Bringing it All Together Organizing Your LTC Toolbox
Bringing it All Together – Organizing Your LTC Toolbox Brought to you by the Nationwide® Advanced Consulting Group FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12)
Some Things You Should Know • This presentation was not intended by the author to be used, by anybody for the purpose of avoiding any penalties that may be imposed on you pursuant to the Internal Revenue Code. The information contained herein was prepared to support the promotion, marketing and/or sale of life insurance contracts, annuity contracts and/or other products and services provided by Nationwide Life Insurance Company. • Federal tax laws are complex and subject to change. Neither the company nor its representatives give legal or tax advice. Please talk with your attorney or tax advisor for answers to your specific questions. • Investing involves risk, including possible loss of principal • Keep in mind that as an acceleration of the death benefit, the LTC rider payout will reduce both the death benefit and cash surrender values. Care should be taken to make sure that your clients' life insurance needs continue to be met even if the rider pays out in full. There is no guarantee that the rider will cover the entire cost for all of the insured's long-term care as these vary with the needs of each insured. FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 2
Some Things You Should Know • When evaluating the purchase of a variable annuity, your clients should be aware that variable annuities are long-term investment vehicles designed for retirement purposes and will fluctuate in value; annuities have limitations; and investing involves market risk, including possible loss of principal. • This information assumes that the life insurance is not a modified endowment contract, or MEC. As long as the contract meets the non. MEC definitions of IRC Section 7702 A, most distributions are taxed on a first-in/first-out basis. Surrender charges may apply to partial surrenders. Loans and partial surrenders from a MEC will generally be taxable, and if taken prior to age 59 ½, may be subject to a 10% tax penalty. Loans and partial surrenders will reduce the cash value and the death benefits payable to your beneficiaries, and withdrawals above the available free amount will incur surrender charges. If your contract were to lapse with a loan outstanding, the loan amount in excess of basis will be treated as a distribution and all or a portion will be subject to income tax. • The underlying investment options to a variable annuity or life insurance product are not publicly traded mutual funds and are not available directly for purchase by the general public. They are only available through variable annuity/variable life insurance policies issued by life insurance companies. FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 3
Some Things You Should Know • As your clients’ personal situations change (i. e. , marriage, birth of a child or job promotion), so will their life insurance needs. Care should be taken to ensure these strategies and products are suitable for long-term life insurance needs. You should weigh your clients’ objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in the policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your clients’ individual needs. • Not all Nationwide products and services are suitable for all clients or situations. There may be products, issued by other companies, which better suit your clients’ goals. Be sure to consider your clients’ objectives, their need for cash flow and liquidity, and overall risk tolerance when using any strategy. • This information was developed to promote and support products and services offered by Nationwide. It should not be taken as tax advice. It was not written or meant to be used by any taxpayer to avoid tax penalties, and it cannot be used by any taxpayer for that purpose. • Life insurance and annuities are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio, member of Nationwide Financial®. The general distributor for variable insurance products is Nationwide Investment Services Corporation, member FINRA. In Michigan only: Nationwide Investment Svcs. Corporation. Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 4
Some Things You Should Know • None of the long-term care products mentioned guarantee that the entire cost for all of the insured's long-term care expenses will be met as these vary with the needs of each insured. • Traditional Long-term Care policies mentioned come with risk of price increase • LTC Riders may have an additional charge and these products should be purchased first and foremost for the purpose of life insurance. Death benefits are reduced dollar for dollar by the amount accelerated for benefits (more than dollar for dollar with some products). Take care the underlying life insurance need is still met should benefits for long-term care or chronic illness be accelerated • Case studies are hypothetical and do not represent a specific client or clients FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 5
Agenda • Approaching Clients – Who and How? • Organizing a Plan – Gathering Data • Misconceptions Your Client May Have • Preparing Clients for Realistic Costs • Helping Clients Choose a Solutions to LTC Costs • Elder Care Issues FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 6
Approaching Clients – Who? • Clients with assets to protect • Clients under age 651 – 81% of purchasers under age 65 – 56% of purchasers between 55 - 64 • Married clients 1 – 77% of purchasers are married • Women 1 – 66% of policies purchased on women • Affluent clients – Insuring risk is more cost effective 1 AALTCI- American Association for Long-Term Care Insurance Sourcebook 2012 -2013 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 7
Approaching Clients – How? • Don’t start with words “long-term care” – Many clients associate long-term care with Nursing Homes • Most clients would prefer to receive care at home – 50% of LTC claims are for Home Health Care 1 – Discuss “staying in your home longer” with the client • Use analogies – – Average cost of a home in U. S. is $187, 3003 Average cost of a Home Health Care claim - $196, 5602 Average cost of Assisted Living Claim - $187, 7582 Average cost of a nursing home claim - $218, 0872 1 AALTCI- American Association for Long-Term Care Insurance Sourcebook 2012 -2013 Market Survey of long-term Care Costs, Market Mature Institute, 3 October 2011. National Association of Realtors – August 2012 2 Source: FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 8
Organizing a Plan • Gather Data – – – – Marital Status Adult Children available for support (physical or advocate) Current Assets Current income sources Income sources in retirement Where clients will live in retirement Debts, Home Mortgage (paid off home? ), etc. • Confidential Health Care Fact Finder – Pertinent information for the LTC calculator FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 9
Organizing a Plan • Make sure the right people are at the appointments – Both spouses – Adult children and parents if the children are purchasing the plan • Be Flexible – LTC discussions can be delicate and emotional – Patience and understanding FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 10
Client Misconceptions According to studies, Americans erroneously believe the following sources pay LTC expenses: 36% 21% 13% • Believe Medicare will pay • Health Insurance will pay • Believe Medicaid will pay • Other government programs will pay Long-term Care Insurance: A Piece of the Retirement Puzzle, Prudential 2011 Study FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 11
Prepare Your Client for Realistic Costs Considerations include: • Current health condition of clients • Marital status • Geographical location • Historical LTC inflation factors FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 12
Prepare Your Client for Realistic Costs Client Fact Finder FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 13
Long-term Care Assessment • John is age 60 at time report is generated • John is estimated to need LTC services at age 80 and need care for approximately 7 months FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 14
Long-term Care Assessment • l • Jane is age 60 at time report is generated • Jane is estimated to need LTC services at age 88 and need care for approximately 2 years and 7 months FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 15
Avoid Client “Sticker Shock” Total estimated LTC cost for this couple nearly $500, 000! Be prepare to customize solutions • Read the report ahead of time • Look at client’s file for information that might influence success of an alternative care choice – What sources of income will be available in retirement? – What assets are available to liquidate for the surviving spouse? • Find out additional facts such as – Do client’s have children living in town? – What capacity to do the children have to give support? • Upon assessing information, a plan can be considered FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 16
Potential Solutions for LTC Coverage – Traditional LTC Policies • Flexible, cost efficient, helps preserves assets to leave to heir – Asset Based LTC • Help preserve assets to leave to heirs • Avoids “loss of premium” objection • Single pay provides “return of premium anytime” guarantee – Life Insurance Riders offering Living Benefits for LTC or Chronic Illness • • • Helps preserve assets to leave to heirs Avoids “loss of premium” objection Provides flexible payment options May enhance inheritance if LTC not needed or partially used Important differences exist between LTC and Chronic Illness riders – Annuities with LTC Rider • Provides least coverage, but may be available to the uninsurable FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 17
Elder Care Check List • Clients should think about a full Elder Care Plan • Suggest they visit appropriate professionals to implement a plan Financial Check List Wills Health Care Check Parent's Advisors List Living Will Financial Advisor Trusts Charge Cards Health Care Power of Attorney DNR (Do not resuscitate order) HIPAA Release Form Health Insurance policies Long-term Care Insurance List of Medications Burial Plots & Prepaid funerals End of Life Wishes (discussion) Durable Financial Power of Attorney Life Insurance and Annuities Investments Bank Accounts Lawyer Accountant/Tax Advisor Religious Council Doctors Basics Driver's License or State ID Insurance Cards Medicare, VA, Medicaid cards Phone numbers of friends Safe Deposit Box Copies of birth & death certificates Marriage records Military records FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 18
Questions? Independent Dealer: Financial Institutions: Wirehouse/Regionals: Nationwide Agents: Nationwide Financial Network: Brokerage General Agency: 1 -800 -321 -6064 1 -800 -893 -5399 1 -800 -720 -1511 1 -888 -333 -4202 1 -877 -223 -0795 1 -888 -767 -7373 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC NFM-11295 AO (12/12) 19
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