ICB’s Multi-Life Team

Jan Daley, CLTC Ext. 314 Jan.D@ica-icb.com

Lawrence Vivenzio Ext. 318 Lawrence.V@ica-icb.com

Richard Eldridge, CLTC Ext. 324 Richard.E@ica-icb.com

ICB’s Multi-Life DepartmentThe Advantages of Selling Multi-Life

An Introduction to Long Term Care

• Not everyone will need long term care, but everyone needs long term care planning – Reasonable people can agree with two

important statements:• There is a good chance that I will live a long life

– The longer I live, the more likely I may need long term care

• The emotional, physical, and financial consequences to my family and my retirement plan may be devastating

Therefore, I need a plan for Long Term Care

An Introduction to Multi-Life

• More than likely all of, or at least most of, your clients are part of the multi-life market

• There are basically two types of clients:– Employers– Employees

Tax Advantages• Favorable tax treatment

– On premiums for employers

– On premiums for employees

– On benefits paid for employees

DISCLAIMERAll tax information given in this presentation is general and its purpose is to give an informational guideline. Under no circumstances is this information considered to be tax advice from a tax professional. Also, this information may not be pertinent to a particular situation on which you are working.

Tax laws may change at any time and this information may not be supported.

Consult a tax professional for advice based on the specific case situation on which you are working.

Nonprofit Entities

• Do not pay federal income taxes• Generally no tax implications for premiums

on LTC policies• Employees not taxed on employer paid

premiums– Not limited on an age basis

• Benefits considered reimbursements for medical care– Excluded from policy owner's income– Tax free “per diem” limit for 2011 is $300

Sole Proprietorship• Generally can take a business deduction on premiums

paid• No deduction is allowed if the sole proprietor is a

beneficiary of any kind to the policy• Premiums must be considered reasonable compensation

for the deduction to exceed to age based limits• An owner may only deduct premium up to the age based

limit• Employees are not taxed on employer paid premiums• Benefits are treated as reimbursements for medical care• Benefits in excess of $300 per day (2011 per-diem limit)

are taxable

Eligible LTCi Premiums

Age

At End of Taxable Year

2011

Age-Based Limits

40 and younger $340

41 through 50 $640

51 through 60 $1,270

61 through 70 $3,390

71 and older $4,240

Partnership• Partners are treated as self-employed• Generally can take a business deduction on

premiums paid• No deduction is allowed if the business is a

beneficiary of any kind to the policy• Premiums must be considered reasonable

compensation for the deduction to exceed to age based limits

• An owner may only deduct premium up to the age based limit

• Employees are not taxed on employer paid premiums

Eligible LTCi Premiums

Age

At End of Taxable Year

2011

Age-Based Limits

40 and younger $340

41 through 50 $640

51 through 60 $1,270

61 through 70 $3,390

71 and older $4,240

S Corporation• Generally may deduct all premiums paid• Employees – less than 2% of stock• Deduction is not subject to age based limits• Premiums must be considered reasonable compensation for the

deduction to exceed to age based limits• No deduction is allowed if the business is a beneficiary of any kind

to the policy• Employees are not taxed on employer paid premiums• May deduct all premium paid for owners who provide compensable

services to the corporation• An owner owns more than 2% of the company’s stock• Deduction is not subject to age based limits• To be deductable, premiums must be paid without regard to

business income• Benefits received are not considered taxable income• Benefits paid are treated as reimbursements for medical care

– Excluded from the policy owner’s income• Benefits in excess of $300 per day (2011 per-diem limit) are taxable

C Corporation

• May generally deduct all premiums• Deduction is not subject to age based limits• Premiums must be considered reasonable compensation

for the deduction to exceed to age based limits• No deduction is allowed if the sole proprietor is a

beneficiary of any kind to the policy• Carving out

– Can not define a class solely by ownership status

• Employees are not taxed on employer paid premiums• Benefits paid are treated as reimbursements for medical

care– Excluded from the policy owner’s income

• Benefits in excess of $300 per day (2011 per-diem limit) are taxable

Underwriting Concessions• Prudential

– Simplified Underwriting• 7+ issues employee lives issued• Spouses if 100% employer paid AND actively at work 25+ hours per week outside the

home

• Genworth– Simplified Underwriting

• 7+ issued employee lives with employer money

• Mutual of Omaha/United of Omaha– Modified Guaranteed Issue

• Minimum of 10 eligible employees with at least 10 employees issued– Simplified Underwriting

• Minimum of 10 eligible employees with at least 10 employees issued

• MedAmerica– Simplified Underwriting

• 50+ actively at work employees/members in the group• 100% ER funded for 10+ active employees

OR• 100% ER funded for a combination of 10+ active employees and care partners

– At least half must be employees

– Modified Underwriting• 3-49 actively at work employees/members• PHI only

Group Discounts• Prudential

– 5%• Genworth

– 5%• Mutual of Omaha/United of Omaha

– 5% Full Underwriting– 10% Simplified Underwriting– 10% Modified Guaranteed Issue

• John Hancock– 5%

• MedAmerica – 5%

• Mass Mutual– 10%

• America General– 5%

Why Should an Employer Plan for LTC?

“There are only 4 types of people:those who have been caregivers,

those who are caregivers,those who receive care, and

those who will be caregivers in the future.”

-Rosalynn Carter

Employer Benefits

• Favorable tax treatment– Deductable as a business expense

• Presenting more value to your employees– Raise or bonus

• A plan to protect employee turnover– Should their spouse or care partner need care

• A plan to protect your family

• An increase in employee loyalty

Employee Benefits

• Funding for your LTC plan– To protect your loved ones– Preserve their retirement nest egg– Preserve their legacy for their loved ones

• Underwriting concessions as an applicant– Much less obtrusive underwriting process

• No phone interview• No medical records• No face to face interview

• Group discount• The opportunity for care partners• A fully portable policy upon retirement

Agent/Broker Benefits

• More premium in one setting– One client can turn into dozens

• Underwriting concessions– A less obtrusive offer for your clients

• Group discounts

• More stability for renewals– Employer funded

Expand your Long Term Care profile with your clients

• We are here to assist you to be successful beyond your initial contact with one person

• Allow us to aid you in expanding your business

• Even if you only sell Long Term Care every now and then, you client is more than likely an employer or an employee somewhere– Why not gain access to everyone they work with? – Why not allow yourself to go beyond your client?

Thank YouICB’s Multi-Life Team

Jan Daley, CLTC Ext. 314 Jan.D@ica-icb.com

Lawrence Vivenzio Ext. 318 Lawrence.V@ica-icb.com

Richard Eldridge, CLTC Ext. 324 Richard.E@ica-icb.com