Planning LTC Solutions for a Couple – Addressing the Different Needs Between Women and Men FOR...

Planning LTC Solutions for a Couple – Addressing the Different Needs Between Women and Men

FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLICNFM-11444AO (02/13)

Brought to you by the

Nationwide® Advanced Consulting Group

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Some Things You Need to Know

• 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.

• Federal tax laws are complex and subject to change. Neither the company nor its representatives give legal or tax advice. Please consult with an attorney or tax advisor for answers to your specific questions


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Some Things You Need to Know• As your personal situations change (i.e., marriage, birth of a child or job

promotion), so will your 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 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 individual needs.

• 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 7702A, 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 tot 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 variable 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.


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Some Things You Need to Know

• Riders are offered at an additional cost and may not be available in all states. A life insurance purchase should be based on the life insurance contract, and not optional riders or features.

• Life insurance is issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio, member of Nationwide Financial®.

• © 2013, Nationwide Financial Services, Inc. All rights reserved.

• Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value


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Agenda

• The Impact of Aging and Care-giving on Men and Women

• Gender Differences in Sales and Claims Experience

• Working through a Plan for a Client

• Mixing Solutions to Provide Maximum Customization

• Looking at Case Solutions

– Traditional LTC plus life with LTC

– Asset based LTC plus life with LTC

– Un-insurable spouse- using an indemnity Life/LTC combo product


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The Impact of

Long-term Care-giving


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The Different Impact of LTC on Men and Women

• Long-term care affects women on a different scale than men

• The double-edged sword for women– After being the caregiver of parents------– After helping care for a spouse------– Women become the cared for

• Without adequate funding for LTC services– Daughters sacrifice income and health

– Wives sacrifice health and longevity

– Men sacrifice better careFOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

NFM-11444AO (02/13)

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Impact on Daughters

• Informal unpaid care comprises 50% of care in the U.S.1

• 75% of unpaid caregivers are WOMEN– Usually the wife, daughter or daughter-in-law3

– Employed and Middle aged1

– 60% of female caregivers make career and wage sacrifices2

• Cut work hours and pass up promotions• 41% are forced to quit job or take leave of absence• Lose an average of $565,000 in wages, pensions, S.S, etc4

– More likely to suffer from2:• Depression, emotional stress, anger and anxiety• Exhaustion and poor physical health• Increased substance abuse

1completelongtermcare.com August 2012--- 2Family Caregiver Alliance, August 2012 ---3AALTCI - American Association for Long-Term Care Insurance, Jan. 2013---- 4Senior Care Services.Org – Women’s Guide to Long-term Care”, by Jesse Slome, 2011


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Differences in Longevity

1American Association for Long-term Care Insurance (AALTCI) 20112 Why Women May Live Longer than Men”, SHAPE Magazine, November 10,2011


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Care-giving Impact on Wives• Women who care for an ill or disabled spouse:

1Senior Care Services.Org – Women’s Guide to Long-term Care”, by Jesse Slome, 20112AALTCI American Association for Long-Term Care Insurance, Jan. 20133 Family Caregiver Alliance, 2012 and Senior Care Services, 2012


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Men Lose Out Too

• Without planned funding for LTC, men sacrifice having the best care available due to:

1Family Caregiver Alliance, Feb . 2013


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Gender Differences on

LTC Sales and Claims


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Candidates for LTC

1The Washington Post, Jan 23, 2012, Amy Pahl, Milliman, Inc.2- 1AALTCI- American Association for Long-Term Care Insurance Sourcebook 2012-2013


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LTC Sales Differences

1 The 2011 Sourcebook for Long-term Care Insurance Information – AALTCI 2011


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LTC Claim Differences

1 The 2011 Sourcebook for Long-term Care Insurance Information – AALTCI 2011


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Working Through a Plan

for a Client


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Gather Data• Request a Long-term Care Cost Assessment

– Age– Marital Status– Health Information– Desired residence in retirement

• Adult children in town?– Capacity for physical care or advocacy support?

• Assets and sources of income client will have in retirement– Is client debt free?– What disposable income can support LTC costs?– What assets are available that a surviving spouse could liquidate?

• Desire to leave a legacy to heirs• Asset source today for fund LTC solution


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Creating a Plan to Address Health Care Costs

Client Fact Finder


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Long-term Care Cost Assessment

• John is estimated to need care first – at home – around age 80

• Services are expected to be needed approximately 7 months

• Estimated cost - $32,360

• If nursing home care is needed – 9 ½ months – cost of $112,702FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

NFM-11444AO (02/13)

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Long-term Care Cost Assessment

• Jane is now presumed to be a widow

• Jane is estimated to need LTC services at age 88

• Services are expected to be needed 2 years, 4 months

• Estimated cost - $440,141FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

NFM-11444AO (02/13)

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Customizing the Potential Need

Estimating the total LTC need to insure

A. Total estimated cost for both spouses

B. Factors that could lower estimated LTC costs– Able adult children may allow for some care to take place

at Home or make Assisted Living more feasible

– There may be income that could help pay for LTC

– Assets may be available to liquidate – home?

C. Factor back in amount to preserve for legacy (inheritance) purposes

D. A – B + C = D (estimated LTC need to be insured)FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

NFM-11444AO (02/13)

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Available Funding Sources

• What income source and/or assets are available to purchase new LTC coverage?– General liquidity that is available

– Income stream that can be devoted to premium• Annual/monthly income source not needed for retirement

expenses

• Required Minimum Distributions from IRA not needed

– Asset that can be re-purposed• Certificate of Deposit

• Annuity not needed for retirement income

• Stock or Mutual Fund Accounts


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Mixing Solutions to Provide

Maximum Customization


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Which Product?

• Offering the same identical LTC solution to both spouses may not be ideal. Could result in:– Wife purchasing LTC coverage, but husband does not

– Both purchasing coverage, but optimal solution not reached

• Wife is more likely to want and buy LTC – AND - want her husband to purchase coverage as well.

• Husband is more likely to not want LTC coverage for himself, but will purchase LTC for wife

• How can the ideal solution for both be reached?


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Deciding on Type of LTC Coverage• Potential solutions depend on desired outcome

– Traditional LTC Policies• Help preserve assets to leave to spouse/children

• Most economical/customizable, no death benefit, potential rate hikes

– Asset Based (also known as Linked) LTC• Help preserve assets left to spouse/children

• Cost recovery if unneeded through a death benefit

• Single pay provides “return of premium anytime” guarantee

• Ability to get similar coverage periods as a Traditional policy

– Life Insurance with a LTC Rider• Helps preserve assets left to spouse/children

• Avoids “loss of premium” – offers true death benefit leverage

• Provides flexible payment options

• May enhance inheritance if LTC not needed or partially usedFOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

NFM-11444AO (02/13)

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Liquidity or Income as Funding SourceAssumptions:• SHE is worried about being a burden to family members and

exhausting hard earned assets

• HE is worried about spending money with no return

Solution:• Traditional LTC policy for her

• Life Insurance with LTC Rider for him

Why this works:• She can customize a plan to quiet her concerns

• Life insurance pays a Death Benefit if he doesn’t need LTC

• Can pay by annual premium for both


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Liquidity and Assets Available

Assumptions:• SHE is worried about being a burden to family, exhausting hard earned

assets - BUT - doesn’t want to “waste” money

• HE believes he’ll die first and not need care, agrees she may need care, and wants maximum legacy for heirs

Solution:• Asset (linked) LTC policy for her

• Life Insurance with LTC Rider for him

Why this works:• She gets coverage she wants, return of premium guarantee – and –

cost recovery through a death benefit if LTC is not needed

• Life/LTC Plan pays for LTC or death benefit if he never needs care

• Annual premium for Life/LTC coverage - No risk repurpose of an asset for the Asset Based LTC coverage


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When One is UninsurableAssumptions:• SHE is healthy, insurable, and wants LTC coverage

• HE is uninsurable for LTC

Solution:• Indemnity –style Life/LTC combo policy for her

• Dedicated savings for him – CD, Mutual Fund, Annuity

Why this works:– Life insurance provides “key person” insurance on the care-giver

• Indemnity LTC benefits can be fully collected

• Excess benefit not needed to care for insured can be used to supplement care costs for the other spouse

– He’s prepared for some LTC costs – PLUS – with an Annuity

• Some companies waive surrender when used for LTC

• Some companies offer rider to increase income for LTC purposes

Case Study


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Summary• Long-term Care is no longer a “single solution” market

place – various solutions abound

• Get your LTC toolbox ready– Be acquainted with the variety of products available

– Do a thorough gathering of data on your client

– Get a LTC cost assessment to estimate potential LTC expenses

– Be sure to design a plan that meets real needs of both spouses – which may mean a different product for each

– Focus on• Your married clients

• Your female clients

• Your clients age 45-64 for greatest chance of placement

• ANY client interested in LTC coverage!


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Questions?

• Independent Dealer: 1-800-321-6064• Financial Institutions: 1-800-893-5399• Wirehouse/Regionals: 1-800-720-1511• Nationwide Agents: 1-888-333-4202• Nationwide Financial Network: 1-877-223-0795• BGA: 1-888-767-7373

Planning LTC Solutions for a Couple – Addressing the Different Needs Between Women and Men FOR...

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