EXPLORING THE OPTIONS OF ASSET-BASED LTC INSURANCE

A Couple stories A Few Facts Several Options

Monthly Costs: Michigan – State Median (2016) Home Healthcare 2016 Homemaker Services¹ $3,861 Home Health Aide¹ $4,004 Adult Day Healthcare¹ Total LTC Benefit Period¹ $1,733 Assisted Living Facility² $3,563 Nursing Home Care Semi-Private Room¹ $7,604 Private Room¹ $8,182 Genworth 2016 Cost of Care Survey, conducted by CareScout®, April 2016 ¹ Based on annual rate divided by 12 months ² As reported, private, one bedroom

Statistic 68% of nursing home residents and 72% of assisted living residents are women* *Long-Term Care Services in the United States: 2013 Overview. National Center for Health Statistics **Centers for Disease Control and Prevention. Nursing Home Care FastStats

Statistic The average nursing home stay is 835 days** **Centers for Disease Control and Prevention. Nursing Home Care FastStats

Exploring the Options

Traditional LTC Non-guaranteed premiums No cash value No death benefit

Asset Based LTC Guaranteed premiums Cash value Death benefit T Tax-free leverage for long-term care Income tax-free reimbursements for qualified long-term care expenses Guaranteed premiums Cash value Death benefit or Legacy An income tax-free death benefit for her beneficiaries, which would be reduced by any loans, withdrawals or benefits paid or Return of premium Provides cash value options

Available Asset-Based Products ForeCare MoneyGuard II CareMatters Life insurance: Asset Care I, II, III, IV Fixed annuity: Annuity Care I, II Indexed annuity: Indexed Annuity Care

All work the same Reposition asset Spend own money first Spend carriers money last Return of Premium Death Benefit/ Account Value Long-Term Care

What matters most? Funding: Forethought – ForeCare: annuity 1035 exchange Lincoln Financial Group – MoneyGuard II: cash OneAmerica – Asset Care III: qualified funds

ForeCare Fixed Annuity Funding: Cash Annuity 1035 exchange Chassis: 9 year fixed annuity Features: 3 x leveraging for Premier class 2.65% fixed interest rate Simplified underwriting Individual or Joint

Pension Protection Act Total Coverage $300,000 Before the Pension Protection Act* After the Pension Protection Act* Additional Coverage $200,000 ForeCare Multiplier 3X When used for qualified Long-Term Care Benefits $100,000 Taxable Growth $50,000 Taxable Growth $50,000 Tax-Free Growth $50,000 TRANSFER Existing annuity into PPA-compliant ForeCare annuity For Use After-Tax $87,500 Cost Basis $50,000 Cost Basis $50,000 Cost Basis $50,000 Traditional Annuity Traditional Annuity ForeCare Annuity

Opportunity cost? Taxable Investment Tax-Deferred Investment Value on 6/19/2016: $100,000 Assumed Annual Interest Rate: 5% Years before the value of Taxable Investment is equal to or greater than the long-term care coverage provided by the ForeCare Fixed Annuity: 29 years Taxable Investment Value on 6/19/2016: $100,000 Assumed Annual Interest Rate: 3% Years before the value of Tax-Deferred Investment is equal to or greater than the long-term care coverage provided by the ForeCare Fixed Annuity: 37 years Tax-Deferred Investment Single Annuity Deposit on 6/19/2016: $100,000 Long-Term Care coverage $300,000 available as of 6/19/2016 Assumed Rating: Premier Maximum Monthly Benefit: $4,167 Federal Taxable Amount if use exclusively for long-term care expenses $0 ForeCareSM Fixed Annuity

Growth of principal Non-Guaranteed Assumptions – END OF YEAR Contact Value Contract Withdrawal Value Accelerated Benefit Maximum Extended Benefit Total Benefit Maximum Monthly Benefit $101,121 $93,031 $202,242 $303,362 $4,213 $102,254 $94,074 $204,508 $306.762 $4,261 $103,400 $96,162 $206,800 $310,201 $4,308 $104,559 $98,286 $209,118 $313,677 $4,357 $105,916 $100,444 $105,731 $211,462 $317,193 $4,405 $108,114 $102,639 $106,916 $213,832 $320,748 $4,455 $106,9326 $104,871 $216,229 $324,343 $4,505 $109,326 $107,140 $218,652 $327,978 $4,555 $110,551 $109,446 $221,103 $331,654 $4,606 $111,790 $223,581 $335,371 $4,658 $113,043 $226,087 $339,130 $4,710 $114,310 $228, 621 $342,931 $4,763 $115,592 $231,183 $346,775 $4,816 $116,887 $233,774 $350,661 $4,870 $118,197 $236,394 $354,591 $4,925 $119,522 $239,044 $358,566 $4,980 $120,861 $241,723 $362,584 $5,036 $122,216 $244,432 $366,648 $5,092 $123,586 $247,172 $370,758 $5,149 $124,971 $249,942 $374,913 $5,207 $126,372 $252,743 $379,115 $5,265 $127,788 $255,576 $383,364 $5,325 $129,220 $258,441 $387,661 $5,384 $130,669 $261,337 $392,006 $5,445 $132,133 $264,266 $396,399 $5,506 $133,614 $267,228 $400,842 $5,567 $135,112 $270,223 $405,335 $5,630 $136,626 $273,252 $409,878 $5,693 $138,157 $276,314 $414,471 $5,757 $139,706 $279,411 $419,117 $5,821 $141,271 $282,543 $423,814 $5,886 $142,855 $285,710 $428,564 $5,952 $144,456 $288,912 $433,368 $6,019 $146,075 $292,150 $438,225 $6,086 $147,712 $295,424 $443,136 $6,155 Primary Insured’s Name: Valued Client Current Age: 65 Gender: Male State: MI LTC Coverage: Single Life - Premier Joint Insured’s Name: N/A Current Age: N/A Gender: N/A 117 bps 0.00098 60 94 bps 0.00078 123 bps 0.00103 61 98 bps 0.00082 129 bps 0.00108 62 103 bps 0.00086 135 bps 0.00113 63 108 bps 0.00090 142 bps 0.00118 64 114 bps 0.00095 150 bps 0.00125 65 120 bps 0.00100 158 bps 0.00132 66 126 bps 0.00105 166 bps 0.00138 67 133 bps 0.00111 175 bps 0.00146 68 140 bps 0.00117 187 bps 0.00156 200 bps 0.00167 160 bps 0.00133 214 bps 0.00178 171 bps 0.00143 229 bps 0.00191 183 bps 0.00153 245 bps 0.00204 196 bps 0.00163 262 bps 0.00218 210 bps 0.00175 280 bps 0.00233 224 bps 0.00187 300 bps 0.00250 240 bps 0.00200

Underwriting 69 and younger: Medical questionnaire Prescription check 70 and older: 15 minute phone interview Premier class: 88% approval

Lincoln MoneyGuard® II Funding: Cash or life 1035 exchange Up to 10 payments Chassis: Guaranteed universal life Features: Death benefit Return of premium 0 day elimination period Best leveraging for most clients Inflation protection Simplified underwriting

Someone always benefits Benefits if you need long-term care A benefit if you don’t Return of premium options 3% Compound Inflation or or Total LTC Benefits Initial Specified Amount ROP Benefit Total LTC Benefit Year 1: $334,685 Age 80: $521,429 Max. Monthly Benefit Year 1: $4,312 Age 80: $6,718 $148,000 Year 1, $123,000 @ 85 $103,483 @ 100 $100,000 Providing at least 6 years of coverage Death Benefit paid income tax-free to beneficiary Policy Vested Policy Vested Year ROP% Year ROP% 1 80.0% 2 84.0% 3 88.0% 4 92.0% 5 96.0% 6+ 100.0%

Summary of benefits Single Premium Amount $100,000 This projection of values assumes premiums are paid as shown. The premium amount is received on the policy effective date. Long-Term Care Benefit Limits: Initial Monthly $4,312 These are the initial amounts available for expense reimbursement for Qualified Long-Term Care Services, subject to rider terms and conditions. Initial Annual $51,742 Initial Total $334,685 Inflation Option 3% Compound The inflation option will automatically increase the monthly rider(s) amounts by 3% annually. Increased benefit amounts are shown in the LTC Benefit column on page 4 herein. Minimum Long-Term Care Benefit Duration 6 years Reimbursement for Qualified Long-Term Care Services are available based on the selected rider(s): Long-Term Care Acceleration of Benefits Rider (LABR): 2 years Long-Term Care Extension of Benefits Rider (LEBR): 4 years Deductible Period None There is no deductible period. Benefits are payable on the first day of care for eligible claims. Initial Specified Amount $103,483 The Specified Amount is set at issue. Long-Term Care reimbursements reduce the Specified Amount on a dollar-for-dollar basis. Initial Residual Death Benefit $5,174 The minimum death benefit if Long-Term Care reimbursements reduced the Specified Amount. Return of Premium $100,000 If the policy is surrendered prior to the total planned premiums being paid, the surrender value to be paid is the cash value minus any applicable surrender charge. Once total planned premiums are paid, the Return of Premium Benefit is available. If surrendered within the first 5 policy years and all planned premiums are paid, the Return of Premium amount is multiplied by the percentage in the table shown below: Policy Year Vested ROP% Policy Year Vested ROP% Policy Year Vested ROP% 1 80.0% 2 84.0% 3 88.0% 4 92.0% 5 96.0% 6+ 100.0% LTC Acceleration of Benefits Rider Charge* $148.50/month LABR Base charge is $31,56 per month for 10 years. LABR Inflation charge is $116 per month for 10 years. LTC Extension of Benefits Rider Charge* $118.80/month LEBR Base charge is $57.23 per month for 10 years. LEBR Inflation charge is $61.57 per month for years. * These are not additional premiums; the LTC Rider Charges are deducted from the Gross Cash value.

Long-Term Care Reimbursement Benefit Limits Guaranteed Values Long-Term Care Reimbursement Benefit Limits 3% Compound Interest Policy Year Age Planned Premium Surrender Value Death Benefit Amount IRR Total Annual Monthly 1 65 $100,000 $80,000 $148,000 48.0% $334,685 $51,742 $4,312 49.1% 2 66 $0.00 $84,000 $151,200 23.0% $344,726 $53,294 $4,441 34.7% 3 67 $88,000 $154,880 15.7% $355,068 $54,893 $4,574 27.4% 4 68 $92,000 $157,320 12.0% $365,720 $56,539 $4,712 22.9% 5 69 $96,000 $160,320 9.9% $376,691 $58,236 $4,853 19.9% 6 70 $163,000 8.5% $387,992 $59,983 $4,999 17.6% 7 71 $160,000 6.9% $399,632 $61,782 $5,149 15.9% 8 72 $156,000 5.7% $411,621 $63,636 $5,303 14.6% 9 73 $153,000 4.8% $423,969 $65,545 $5,462 13.5% 10 74 $149,000 4.1% $436,688 $67,511 $5,626 12.6% 11 75 $146,000 3.5% $449,789 $69,536 $5,795 11.9% 12 76 $143,000 3.0% $463,283 $71,622 $5,969 11.2% 13 77 $140,000 2.6% $477,181 $73,771 $6,148 10.7% 14 78 $138,000 2.3% $491,497 $75,984 $6,332 10.2% 15 79 $135,000 2.0% $506,242 $78,264 $6,522 9.7% 16 80 $133,000 1.8% $521,429 $80,612 $6,718 9.4% 17 81 $131,000 1.6% $537,071 $83,030 $6,919 9.0% 18 82 $128,000 1.4% $553,184 $85,521 $7,127 8.7% 19 83 $126,000 1.2% $569,779 $88,086 $7,341 8.4% 20 84 $125,000 1.1% $586,873 $90,729 $7,561 8.2% 21 85 $123,000 1.0% $604,479 $93,451 $7,788 8.0% 22 86 $121,000 0.9% $622,613 $96,254 $8,021 7.8% 23 87 $119,000 0.8% $641,291 $99,142 $8,262 7.6% 24 88 $118,000 0.7% $660,530 $102,116 $8,510 7.4% 25 89 $116,000 0.6% $680,346 $105,180 $8,765 7.2%

Underwriting Simplified: 45 minute Personal History Interview MIB/Rx Check Pass/fail

OneAmerica – Asset Care III Funding: Qualified transfer Chassis: Fixed annuity Whole life insurance Features: Return of premium Benefits for Life Individual or Joint Satisfies RMDs

Funds whole life policy with LTC Distributions for 20 years Qualified funding? Funds whole life policy with LTC Transfer to annuity Distributions for 20 years

Reposition asset End of Policy Year Insured’s Age Contract Premium Life Insurance Premium and RMD Total Accumulated Value Total Cash Surrender Value Total Death Benefit/LTC Benefit Balance 1 66 $100,000 $6,525.82 $100,777 $152,802 2 67 $0.00 $101,564 $99,932 $152,255 3 68 $102,364 $99,795 $151,692 4 69 $103,177 $99,589 $151,112 5 70 $104,004 $99,316 $150,516 6 71 $104,834 $100,683 $149,901 7 72 $105,655 $102,504 $149,266 8 73 $106,456 $104,330 $148,614 9 74 $107,242 $106,170 $147,942 10 75 $108,009 $147,249 11 76 $108,760 $146,536 12 77 $109,484 $145,802 13 78 $110,171 $145,045 14 79 $110,804 $144,265 15 80 $111,372 $143,463 16 81 $111,864 $142,637 17 82 $112,274 $141,784 18 83 $112,602 $140,908 19 84 $112,838 $140,004 20 85 $112,963 $139,074 21 86 $114,387 22 87 $115,723 23 88 $116,970 24 89 $118.123 $118,123 25 90 $119,182 26 91 $120,167 27 92 $121,092 28 93 $121,962 29 94 $122,773 30 95 $123,521 31 96 $124,220 32 97 $124,886 33 98 $125,514 34 99 $126,097 35 100 $126.623 $126,623 36 101 $127,104 37 102 $127,574

Continuation of Benefits Rider Base Policy Initial Total Death Benefit $149,998 Total LTC Benefits Total LTC Benefit Period 25 months Initial Monthly Benefit Home Healthcare, LTC Facility, Assisted Living Facility, Adult Day Care (additional services covered – see Basic Illustration) $6,000 Inflation Option 0% Simple Waiting Period Home Healthcare Other LTC services 30 days 60 days Base Policy + COB Continuous Pay Rider $149,998 Lifetime/Unlimited $6,000 Base 0% Simple Rider 0% Compound 30 days 60 days Base Policy + COB Single Pay Rider $149,998 Lifetime/Unlimited $6,000 Base 0% Simple Rider 0% Compound 30 days 60 days or or First Year Premium $100,000 Subsequent COB Premium $0.00 $101,959.72 $1,959.72 (annually) $129,723.88 $0.00 Base policy + LTC Benefits Continuation Rider Base policy Optional COB Rider Lifetime / Unlimited Initial Total DB / LTC Benefits $149,998 + Non-cancelable premium guaranteed to never increase

Underwriting Simplified issue if: NAR < $250,000 No history of medical concerns Client has seen doctor in past 12 months Plan on full underwriting

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