For agent or broker use only. Not for use with the public. Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value 2011 Lincoln National Corporation LIF-MGR _MGR-ADV-PPT001_Z01

2 Agenda The importance of long-term care expense planning Lincoln Financial Life Stages Survey Long-term care What is self-insuring, and why do clients prefer it? Case studies

3 The importance of long-term care expense planning 70 % of people over age 65 will require long-term care 1 1 DHHS, Statistics taken from Administration on Aging:

4 The importance of long-term care expense planning National average LTC costs in 2010 Assisted living $3,369 per month $40,428 per year Nursing home Semiprivate room: $5,931 per month $71,175 per year Private room: $6,570 per month $78,840 per year Home health aide $20.27 per hour Source: LifePlans Long-Term Care Market Summary: Cost of Care Update 2010; Research & Analysis; October For a printed copy of the report, call 877 ASK-LINCOLN.

5 Lincoln Financial Life Stages Survey Lincoln understands how your clients feel Lincoln Financial Life Stages Survey: Long-term care Executive Summary for LTC Survey Available at click Research & Analysis, and then click Featured Surveys

6 Lincoln Financial Life Stages Survey Lincoln understands how your clients feel Survey of a segment of the population Ages 40 to 70 Household income and/or assets of $100K Survey results Americans know the long-term care risks They are unaware of their funding options Some think they have prepared sufficiently by self-insuring

7 Lincoln Financial Life Stages Survey Long-term care 75 % of people will use savings to pay for long-term care * Long-term care costs could exceed $60,000 per year * Lincoln Financial Group, Long-term Confidence Study, November 2010.

8 Lincoln Financial Life Stages Survey Long-term care planning How loved ones paid for the cost of their own long-term care 56% Used savings Used money from 32% loved ones, family or friends 18% Sold their homes 4% Declared bankruptcy * Lincoln Financial Group, Long-term Confidence Study, November 2010.

9 Why do clients self-insure? Why not purchase a traditional long-term care product?

10 Why do clients self-insure? Even though they have assets and investments, these clients treat long-term care like any other potential expense. This gives them: Control over their assets No ongoing premium costs Leftover assets for their heirs and beneficiaries if they don t need care

11 Why do clients self-insure? Costs vary, and can far exceed expectations The market doesn t care when you need LTC Stress, threats to spousal income, family dynamics

12 A smarter alternative to self-insuring SM Advantages clients want Asset control More for their long-term care dollars Benefits whether or not they need long-term care

13 A smarter alternative to self-insuring SM $100,000 purchase CD Control No premiums Assets for children Will this be enough to pay for her long-term care expenses? Lincoln MoneyGuard Reserve Plus policy Control No additional premiums Assets for children LTC benefits worth multiple times her premium payment Figures based on 65F, healthy, nonsmoker

14 A smarter alternative to self-insuring SM Other Life Insurance to create a legacy Premium Portion of savings Investments/ retirement products Cash savings Money-back guarantee Death benefit Income tax-free death benefit for beneficiaries Long-term care benefits Income tax-free long-term care reimbursements* OR OR Consider buying a Lincoln MoneyGuard Reserve Plus policy with a portion of cash reserves. The policy remains an asset in the portfolio, and it offers:

15 A smarter alternative to self-insuring SM OR A money-back guarantee. At any time, your client can request a return of premium, upon full surrender of the policy. The amount received will be adjusted for any benefits paid and any loans and cash withdrawals, and it may have tax implications. The money-back guarantee is included in the policy cost through the Enhanced Surrender Value Endorsement, which is available at issue on all single premium policies and flexible premium policies for ages See Endorsement for complete terms and conditions. An income tax-free death benefit. When the client dies, the policy pays an income tax-free death benefit to their beneficiaries. OR Long-term care benefits. If the client needs long-term care, the policy can provide income tax-free reimbursements for qualified long-term care expenses. * Long-term care reimbursements are generally income tax-free under IRC Section 104(a)(3). Beneficiaries can receive an income tax-free death benefit under IRC Section 101(a)(1).

16 A smarter alternative to self-insuring SM / / CD Lincoln MoneyGuard Reserve Plus $100,000 $100, Control 2. No additional premium 3. $ to kids 2.8% after-tax return over 18 years 1. Control 2. No additional premium 3. $ to kids $164,390 (30% tax bracket) Risk = Enough $ for LTC? $166,339 Income tax-free death benefit for beneficiaries OR Risk = Only get $ back $499,017 Income tax-free long-term care reimbursements $6,931/month $83,170/year

17 A smarter alternative to self-insuring SM The policy is an asset in the client s portfolio. The client appreciates asset leverage more for the LTC dollar. The client gets benefits whether or not long-term care is needed The client has a money-back guarantee 1 1 Through the Enhanced Surrender Value Endorsement available at issue on all single premium policies and flexible premium policies for ages See Endorsement for complete terms and conditions.

18 A smarter alternative to self-insuring SM No deductible or elimination period Premiums never increase Tax advantages Choice of care setting International benefits

19 Client categories Retired clients or those nearing retirement (Age 50 75) High net-worth individuals (Age 35 80) Older clients (Age 70 80) Clients who have seen the impact of long-term care in their families (Age 35 80) Single females (Age 50 80) Corporate cash (Age 35-65)

20 Hypothetical case study: Protecting retirement income Jeffrey, age 70 and Anne, age 60 Healthy, nonsmokers Concern Jeffrey wants to help protect Anne s retirement income should he need long-term care. Recommendation Jeffrey purchases a $150,000 single premium Lincoln MoneyGuard Reserve Plus policy with a two-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

21 Hypothetical case study: Protecting retirement income Other Life Insurance to create a legacy Portion of savings $150,000 Premium Investments/ retirement products Cash savings $150,000 Money back guarantee $181,777 Income tax-free death benefit for beneficiaries $545,331 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.) His maximum available benefit is $90,889 per year for six years ($7,574 per month).

22 Hypothetical case study: Getting more for the LTC dollar Gloria, age 62 Healthy, nonsmoker Concern Gloria wants to maintain her lifestyle, leave money to her beneficiaries, and establish a scholarship. Recommendation Gloria purchases a $250,000 single premium Lincoln MoneyGuard Reserve Plus policy with a two-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

23 Hypothetical case study: Getting more for the LTC dollar Other Life Insurance to create a legacy Portion of savings $250,000 Premium Investments/ retirement products Cash savings $250,000 Money back guarantee $434,474 Income tax-free death benefit for beneficiaries $1,303,422 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.) Her maximum available benefit is $217,237 per year for six years ($18,103 per month). LCN

24 Hypothetical case study: Having no deductible/elimination period Joyce, age 76 Healthy, nonsmoker Concern Joyce wishes she had prepared a long-term care plan earlier. She s concerned she may need care due to a family history of Alzheimer s disease. Recommendation Joyce purchases a $100,000 single premium Lincoln MoneyGuard Reserve Plus policy with a three-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

25 Hypothetical case study: Having no deductible/elimination period Other Life Insurance to create a legacy Portion of savings $100,000 Premium Investments/ retirement products Cash savings $100,000 Money back guarantee $127,343 Income tax-free death benefit for beneficiaries $297,134 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.) Her maximum available benefit is $42,448 per year for six years ($3,537 per month).

26 Hypothetical case study: Planning ahead to keep up with inflation Dan, age 50 Healthy, nonsmoker Concern Dan wants to protect his children from the stress of managing his LTC expenses. Recommendation Dan purchases a $100,000 single premium Lincoln MoneyGuard Reserve Plus policy with a two-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Dan adds the 3% Compound Inflation option to keep pace with rising LTC costs Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

27 Hypothetical case study: Planning ahead to keep up with inflation Values are subject to change if any cash withdrawals or loans are taken or if any benefits are paid prior to age 75. Other Life Insurance to create a legacy Portion of savings Investments/ retirement products Cash savings $100,000 Premium At age 75, his maximum available benefit is $151,189 per year for six years ($12,599 per month). $100,000 Money back guarantee $148,750 Income tax-free death benefit for beneficiaries $907,134 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

28 Hypothetical case study: Helping to protect the portfolio Nancy, age 65 Healthy, nonsmoker Concern Nancy is concerned that she may need long-term care within the next few years, but she thinks she has enough set aside to cover expenses. Recommendation Nancy purchases a $100,000 single premium Lincoln MoneyGuard Reserve Plus policy with a two-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

29 Hypothetical case study: Helping to protect the portfolio Other Life Insurance to create a legacy Portion of savings $100,000 Premium Investments/ retirement products Cash savings $100,000 Money back guarantee $166,339 Income tax-free death benefit for beneficiaries $499,017 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.) Her maximum available benefit is $83,170 per year for six years ($6,931 per month). LCN

30 Hypothetical corporate case study: Deferred compensation of LTC funding Vince, age 60 Healthy, nonsmoker Concern Vince and his sons own an engineering firm organized as a C corporation. He would like to have a valuable fringe benefit of LTC funding that also provides tax benefits for his business. Recommendation The corporation purchases a $100,000 single premium Lincoln MoneyGuard Reserve Plus policy for Vince with a two-year Convalescent Care Benefits Rider (CCBR) and a four-year Extension of Benefits Rider (EOBR) Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

31 Hypothetical corporate case study: Deferred compensation of LTC funding Other Balance sheet Portion of savings $100,000 Premium Business assets Insurance $100,000 Money back guarantee* $165,619 Income tax-free death benefit for beneficiaries $496,857 Income tax-free long-term care reimbursements OR OR Hypothetical example only. Benefit amounts will vary by client s age, health status, and gender (except in Montana, where gender does not affect rates or benefits.)

32 Why Lincoln MoneyGuard Reserve Plus Streamlined underwriting Experience in claims paying Experience of Lincoln

33 Next steps Identify prospects with cash reserves Position the product Follow-up Submit

34 Important disclosures. Please read. A universal life insurance policy with a Convalescent Care Benefits Rider (CCBR) that accelerates the specified amount of death benefit to pay for covered long-term care expenses. An Extension of Benefits Rider (EOBR) to continue long-term care benefit payments after the entire specified amount of death benefit has been paid. The money back guarantee is featured through the Enhanced Surrender Value Endorsement (ESVE), included in the policy cost for all single premium policies and for flexible premium policies for issue ages The additional surrender benefit provided will be adjusted by any loans/loan interest/loan repayments, withdrawals taken, or claim payments made. The cost of riders will be deducted monthly from the policy cash value. Issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, on Policy Form LN870 with the Convalescent Care Benefits Rider (CCBR) on Rider Form LR870, an optional Enhanced Surrender Value Endorsement (ESVE) on Endorsement Form B10465F, an optional Extension of Benefits Rider (EOBR) on Rider Form LR871, and an optional Nonforfeiture Benefit Rider (NFO) on Rider Form LR872. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. The policy and riders have exclusions, limitations, and/or reductions. Products and features, including benefits, terms, and definitions, may vary by state. Not approved for use in New York. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations Lincoln National Corporation LIF-MGR _MGR-ADV-PPT001 For agent or broker use only. Not for use with the public. Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value