1. Tax-Deferred to Tax-Free for LTC: LTC Annuities
For use with financial professionals only. Not for public distribution.

2. The Asset-Based LTC Market Leader
Financial Strength
Traces roots back to 1877
A+ (AM Best), AA- (S&P)
Comdex score is 95
Innovation
First to market (Asset-Care released in 1988)
Patented joint life benefits
Commitment
OneAmerica® is a mutual insurance holding company that is committed to being there when our clients need us most
The companies of OneAmerica can trace their roots back to on July 27th, 2018, State Life was rated A+ by AM Best. On September 7, 2018, State Life was rated AA- by S&P. Asset Care was first released in 1988 and offers patented join life benefits. OneAmerica is a mutual insurance holding company that is committed to being there when our clients need us most.
On July 27, 2018, State Life was rated A+ (Superior) by A.M. Best. This is the second highest of 16 possible ratings assigned by the agency. On September 7, 2018, State Life was rated AA- by S&P. This is the fourth highest of 21 possible ratings assigned by the agency.

3. Issues Affecting the Descent
(Distribution Phase)
Having enough income
Low interest rate market
Medical expenses
Extended Healthcare costs
Everyone needs a plan to get down the mountain securely.
Certain obstacles can send you on detours or make you halt your descent altogether. These issues and obstacles can include:
Having enough retirement income
Low interest rate market
Rising healthcare costs
Having enough income to pay for long-term care

4. What is LTC from a planning perspective?
It is simply – another retirement expense that causes your client’s income needs to increase
Read slide

5. “What could cause this to happen?”
Questions to ask your clients:
“In your retirement years, what would be the reason for your income needs to suddenly skyrocket?”
“For Example:
You are living well on $70,000 per year. Suddenly, you need an additional $125,000 per year in income on top of the $70,000 you are already using.”
“What could cause this to happen?”
During the descent, what would be the reason for your client’s income needs to suddenly skyrocket?
Example: Your client is living well on $100,000 per year. Suddenly, they call you stating they need to start taking out an additional $70,000 per year on top of the $100,000 they are already using.
What would cause that to happen? (ask for audience participation)

6. Concept of Self-Funding
Aggressive
$125k
Moderate
$125k
$125k
$125k
Conservative
Self-funding LTC expenses requires the spending down of one’s own assets to pay for LTC expenses.

7. Life Insurance (Asset Care) Annuity (Annuity Care)
Concept of OneAmerica Care Solutions
Base Policy
Continuation of Benefits
Rider
Funding:
Single premium
Recurring Premiums
Life Insurance (Asset Care) OR
Annuity (Annuity Care)
Funding:
Single Premium
Recurring premiums
Non-qualified annuities
Cash value life insurance
This diagram that I will show you will explain how this concept really works!
We call this our “Timeline”. The base policy uses a life insurance policy or annuity to serve as a “deductible”. Once the base policy is exhausted, the “Rider” kicks in and keeps paying the benefit for lifetime.
You may fund the life policy via cash, CDs, savings, life insurance cash values, and qualified retirement money! There are also payment options available for those using an income stream to pay rather than an asset reposition. The annuity option uses non-qualified money only. The Rider may be funded by single premium or fixed annual premiums. These premiums are guaranteed to never increase and have tax incentives.

8. Underwriting – Annuity Care
Underwriting Process
No paramed exams
No medical records
A 15-minute telephone interview is required if the Continuation of Benefits rider is being applied for
No phone interview is necessary when applying for the Base Policy only
Additional Notes
Underwriting is based on Morbidity risk only (Mortality risk is not a concern)
Applicants are either approved or declined. There are no smoker/non-smoker or preferred/standard/substandard rating classes.
We can consider applicants that may not be eligible for Asset Care or other Life/LTC products due to medical history

9. = 2017 variable annuity sales = 2017 fixed annuity sales
Annuity statistics High-level overview
$2.032
= total assets of retirement annuities
trillion
Statista, 2017 Survey
$95.6
$108
= 2017 variable annuity sales = 2017 fixed annuity sales
LIMRA Secure Retirement Institute,
billion billion
The potential to use annuities to fund LTC expenses is also significant, because the annuity market is so large. There are huge numbers of assets in annuities and the average age of annuity owners is around where preparing for LTC becomes more important. 51
= average purchase age of
nonqualified annuities
years
Annuity Purchasers Are Getting Younger, Rachel Summit,

10. Is your client’s non-qualified annuity where it should be?
Annuity marketplace
Annuities are typically purchased for the following reasons: 1 3
Guaranteed
lifetime income
Growth
Is your client’s non-qualified annuity where it should be? 4 2
Additional benefits to guard against catastrophic illness
Tax deferral
Low interest rate market
Need to find value in an annuity in today’s market. Adding long term care can add value to an annuity

11. Annuity statistics High-level overview
How many will pass away with an annuity?
How many are utilizing their income riders?
Read slide.

12. According to a Gallup poll of nonqualified annuity owners:
Annuities
83% intend to use their annuity to avoid being a financial burden on their children.
73% intend to use their annuity as an emergency fund for catastrophic illness or nursing home care.
According to a Gallup poll of nonqualified annuity owners:
Research indicates that annuity owners purchased their annuity with unexpected medical and health care costs in mind.

13. Pension Protection Act (PPA) Effective Jan. 1, 2010
It’s important that clients understand the power of the Pension Protection Act (PPA) and how it should influence their thinking when pre-planning for long-term care expenses.
The PPA became effective Basically, the government is giving us a tax incentive to plan for long-term care expenses.
The act allows a Tax-free Exchange of a Non-qualified annuity into a HIPAA qualified. PPA eligible annuity, and any withdrawals for qualified long-term care expenses are income tax free!
In this example, a client has a $150,000 NQ annuity with $50,000 basis. If a client has earmarked this annuity for emergencies…which almost always means health related expenses, they need to be informed that when they make a withdrawal from that existing NQ annuity, the gain will come out first and that creates a taxable event.
If the client 1035 exchanges that into an Annuity Care policy, and withdrawals for qualified long-term care expenses are income tax fee. The client cannot leverage their existing annuity as well by leaving it as is, there are no tax advantages for LTC expenses.
Let’s look at some examples.

14. Common annuity features Mistaken for PPA benefit
FIA income riders that double or triple for confinement
Terminal illness waiver
These are common annuity features that could be confused with a HIPPA qualified (Pension Protection Act) Care benefits.
The utilization of these annuity features may require a considerable waiting period and/or may be restricted to licensed facilities
Nursing home waiver
For use with financial professionals only. Not for public distribution.

15. The opportunity And ideal scenarios
Any client with an existing annuity not earmarked for income and who currently has no care plan in place
Clients holding annuities when income isn’t needed
Clients with “old” annuities
Clients who are not exposed to PPA benefits
Clients with health issues
Any client with an existing annuity or cash not earmarked for income and who currently have no care plan in place.
Clients
70-85 with “old” annuities where interest rate guarantees or surrender charges pose a problem for the1035 exchange into another annuity.
Clients holding annuities with income benefit charges however it turns out income isn’t needed after all.
Agent who has existing book of clients with annuities yet these clients have not been exposed to benefits available through the PPA.
Clients who have applied or were interested in LTCi or Life based LTC however health issues were a concern.
For use with financial professionals only. Not for public distribution.

16. Concept of Annuity-based LTC Annuity Care
Aggressive
Moderate
Cash value
LTC benefits
$100k
Conservative
$250k
Typical portfolio assets:
Aggressive - Assets positioned for significant growth with the acceptance of the risk of loss of principal
Moderate - Assets positioned for some growth with the acceptance of some downside risk
Conservative - Assets positioned for conservation of principal, often with guarantees
Annuity-based LTC solutions such as Annuity Care are similar in concept to Life-based solutions.
$400k
Lifetime LTC
(unlimited)

17. Hypothetical case study #1 Female, age 70.
May have various health issues that could eliminate her from a life- based LTC plan
$100K in existing nonqualified annuity or cash fund
No need for an income stream other than care
Potential care need, protection and guarantees are priority
Cash value growth is secondary to creating leverage for care
Significant amount of assets in annuities. Billions of dollars of annuity sales annually billion of nonqualified annuity sales in 2015.
When annuity finishes the surrender period option to 1035 exchange to another annuity.
Average age of annuity purchase age 65, retirement age
Annuity provides tax deferral however deferred interest is taxable upon withdrawal.

18. Annuity Care II Specifications
COB Rider is INCLUDED
Single: 24 month base
Joint: 30 month base
36-month rider
72 mo. Rider
Ages: 40-80
Deferred, fixed annuity
Single: 24 months for LTC
Joint: 30 months for LTC
Cash premium/1035 exchange – LTC benefits are tax-free
Tele-interview required because COB Rider is included
Monthly internal charges taken to pay for rider OR
72-month rider OR
108-month rider
Ages: 40-80
Non-cancelable premiums
Optional inflation protection
Additional 36 months up to age 80
Additional 72 months up to age 75
Additional 108 months up to age 70
Paid for with monthly internal charges from the base policy
Read slide

19. Continuation of Benefits Rider
Annuity Care II example Female, age 70
Fixed annuity
Continuation of Benefits Rider
$250,000
$150,000
36 months OR
$400,000
$100,000
$100,000
$300,000
$4,167 per
month for LTC
72 months OR
$550,000
$450,000
Explain how Annuity Care II works
Monthly LTC charges
108 months
For use with financial professionals only. Not for public distribution.

20. annuity with PPA LTC benefits
The FIRST and ONLY fixed-indexed
annuity with PPA LTC benefits
Read slide

21. Indexed Annuity Care case study Female, age 81
Age, health issues or tax adversity from funding source has eliminated her from a life-based LTC plan
$250K in existing nonqualified annuity or cash fund
No need for an income stream other than care
Potential care need, safety and guarantees are priority. Cash value growth is also desired.
Writing agent is familiar with fixed- indexed annuity structures
Read slide
For use with financial professionals only. Not for public distribution.

22. ($10,416 per month for 24 months)
Indexed Annuity Care - Basic Strategy (base only) Female, age 81, has $125k in an existing NQ annuity with a 3% interest rate
Fixed indexed annuity
$250,000 single premium
(1035 exchange)
$250,000
$125,000 per year for 2 years
($10,416 per month for 24 months)
Here is an example of an 81 year old female that had an annuity, approximately $250,000.  When asked “what will you use this money for?”  She said, “I don’t currently need to use this for income so if I use this money it will probably be for some kind of emergency or I will end up passing it on to my kids when I die.”  What an ‘emergency’ meant to her was health care- more specifically, long-term care.
Here are the details: this annuity had a 3% minimum rate guarantee.  In order for this fixed annuity to be 1035 exchanged to another fixed indexed annuity it would need to show a great value to pass the best interest requirements because of the higher guaranteed interest rate. That is one of the benefits to Indexed Annuity Care!  The value that is created by adding long-term care and tax-free dollars for LTC expenses helps with your best interest requirements for your client.
We showed her Option A which is 1035 exchanging her $250,000 into our Indexed Annuity Care base contract. This is designed to last for 24 months if care is needed providing $10,400 per month or $124,800 annually for two years. It also has a guaranteed “step up” or increase for LTC expenses.
For use with financial professionals only. Not for public distribution.

23. Downside protection Step up for LTC
Guaranteed values from illustration

24. Upside potential Step up for LTC
Projected values from illustration

25. $10,416 per month for 24 months ($125,000 per year for two years)
Indexed Annuity Care Advantages of Basic Strategy
Guaranteed increase multiplier “Step up” for LTC
Ability to use her money in two years penalty-free
No tele-interview
Tax-free for LTC expenses
If she decided on the Basic strategy, she would have the benefit of a “step up” for LTC which we call a Multiplier. She wouldn’t have to have a telephone interview although she would need to answer some health questions on the application. The ability to use her money over a two year period without paying a surrender period can be a very attractive feature!
This annuity is a Pension Protection Act compliant annuity which allows withdrawals for LTC expenses to be considered income tax-free!
Option A would generate a minimum $10,400 per month for 24 months which is $124,800 per year for two years
$10,416 per month for 24 months
($125,000 per year for two years)

26. Indexed Annuity Care - Leveraged Strategy (Base + Rider) Female, age 81, has $250k in an existing NQ annuity with a 3% interest rate
Fixed indexed annuity
Continuation of Benefits Rider
$250,000 single premium
(1035 exchange)
$170,760
$79,240
LIFETIME
$170,760
$85,380 per year for LIFETIME
($7,115 per month for LIFETIME)
We also showed her The Leveraged strategy.
She was shown that by 1035 exchanging her $250,000 to Annuity Care, a piece could be “carved out” to pay for the lifetime rider.  That amount would have been a taxable event, but because of the Pension Protection Act, it is viewed as a legitimate LTC expense, therefore, the rider cost didn’t generate a 1099 to the client! 
Why was this a great benefit to her? Option B provides her $7,115 per month for the rest of her life – guaranteed. This would equal $85,380 per year for the rest of her life!
She would have to earn 34% guaranteed for life in another annuity to get the equivalent annual benefit!
For use with financial professionals only. Not for public distribution.

27. 1 3 4 2 Annuity-based LTC Underwriting Brief phone
interview if
rider is added
No paramedical
exam 4 2
No attending
physician’s
statements
No tele-interview
for base policy
only
No Paramedical Exam
No Attending Physician Statements
Short Telephone Interview
** If the COB rider is not desired, the only the information on the application is required and no telephone interview is required.
For use with financial professionals only. Not for public distribution.

28. By the way 1035 Exchange
Eligible person provides spousal coverage by 1035 exchanging an existing annuity in one spouse’s name
Transfer annuity creates an opportunity to use partial 1035 exchange when transferring company will not do partial
Eligible Person - Allows spouses to have a joint plan funded by 1035 exchange of an existing annuity that is only in one spouse’s name.
“Like for Like” Transfer. Owner and annuitant listed on current annuity will be listed as owner and annuitant on Annuity Care plan. Spouse will be listed as eligible person and beneficiary.
Transfer Annuity is a way to use a partial 1035 exchange when transferring company will not do partial 1035 exchanges
Partial 1035 exchange is desired to fund a contract from our Annuity Care suite
For use with financial professionals only. Not for public distribution.

29. Illustrations, marketing materials, and product information
Let’s Get Started!
Illustrations, marketing materials, and product information
Get started by contacting the OneAmerica Sales Desk, or your BGA back office for more information.