Nationwide Your Life Care Matters Uses in Advanced

Nationwide Your. Life Care. Matters – Uses in Advanced Planning Brought to you by Nationwide ® NATIONWIDE YOURLIFE CAREMATTERS® • 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

Disclosure This presentation was not intended by the author to be used, and cannot 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. Keep in mind that as an acceleration of the death benefit, the payment of long-term care rider benefits will reduce both the death benefit and cash surrender values of the policy. Additionally, loans and withdrawals will also reduce both the cash values and the death benefit. Care should be taken to make sure that life insurance needs continue to be met even if the rider pays out in full, or after money is taken from the policy. There is no guarantee that the rider will cover the entire cost for all of the insured’s long-term care, as this may vary with the needs of each insured. Nationwide pays the longterm care benefit to the policy owner; there is no guarantee the policy owner will use the benefit for long-term care expenses if the policy is owned by someone other than the insured. Guarantees are subject to the claims-paying ability of the issuing company. Life insurance products are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio. FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 2

Disclosure When choosing a product, make sure that life insurance and long-term care insurance needs are met. Care. Matters is not intended to be a primary source of life insurance protection, so make sure life insurance needs have been covered by appropriate products. Because personal situations may changes (i. e. , marriage, birth of a child or job promotion), so can life insurance and long-term care insurance needs. Care should be taken to ensure these strategies and products are suitable. Associated costs, as well as personal and financial objectives, time horizons, and risk tolerance should all be weighed before purchasing Nationwide Your. Life Care. Matters. Life insurance, and longterm care coverage linked to life insurance, has fees and charges associated with it that include: costs of insurance which varies based on characteristics of the insured such as gender, tobacco use, health and age; and additional charges for riders that customize a policy to fit individual needs. Approval for coverage under the policy and attached LTC riders is subject to underwriting and may require a medical exam. Benefit banking is available through the Excess Benefit Account feature, a separately established secure money market account with Nationwide Bank. Inflation protection is available to help the monthly benefit keep up with increases in the cost of care. International benefits are available if care is provided outside of the US. However, with these and other product features, there are limitations and exclusions. Refer to your policy and attached riders for details on product features, including benefits, exclusions, limitations, terms and definitions (which may vary by state). FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 3

Disclosure The extent to which an LTC benefit payment is received tax-free is limited, on an annual basis, to the greater of the actual qualifying LTC expenses incurred or the HIPAA per diem amount or its equivalent. Nationwide Your. Life Care. Matters is a cash indemnity policy that pays benefits upon showing that the insured has been certified as a having the triggers required to qualify a claim. Submission and review of bills and receipts supporting actual LTC expenses incurred is not required for payment of benefits nor is the benefit limited to the daily HIPAA per diem. Therefore, the company cannot guarantee that LTC benefit payments will be treated as a tax-free given the taxpayer’s specific circumstances, especially when benefits are used to pay for care provided by family members or collected from more than one policy. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances upon qualifying for LTC monthly benefits. For contracts that meet the MEC definitions of IRC Section 7702 A, most distributions are taxed on a first-in/first-out basis, however LTC benefit payments can be received tax-free under IRC Section 7702 B. Gains from partial surrenders and loans from a MEC will be taxable and if taken prior to age 59 1/2, may be subject to a 10% penalty. Federal tax laws are complex and subject to change. Neither the company nor its representatives give legal or tax advice. Nationwide Your. Life Care. Matters may not be available in every state. Please contact Nationwide to determine product availability in your state. Life insurance products are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio. Nationwide, the Nationwide N and Eagle, Nationwide is on your side and Nationwide Your. Life Care. Matters are service marks of Nationwide Mutual Insurance Company. © 2017 Nationwide FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 4

Agenda • Brief reminder of Nationwide Your. Life Care. Matters features • In an Irrevocable Life Insurance Trust (ILIT) • Affluent clients wanting to “self-insure” Brought to you by Nationwide ® • Long-term care – the new executive benefits • Section 162 Plans • REBA – Sec. 162 plans with restrictive bonus • Executive Benefit of Long-Term Care coverage • Multiple needs met with one solution FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 5

………. Nationwide Your. Life Care. Matters — How It Works $100, 000 Brought to you by Nationwide $180, 419 $7, 517 ® $360, 838 • Nationwide Your. Life Care. Matters is a LTC sale – Death Benefit is secondary • Return of Premium Feature (to owner) • More features similar to Traditional LTC policies • DB at least 20% of Specified DB Amt. FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC $541, 257 $36, 083 6

…………. … Nationwide Your. Life Care. Matters features to remember • Only the first bucket has death benefit Some business planning may require addition of term insurance • Premiums are guaranteed Premiums will never increase • CASH indemnity Ease of implementing claims No bills or receipts needed to collect monthly LTC benefits No restrictions on care or benefit use • Allows informal and family caregivers • Use for home modifications, prescriptions. transportation • Full LTC monthly benefit amount can be paid – guaranteed LTC expenses are not considered • Amount can be counted on – which aids in business uses FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 7

……………. Nationwide Your. Life Care. Matters features to remember • Premium schedules available are: Single pay 5 year pay schedule – monthly mode available 10 year pay schedule – monthly mode available • Return of premium feature Single pay ROP is vested over 5 years – full ROP on day 1 of year 6 5 year pay schedule - full ROP on day 1 of year 6 10 year pay schedule – full ROP on day 1 of year 11 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 8

………. . . Estate Planning – Using in an ILIT • Indemnity LTC riders can be used in ILIT Rider is paid to contract owner (the trustee) with no obligations to pay funds to grantor • Use of collateralized arms length loans removes money from trust without incidents of ownership Collateral ……Interest Rate ……Loan is repaid in full • Interest taxable if repaid after death • Reimbursement plans will not work in ILIT Reimbursement is tied directly to grantor and creates incidents of ownership Can be used in other type trusts FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 9

What does self-insuring mean to an affluent client ………. 70% chance of using some or all of asset for LTC costs 1 (How much will some cost? ? ? ) $1, 000 Client sets aside $1, 000 to cover any LTC Costs. Asset is liquid and in the estate. Cost of being “lucky” 1 . Little or no amount from this asset would be estate taxed since it was liquidated to pay LTC costs 50% chance of not needing this asset for LTC costs The untouched $1 million would be estate taxed. At 2015 rates, this could mean a tax rate of as much as 40% ($400, 000) Medicare/gov 2016 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 10

……………Example - Meet Allyson • High net worth client with estate tax liability, thought of self insuring Age 55 female, non-tobacco, couples rate Planned to put money aside in a conservative investment • Advisor suggests Care. Matters as an alternative way to insure LTC The policy will be owned by an ULIT (ILIT) Avoid potential estate taxes if the money is not needed for care • Assumes the following loan provisions Collateral is the vacation home, Interest rate is 8% Loan paid back just days before death Single Premium $199, 536 LTC Total Benefit $1, 080, 000 If LTC Used…. $72, 000 Guaranteed DB If LTC not Used… $360, 000 Guaranteed DB FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 11

The Results ………. . $15, 000 per month of LTC benefits are paid to the trust for 6 years Estate Upon Death After a 6 Year Claim Trust Net Policy Cost Repays principal borrowed $1, 080, 000 Repays loan interest just prior to death $309, 582 Repaid principal $1, 080, 000 Single premium paid $199, 563 Repaid loan interest not subject to estate tax $309, 582 Minus tax savings from interest moving from estate into trust -$123, 832 (40% tax rate) The above funds are now Guaranteed Death Benefit removed from the estate $72, 000 Total in Trust $1, 461, 582 Minus Guaranteed Death Benefit -$72, 000 Net Policy Cost $3, 704 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 12

Care. Matters for the Affluent SM Dedicate $100, 000 of assets to pay for LTC If LTC is needed Pay for care using the $100, 000 Ease of use – flexibility But when that runs out Client uses more of their own income/assets to pay for additional LTC bills vs. Self Assuring with Care. Matters ……………………………… Self Insuring Net Cost 2 of care = $100, 000 or more SM Reposition $100, 000 For up to $541, 257 of LTC 1 If LTC is needed Policy pays benefits first from premium $100, 000 Ease of use - flexibility – cash indemnity If LTC is still needed Nationwide’s pays monthly LTC benefits up to an additional $441, 2571 For heirs $36, 083 DEATH BENEFIT Net Cost 2 of $541, 257 in benefits = $63, 917 1 Stated benefit amounts are based on hypothetical examples, actual benefit amounts received may vary. This example assumes a 55 -year- old female, couple rate, non-tobacco, 6 -year benefit duration, no inflation option. 2 Assumes at least $100, 000 spent on care FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 13

……………. the new executive benefit - LTC • Long-term Care is an industry hot topic • Baby Boomers and Gen X dealing with LTC for parents May see the eventual need for their own financial protection May be looking for ways to plan while dealing with Saving or paying for children's college Helping children pay off college loans Saving for their own retirement • Companies are now looking at LTC as the next executive benefit to offer FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 14

. . …… Executive Bonus - Section 162 Plans • Executive bonus plans are offered to retain good people • A long-term care benefit may be a welcome “bonus” Especially for executives in mid-life experiencing LTC with parents • Nationwide Your. Life Care. Matters is built on a life insurance chassis Life insurance premiums are never tax deductible LTC rider premiums - not tax deductible when paid from cash surrender value • However – Compensation to employee is tax deductible Employer pays premium directly to insurance company Premium for policy is treated as compensation bonus to employee Bonus amount taxed as compensation to employee Bonus amount tax deductible to employer as compensation FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 15

Double Bonus – bonus of premium and tax ……… • Employee will owe all taxes on the bonus • Company/employer can minimize taxes with a “double bonus” Example : Company bonuses $14, 286 to employee in a 30% tax bracket $10, 000 a year is for insurance premium $4, 286 is sent to IRS to pay employee’s taxes on bonus • Single premium for Nationwide Your. Life Care. Matters will purchase largest LTC benefit pool But …… a large bonus could further raise employee’s tax bracket 5 or 10 year pay schedule provides less LTC, but may provide some tax management • Employee owns policy - which means………. Employee controls cash value – and could walk away/cash it in FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 16

REBA – Exec Bonus with “silk handcuffs” ……… • REBA – Restrictive Executive Bonus Arrangement • Due to larger premiums, may provide best protection for company Helps protect from employee quitting and running off with bonus • Employee still owns policy but with limited access to cash value Company can restrict on a vesting schedule • Example - 10 year graded schedule • 10% access start of year 2, 20% start of year 3, Full access day 1 of year 11 Company can restrict on a cliff schedule • Example – 10 year cliff, No access until day 1 of year 11 If employee leaves before vesting complete, must repay all bonuses • Employee always retains rights of ownership Name beneficiary Employer can sign off allowing employee early access to cash value FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 17

Tax Treatment of Long-term Care Benefits…………. • LTC products classified as 7702 B Benefit paid tax free to business/policy owner or corporation 7702 B LTC riders treated as an A & H contract whose benefits are excludable from income under Sec 104. LTC benefits are tax free up to IRS guidelines The amount of LTC benefits that may be collect tax free is the greater of the HIPAA per diem in year of claim or actual LTC costs incurred This formula applies cumulative of all policies owned on a single insured regardless of who the policy owners are Insured has first rights to tax free amounts Remaining tax free amount and tax on excess of formula paid by business (or other owners on a pro rata basis) FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 18

…. . . . Executive Benefits – as an accident and health benefit • Executive Benefits Tax qualified long-term care contract per Sec. 7702 B • Treated as accident and health insurance contract • Benefits paid tax free to corporation Benefits paid tax free to employee per Sec. 7702 B(a)(2) • Corporation cannot deduct: Premiums or Benefits • Neither life insurance premium or LTC costs are eligible deduction • Risk is insured, so no deduction for benefits paid to employee • Corporation can discriminate Plan is insured, not self funded • Erisa – welfare benefit plan, subject to reporting and disclosure Written plan not required, but may be wise to do so FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 19

Combo Solutions – Customizing a Strategy …………. . • Business owner has an employee ………. whose value should be backed by key person insurance who wants LTC benefits, now and in retirement Now – Key Person Plus- LTC coverage Retirement • Care. Matters death benefit for key person purposes • Term insurance can supplement death benefit need • Becomes LTC coverage – paid tax free if put in A & H Plan • Return of Prem. feature provides money back if employee leaves • Separation package – Care. Matters provides LTC in retirement • Employee taxed, employer deducts FMV of policy - compensation • If tax paid by CV, pro-rata reduction of all policy benefits FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 20

……………. In summary • Nationwide Your. Life Care. Matters offers numerous opportunities with…. . Individual clients looking for LTC protection High net worth clients looking to avoid unnecessary taxation Affluent clients wanting a to “self-insure” with less risk Businesses wanting to enhance employee benefits FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC 21

Questions? Need a quote on Nationwide Your. Life Care. Matters? Please call 1 -800 -321 -6064 Follow the prompts to “life”, then “sales • Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value LAM-2468. 1 (1/17) FOR BROKER/DEALER USE ONLY – NOT FOR USE WITH THE PUBLIC