The Importance of LTC Planning Aaron R Eisenach, CLTC VP Western Region Individual Commercial Brokerage, Inc

A. Protect assets B. Remain independent from loved ones C. Stay out of a nursing home D. Be able afford the best facility E. All of the above Why LTC Planning?

Your Family

 Emotional  Physical ◦ You cannot put a price tag on the physical and emotional consequences to the family!  Financial ◦ Assets don’t pay for care. Income does. ◦ People don’t self-fund. They bet! ◦ Nothing has been allocated to pay for care, creating chaos, confusion and hard feelings.

Medicare – NO Health insurance - NO Veterans Administration – NO unless a severe service-connected disability Your own money - YES LTC insurance - YES Medicaid – YES, but must be impoverished Asset test Income test Home equity limit Limited choices

 “At least 70 percent of people over age 65 will require some long-term care at some point in their lives.” 1  7 in 10 of people 80 and older had some kind of disability in  1 in 5 of people aged  55.8% of people 80 and older have a severe disability 2  Lifetime Chance of Using LTCi Policy 3 (assumes a 0-day elimination period)  Issue age 50 = 50%  Issue age 60 = 50%  Issue age 70 = 51%Your chance is either 0% or 100%.  Issue age 75 = 53%  Issue age 80 = 54%  Lifetime possibility from age 65 on 4 : MenWomen  Major house fire 2.2% 2.6%  Severe care accident15.5% 18.0%  Becoming ADL disabled or cognitively impaired44.0% 72.0% 1) 2014 Medicare & You; 2) “The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013; 3) AALTCI 2012 Sourcebook; 4) AALTCI 2007 Sourcebook

May bear the brunt of caring for a parent, spouse or child 65% of family caregivers are female More than 8 in 10 are caring for a relative or friend aged 50 or older Average caregiver 49-year old woman Works outside the home Spends about 20 hours/week providing unpaid care to mom for nearly 5 years More than 2/3 of people over 85 are women 2/3 of LTCi claims are for women Twice as likely to exceed 3-year claim Women on average live 5 years longer At age 75, 74% of men still have a spouse At age 75, only 38% of women still have a spouse 73% of women aged 85+ are widowed AALTCI 2011, , 2014 AALTCI Sourcebook; “The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013.

◦ 1 in 3 seniors dies with Alzheimer’s Disease or another form of dementia ◦ 2013 cost to US = $203 billion ◦ 2050 cost to US = $1.2 trillion ◦ Who has it:  1 in 9 Americans 65 and older has Alzheimer’s  1 in 3 Americans 85 and older has Alzheimer’s  An estimated 200,000 Americans under age 65 ◦ The only Top 10 cause of death in US without a way to prevent it, cure it or even slow its progression ◦ Dementia is the 2 nd largest contributor to death among older Americans, second only to heart failure 2013 Alzheimer’s Association Facts and Figures

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“The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August % of Americans believe they will be able to rely on their families to meet LTC needs when they require help Family caregiving has expanded from coordinating and providing personal care and household chores to including medical or nursing tasks (eg, wound care and injections) with little training or professional support As LTSS shift from institutional to home-based care, burdens on family caregivers will likely increase without adequate supportive services for caregiving families

12 “The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August Number of caregivers, defined as people aged 45-64, for every person aged 80+: Population aged is projected to increase by 1% between 2010 and Population 80+ is projected to increase by 79% during the same period Colorado United States

I Work with Reasonable People Understand they may live a long life. Believe that it’s possible they could become frail and need care if they do live a long life. Are willing to consider taking action if they understand that needing care could have serious consequences to their family and retirement portfolio.

 Stay at home for care without disrupting or destroying the lives of my loved ones by protecting them from the devastating emotional and physical consequences  Preserve the retirement plan (and other assets) for its intended purpose Supporting your lifestyle and keeping continuing commitments to your family and community To make sure your surviving spouse or partner never has to turn to the children for support Leave a legacy to those who deserve and/or need it  Avoid disrupting or destroying other planning

Claims on Individual LTCi Policies Home health care is becoming increasingly popular 2001 = 15% 2004 = 26% 2007 = 43% 2010 = 49% of new claims 2011 = 50% of new claims 2012 = 51% of new claims Claims in facilities have declined SNF 2001 = 80% SNF 2004 = 55% SNF 2007 = 24.1% (ALF = 32.9%) SNF 2010 = 27.0% of new claims (ALF 24%) SNF 2011 = 31.0% of new claims (ALF 19%) SNF 2012 = 30.5% of new claims (ALF 18.5%) 1) National Underwriter Life & Health edition, 1/14/08; 2) 2008, , 2014 AALTCI Sourcebook 15

Having a Plan for Extended Care Answers the important questions of: Who is going to provide my care? Where is it to be provided? How is it going to be coordinated? How will it be financed? May be a second gift of life to the caregiver If a LTC plan is not developed, you must still live with your planning!

The main function of long-term care insurance or other insurance solutions is… To provide cash flow to pay for long-term care services and mitigate the emotional, physical and financial consequences to my family and my lifetime savings.

1._______________ Monthly Benefit (increments of $100) X 2.________________ Benefit Period (2, 3, 4, 5, 6, 8, 10 years) 3. Inflation Protection4. Elimination Period 5. Shared Benefits 6. Other riders $ Months $5000 $7000 $4200 $800 stays in for future use $2000 self-fund Traditional LTC Insurance $180,000

Approved State Plan Amendment State Documents Available Policies for Sale State Plan Amendment Submitted No documents available for these States as of

Short-term care policies Lower premiums Less health underwriting than traditional LTCi Life insurance with accelerated death benefits Modern life insurance: use while you are alive Less health underwriting than traditional LTCi Life or annuities with LTC services riders Use life insurance or annuity account first, then LTC insurance rider second Death benefit if not used for care, cash value if policy is surrendered, guaranteed premiums for life

Living a long life is likely. Planning for it is a necessity. Having some coverage is far better than having no coverage. Even if you do not have a well thought-out and funded plan, you still have to live with that plan. What’s YOUR plan?

Thank You! Aaron R Eisenach, CLTC VP Western Region Individual Commercial Brokerage, Inc

 Perfect storm ◦ Increasing longevity ◦ Low lapse rates / high persistency ◦ Higher claims ◦ Low interest rates  Increased premiums on new and old policies  Carrier exits and entries  LTCi is a form of health insurance!  Not an investment  Not life insurance  Rates go up 23

 More solutions than ever!  A LOT of people living longer…a lot MORE people!  Care is expensive, and clients cannot afford it. Ever! ◦ …without disrupting lifestyle, the estate, retirement and business succession plans, and still keeping obligations to others ◦ WE are the only solution. WE have the ONLY solutions! ◦ It’s not about a product. YOU are the product! You are the educator of the clients and their advisors!  Help your clients while helping yourself and family  YOU are your only competition! 24

1. Immediate liquidity 2. Benefits often paid out faster - as little as one year 3. Less self-funding involved than hybrids 4. Unlike 101(g) riders, does not require the condition to be permanent and always includes 2 benefit triggers 5. Inflation protection 6. Shared benefits 7. Partnership program may greatly benefit Middle Class 8. Tax incentives 9. Preserves a death benefit for its intended purpose 10. Pays renewals

Thank You! Aaron R Eisenach, CLTC VP Western Region Individual Commercial Brokerage, Inc