1. Extended Care and Long Term Care Planning
Long term care is a life changing event that can have long term consequences. A family may have difficulty recovering emotionally and financially if they or family member has a chronic illness or accident. Today we are going to discuss some options available to plan for an extended care event.
Extended Care and Long Term Care Planning
Presented by:

2. Disclosure
These materials are provided for educational purposes and may be used in conjunction with the solicitation of an insurance product to the public. For use with non-registered products only. Variable is not discussed within this presentation. The insurance products described may be issued by various companies and may not be available in all states. All comments about such products are subject to the terms and conditions of the annuity and/or insurance contract issued by the carrier and policy terms, conditions and limitations may apply. Not all applicants will qualify for coverage. Your insurance producer may recommend insurance products based on the individual circumstances you communicated. You should not purchase an insurance product unless accompanied by a compliant carrier illustration. Carrier illustrations are based on the individual circumstances you presented to your producer. The underwriting class illustrated may not be the underwriting class ultimately issued by the carrier. The carrier may, in its sole discretion, issue a policy other than applied for based upon information received during the underwriting process. The premiums and benefits illustrated are based on information provided by the carrier at the time the illustration is run and are subject to change at any time at the sole discretion of the carrier.
Crump Life Insurance Services, its agents and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. Clients should consult with and rely on their own independent legal and tax advisors regarding their particular set of facts and circumstances before purchasing an insurance product. To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
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This presentation is not meant to give individual and professional advice. It is educational in nature.

3. Today’s Agenda Long Term Care Types of Care Who Pays For Care
Types of Plans Available
Today we will be addressing: … What is long-term care? Why do people need LTC? What is the cost of care? What are the main components of LTCI. as well as any questions you may have.

4. Long Term Care: The Basics
Extended Care, often known as Long Term Care, can be needed to due an accident or Illness. Lets review some important basics

5. Why Do People Need Care?
Long term care services are provided to individuals when they require ongoing…
Assistance or supervision to perform Activities of Daily Living (ADLs): Bathing, Dressing, Eating, Continence, Toileting, Transferring
OR:
Assistance or supervision due to severe Cognitive Impairment, such as: Alzheimer’s disease, dementia, other brain disorders
Why Do People Need Care… for physical and/or cognitive reasons:
The result of these impairments leave the person’s health so severely compromised that they are no longer able to care for themselves safely. There is perhaps no other unexpected serious event in life that has the potential of causing long term consequences to a family than a need for care over an extended period of years. Many times providing care for a chronically ill person makes a healthy caregiver chronically ill. In many instances person receiving the care outlives their caregiver.

6. What are the Types of LTC Services?
As you can see, if you needed care today, you can receive a great number of services in your home, if the services are available in your area and if you can afford it.

7. Who Pays for the Coverage?
Medicare
Age 65+, 3 day hospital stay, skilled care
Covers days %, Co-Pay $ next days
Medicaid
Federal/State funded, financial eligibility, 5yr lookback, estate recovery
VA Benefits
Priority group system - illnesses related to service come first
Personal Income and Assets
Long Term Care Insurance
Read Slide until LTCI
LTCi is a contract between you and the insurance company. You are transferring some of the risk in return of premiums paid. You can leverage today’s dollars to pay for tomorrows medical costs. If you never need the care then the premiums paid are not refundable for a traditional policy. Also LTC premiums may increase over time.

8. What is the Impact of Providing Care?
The need for extended care may significantly change the life of the family member providing the care.
Factors that may impact those providing care include:
Increased
Stress
Sibling Tension
Decline in Well Being
Second Marriages
Possible factors that may impact the care providers and family:
The need for extended care may significantly change the life of the family member providing the care.
Increased stress
Sibling tension
Decline in well being
Second marriages

9. What are the Financial Consequences?
It’s true – wealthier people may be able to cover the cost of care.
However, have they considered the following?
Tax Implications
Market Timing
Liquidity
Loss of Future Income
Tax implications of funding LTC out of pocket may mean using money or income from current investments, which have the potential to increase taxes and may result in a material loss
Market Timing - Selling things like stocks, due to the need for cash flow at the wrong time, may result in a loss greater than expected.
Liquidity - Selling property at the wrong market timing can result in material losses.
Loss of Future Income Possibilities - If you’ve sold your future income possibilities, you have a future income loss as well.
Paying for care out of pocket my be a viable option for those who are wealthy enough. However the impact of generating the potential additional $80K to $150,000 each year can have a the potential of causing long term consequences on wealth and prior financial commitments.
Increased income may raise tax brackets, selling stock at a time when the stocks are at a low point can actualize losses, converting real estate in a hurry can result in selling at a lower price then you may have otherwise sold at, and finally the overall effect of reducing assets can result in a material loss of future income.

10. What is Long Term Care Insurance?
Pays for care provided to individuals who, because of a physical or cognitive impairment, need assistance.
Custodial vs. Skilled
Provides a stream of income used to pay for care
Care provided to individuals who, because of a physical or cognitive impairment, need assistance with basic activities of daily living (ADLs) such as:
Bathing, Continence, Toileting, Dressing, Toileting, Eating, Transferring
Custodial vs. Skilled – (Nurse care)
Provides a stream of income that is used to pay for care

11. What are the Main Components?
Benefit
Amount
$1,500 – $12,000
(monthly max.)
Benefit
Period
(yrs.)
2 Years - Lifetime
Elimination
Period
0-90 days,
varies by carrier
Inflation
Protection
1-5% Simple
3-5% Compound
Life Insurance or Annuity
Surrender value
Other Optional Riders*
Shared Coverage
Joint/Spousal Waiver of Premium
Waiver of Elimination Period for Home Care
Survivorship Benefit
Cash Alternatives
Return of Premium/Surrender Value
Death Benefit
Most policies pay up to the monthly maximum selected, The benefit period is the number of years at the maximum monthly amount it will pay for care. For example $5, per month X 48 months (4 years) = $240,000 dollars available for care. If you do not need the maximum $5,000 per month then the pool of money will last longer.
Benefits are received Tax Free and may be deductible, depending on filing status.
*Policy riders are available at an additional cost and may not be available for all products. Terms and conditions apply.

12. Traditional LTC Policy
Maximum leverage per dollar (lowest premium for comparable coverage)
Can be funded with HSA dollars
Premiums potentially tax deductible
Monthly/daily benefit with specified benefit duration
Inflation protection options with a variety of optional riders
Services - home healthcare, assisted living, nursing home care, adult day care, hospice
Highly Customizable: Flexible Design (You Choose)
Highly customizable – flexible design
You choose:
Monthly/daily benefit – ex. - $150/day or $5,000/month
Elimination period (deductible) – ex. 90 days, 180 days
Benefit length – ex. 2 to 6 years
Inflation protection – ex. 5% compound, 3% compound, no inflation
Shared Care Rider – joint pool of month that can be used by either spouse
Premiums can be paid annually, semi-annually, quarterly or monthly
Covers a variety of services, such as home healthcare, assisted living, nursing home care, adult day care, hospice

13. Hybrid LTC Policy (Asset-Based Investment)
LTC policy + Death Benefit
Premiums payment method
(1,3,5,7,10, Annual)
Potential tax-advantaged LTC
benefits
Tax-free death benefit
Surrender value
Inflation options available
Services - home healthcare, assisted
living, nursing home care, adult day care,
hospice
Reallocation of assets
Combined Linked Benefits: (Live, Die, Quit Solution)
Combined (linked benefits) Solution – use it, die with it or walk away
Combination LTC policy with a death benefit
Premiums can be funded with a lump sum or 3, 5, 7, 10yrs or even lifetime annual pay
Provides potential tax-advantaged long term care benefits and more leverage for your clients’ (or your) LTC dollars
Offers a tax-free death benefit if all or some of the LTC benefits are not used
Enhanced surrender value endorsement – guarantees at least your clients’ (or your) original premium amount, should they (or you) want to walk away from the contract
Inflation options available
Covers a variety of services, such as home healthcare, assisted living, nursing home care, adult day care, hospice
Reallocation of assets

14. Hybrid (“Linked Benefits”) LTC Policies
This is a example of reallocation of assets. Linked benefits are often funded in a single pay funding using a portion of assets the client intends to use for the potential LTC emergency. However by reallocating the asset into a linked benefit policy you can increase and leverage greater amounts of LTC monies available.

15. Hybrid (“Linked Benefits”) Case Study
Client Profile:
Female, Age 60
Current Liquidity: $750,000
Additional income
$100K CD coming due
Financial plan shows she has enough to retire and live comfortably
Children all reside in different locations
In the sample client, the female client repositions a CD to fund the LTC Hybrid policy providing an immediate increase from $100,000 to $375, And if she lives to age 88 and needs care (her CD would be around $228K), however with the Hybrid LTC policy she will have over $850,000 available!
Potential Solution: Reposition her current asset in the CD and use the funds to pay for a hybrid LTC product. By doing this, she will significantly increase her LTC benefit, helping protect herself from LTC costs. If she never needs care, she will have a tax-free death benefit to pass onto her heirs.
Case studies are offered to show how Crump Life Insurance Services can provide valuable assistance to financial advisors seeking insurance solutions for their clients. Results may vary. This is a hypothetical example and does not guarantee a similar results.

16. Life Insurance with LTC Rider
Death benefit = LTC benefit amount
Monthly benefit amount is elected
Services - home healthcare, assisted
living, nursing home care, adult day
care, hospice
Premium used for LTC costs is
locked in
Tax-free death benefit
2nd to die options
Flexible Protection
Flexible protection
Traditional Universal Life (UL) contract with LTC Rider
Full amount of your life insurance death benefit is also the LTC benefit amount
Death benefit is “accelerated” once a LTC claim is filed
Portion of the death benefit that is not used for LTC passes to the named beneficiary as tax free income
Monthly benefit amount is elected at policy issue (1%, 2% or 4% of death benefit/face amount)
Elimination Period
Premiums can be paid annually, quarterly, semi-annually, monthly or in a lump sum
Covers a variety of services, such as home healthcare, assisted living, nursing home care, adult day care, hospice
Premium used to cover LTC costs is locked in, it cannot change
Tax-free death benefit
2nd-to-die options to insure multiple lives

17. What Does Your LTC Plan Look Like?
The insured’s own home
Adult day care
Continuing or life care community
Assisted Living Facility
Nursing Facility
People prefer to stay in their homes as long as it is a safe environment. Services can be provided by family members, friends or HHC Agencies… the medical & custodial services come to your home.
Adult day care facilities give the caregiver’s respite and time to shop, run errands and just have some time to themselves. ADC offers social stimulation and a safe environment to support their home care.
Assisted Living Facilities are an apartment like setting with a common areas for meals. The level of care one receives is dependent on their needs.
Skilled Nursing Facilities are necessary when a person requires ongoing care and/or supervision requiring ongoing treatment.
Then finally Continuing Care Communities offer independent living, HHC, assisted living and skilled care. It’s an idea that has evolved and become quite popular among retirees.

18. What Should You Consider?
If it happened today, what would your concerns be?
If single/widowed, protect assets for self should you recover
Protect family from impact of needing care
Ensure ability to keep financial commitments
Needing care can have a significant, unintended impact on the individual needing care AND the individuals providing care. The best time to consider extended care planning is when you’re eligible for coverage.

19. What about the Premiums?
Insurability, Premium Funding and Affordability
Premiums will vary depending on:
Age
Gender
Health
Type of insurance products considered
Premiums can potentially be funded with:
Cash value from other/old life insurance policies
Old annuities
Low producing Certificate of Deposits (CDs)
Tax qualified monies
New money
Consider your financing options…

20. Next Steps?
Meet with your insurance professional to help determine if extended care planning is right for you
If you believe it is, they can assist you in determining if you may be eligible and which plan would be an appropriate fit for your needs
People purchase this coverage for different reasons. Some want to put a wall of protection around their portfolio, others look to maintain their independence and others want to choose where and how their care is delivered. Many say they want to protect their family members from providing the exhaustive care.
Whatever your reason, your insurance professional can plan to meet you and your family’s financial needs. Please contact your dedicated representatives for more information.