EXTENDED CARE AND LONG TERM CARE PLANNING Presented

EXTENDED CARE AND LONG TERM CARE PLANNING Presented by: John Clarkson, EA & John Vasu, EFS Allstate Insurance Co.

DISCLOSURE These materials are provided for educational purposes and may be used in conjunction with the solicitation of an insurance product to the public. For use with non-registered products only. Variable is not discussed within this presentation. The insurance products described may be issued by various companies and may not be available in all states. All comments about such products are subject to the terms and conditions of the annuity and/or insurance contract issued by the carrier and policy terms, conditions and limitations may apply. Not all applicants will qualify for coverage. Your insurance producer may recommend insurance products based on the individual circumstances you communicated. You should not purchase an insurance product unless accompanied by a compliant carrier illustration. Carrier illustrations are based on the individual circumstances you presented to your producer. The underwriting class illustrated may not be the underwriting class ultimately issued by the carrier. The carrier may, in its sole discretion, issue a policy other than applied for based upon information received during the underwriting process. The premiums and benefits illustrated are based on information provided by the carrier at the time the illustration is run and are subject to change at any time at the sole discretion of the carrier. Crump Life Insurance Services, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. Clients should consult with and rely on their own independent legal and tax advisors regarding their particular set of facts and circumstances before purchasing an insurance product. To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, any U. S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please note that in order to provide a recommendation to a client about the transfer of funds from an investment product, including those within an IRA, 401(k), ROTH IRA, or other retirement plan, to fixed or variable insurance product, an insurance producer must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. Investing advice can only be provided by an appropriately qualified investment advisor. Policy riders are available at an additional cost and may not be available for all products. Terms and conditions apply. Insurance products are offered through Crump Life Insurance Services, Inc. DBA BB&T Life Insurance Services, AR license #100103477 and CA license #0697253, a wholly owned subsidiary of BB&T Insurance Holdings, Inc. Insurance products are not a deposit, not FDIC insured, not guaranteed by the bank, not insured by any federal government agency and may go down in value. 10. 18 BBTL 18 -8399 -A-2, 10. 19 © 2019 Crump Life Insurance Services. All Rights Reserved.

TODAY’S AGENDA § Long Term Care § Types of Care § Who Pays For Care § Types of Plans Available

LONG TERM CARE: THE BASICS

WHY DO PEOPLE NEED CARE? Long term care services are provided to individuals when they require ongoing… Assistance or supervision to perform Activities of Daily Living (ADLs): Bathing, Dressing, Eating, Continence, Toileting, Transferring OR: Assistance or supervision due to severe Cognitive Impairment, such as: Alzheimer’s disease, dementia, other brain disorders

WHAT ARE THE TYPES OF LTC SERVICES?

WHO PAYS FOR THE COVERAGE? § Medicare Age 65+, 3 day hospital stay, skilled care Covers days 1 -20 100%, Co-Pay $170. 50 next 21 -100 days § Medicaid Federal/State funded, financial eligibility, 5 yr lookback, estate recovery § VA Benefits Priority group system - illnesses related to service come first § Personal Income and Assets § Long Term Care Insurance

WHAT IS THE IMPACT OF PROVIDING CARE? § The need for extended care may significantly change the life of the family member providing the care. § Factors that may impact those providing care include: Increased Stress Sibling Tension Decline in Well Being Second Marriages

WHAT ARE THE FINANCIAL CONSEQUENCES? § It’s true – wealthier people may be able to cover the cost of care. Tax Implications Market Timing Liquidity Loss of Future Income § However, have they considered the following?

WHAT IS LONG TERM CARE INSURANCE? § Pays for care provided to individuals who, because of a physical or cognitive impairment, need assistance. § Custodial vs. Skilled § Provides a stream of income used to pay for care

WHAT ARE THE MAIN COMPONENTS? Benefit Amount $1, 500 – $12, 000 (monthly max. ) Benefit Period (yrs. ) 2 Years Lifetime Elimination Period Inflation Protection 0 -90 days, varies by carrier 1 -5% Simple 3 -5% Compound Life Insurance or Annuity Surrender value Other Optional Riders* § Shared Coverage § Joint/Spousal Waiver of Premium § Waiver of Elimination Period for Home Care *Policy § Survivorship Benefit § Cash Alternatives § Return of Premium/Surrender Value § Death Benefit riders are available at an additional cost and may not be available for all products. Terms and conditions apply.

TRADITION AL LTC POLICY Highly Customizable: Flexible Design (You Choose) § Maximum leverage per dollar (lowest premium for comparable coverage) § Can be funded with HSA dollars § Premiums potentially tax deductible § Monthly/daily benefit with specified benefit duration § Inflation protection options with a variety of optional riders § Services - home healthcare, assisted living, nursing home care, adult day care, hospice

HYBRID LTC POLICY (ASSET-BASED INVESTMENT) Combined Linked Benefits: (Live, Die, Quit Solution) § LTC policy + Death Benefit § Premiums payment method (1, 3, 5, 7, 10, Annual) § Potential tax-advantaged LTC benefits § Tax-free death benefit § Surrender value § Inflation options available § Services - home healthcare, assisted living, nursing home care, adult day care, hospice § Reallocation of assets

HYBRID (“LINKED BENEFITS”) LTC POLICIES

HYBRID (“LINKED BENEFITS”) CASE STUDY Client Profile: § Female, Age 60 § Current Liquidity: $750, 000 § Additional income § $100 K CD coming due § Financial plan shows she has enough to retire and live comfortably § Children all reside in different locations Potential Solution: Reposition her current asset in the CD and use the funds to pay for a hybrid LTC product. By doing this, she will significantly increase her LTC benefit, helping protect herself from LTC costs. If she never needs care, she will have a tax-free death benefit to pass onto her heirs. Case studies are offered to show Crump Life Insurance Services can provide valuable assistance to financial advisors seeking insurance solutions for their clients. Results may vary. This is a hypothetical example and does not guarantee a similar results.

LIFE INSURANCE WITH LTC RIDER § Death benefit = LTC benefit amount § Monthly benefit amount is elected § Services - home healthcare, assisted Flexible Protection living, nursing home care, adult day care, hospice § Premium used for LTC costs is locked in § Tax-free death benefit § 2 nd to die options

WHAT DOES YOUR LTC PLAN LOOK LIKE? Continuin g or life care communi ty The insured’s own home Nursing Facility Assisted Living Facility Adult day care

WHAT SHOULD YOU CONSIDER? If it happened today, what would your concerns be? § If single/widowed, protect assets for self should you recover § Protect family from impact of needing care § Ensure ability to keep financial commitments

WHAT ABOUT THE PREMIUMS? § Insurability, Premium Funding and Affordability Premiums will vary depending on: Age Gender Health Type of insurance products considered Premiums can potentially be funded with: Cash value from other/old life insurance policies Old annuities Low producing Certificate of Deposits (CDs) Tax qualified monies New money

NEXT STEPS? § Meet with your insurance professional to help determine if extended care planning is right for you § If you believe it is, they can assist you in determining if you may be eligible and which plan would be an appropriate fit for your needs