WHAT HAS HAPPENED

Lack of Sales  Training  Producer Demands High Administrative Costs  Very service driven  Large reserves Pricing  Low lapse Rate  Inflation  New types of care emerged

CLAIMS OVERVIEW

Over $7.7 billion dollars has been paid through 12/11 Youngest claimant 27 Longest claim 18.7 years $1.7 Million is the largest single claim  14+ years, annual premium was $881 71% of claim dollars have been paid to female claimants 50% of all claim “dollars” are paid to claimants with mental disorders including Dementia

RECENT CHANGES IN INDUSTRY

    Carriers Exiting the Industry  AIG   Allianz Berkshire/Guardian  Equitable Penn Treaty MetLife Prudential Transamerica Carriers Coming back in  Transamerica  Thrivent

CHANGES IN INDUSTRY

No one wanted to be the “Lone Wolf”  Lifetime Benefits   3.7% sales in 2011 Shortened Premium Payment Options  Less than 8% of overall sales Adjusting the Current Pricing Rate Increases

TODAY’S TOP CARRIERS

Key Carriers             Bankers Life and Casualty Genworth Financial John Hancock LifeSecure MassMutual MedAmerica Mutual of Omaha New York Life Northwestern Mutual State Farm Transamerica United of Omaha

WHAT TO EXPECT

Premiums are not going to go down Changes in Underwriting    All relates to claims Do not take risks Family History  More “lifelike” underwriting Updated Pricing  Sex Distinct 5% Compound No Longer Affordable

NEW DESIGNS

Linked Benefit Products  Single Pay Life Insurance and LTCI  Life Insurance with a LTCI rider Simple Product Design    Evolution LifeSecure Others?

Don’t try to Cover Entire Cost

WHAT FITS

What is your Client looking for?

Linked Benefits   Repositioning existing assets and exercising leverage and control Helps overcome common objections Traditional LTCI    Using a portion of your client’s portfolio to pay the premiums Business owners can deduct a portion of the premiums Best leverage of premium dollar

TAX INCENTIVES Age 40 or Less 41-49 50-59 60-69 70+

Qualified Premium Limits for 2013 (Attained age before the close of the taxable year)

Deductible Amount $360 $680 $1,380 $3,680 $4,550

Per Diem Limit for 2013 is $340 per day

THE NEED IS NOT GOING AWAY

2 out of 3 over 65 will require long term care Average life expectancy after someone is diagnosed with Alzheimer’s after the age of 70 is 4 to 7 years Cost of care today verses the future 50% of people entering a care situation are penniless within one year

It IS going to happen so how are you going to pay for it

WHO DOES IT REALLY PROTECT?

Spouse Children Grandchildren

FUNDING THE COST OF YOUR CHRONIC DISABILITY

Plan A:  Keep the Risk (Don’t Plan) Can happen at any age   Directly and immediately impacts monthly cash flow Impossible to predict the financial impacts on an individual and their family until the event happens  Monthly distributions are systematic and in most cases, taxable Plan B:  Transfer the Risk (Do Plan) Provides liquidity on a tax favored basis

KEEPING THE RISK

Choose an investment class that does not have any market exposure such as CD’s or Treasury’s Make an adequate lump sum investment that can match what LTCi delivers by Y20 Promise yourself that you’ll never touch this money for any purpose other than long term care How much would this be?

OUR CHALLENGES

A lack of understanding of what role long-term care insurance plays in the client’s family and finances.

Not having a clear grip on how to overcome sometimes debilitating objections.

Not understanding the competition to LTCI in the form of alternative funding sources such as Medicare, Medicaid, Self Funding and or the VA.

Not being able to confidently recommend the proper coverage to achieve maximum benefit for the client

TYPICAL LTCI BUYER

Female ages 55 to 64 Married with Adult Children Working in a white-collar profession; not yet retired College educated Homeowner with 11 or more years in current residence Affluent: upper middle class with a household income of $100,000 or more Planner Exposed to LTC issues Reasonable and family oriented

PRIMARY REASON FOR PURCHASE

Protect Assets Security/Peace of Mind To cover the cost of LTC services possibly needed Do not want to be a financial burden I know I’ll need it Know someone who had trouble paying for LTC

PRIMARY REASON FOR PURCHASE

Getting older Do not want their children to take care of them Make sure they are taken care of Family does not live close Choose type of care High cost of LTC Services

LIFE EVENTS THAT TRIGGERED PURCHASE

Planning for Retirement Client or their spouse retired Loved one needed LTC Change in financial situation Change in marital status Birth of a child or grandchild

WHERE THE CLIENT LEARNED ABOUT LTCI

Family or friends Information from an employer Financial Advisor 8.9% Insurance Agent or Broker 8.7% Brochure – Insurance Company Advertising – television Advertising – magazine 55% of people who made the first contact with an agent about LTCI

REASON FOR BUYING NOW

Less expensive to buy now Know they are getting older Planning for retirement/future Seemed like a good idea Loved one passed away

70% of people discussed buying long term insurance with family members or friends

QUESTIONS TO ASK

What is your written strategy?

 This should not include their spouse and/or children How will the costs of extended care impact your family and portfolio?

P.S.

Unwritten Rule #1  Women lie about their weight Unwritten Rule #2  No healthy person will willingly pay $10,000 a year for LTCi Unwritten Rule #3  If a client’s daughter approaches you on behalf of a parent/in-law, there is already a problem Unwritten Rule #4  All clients believe they are healthy

P.S.

Unwritten Rule #5  If you are taking an application for a couple, and you discover a health “issue” – STOP and “close the case again”.

Unwritten Rule #6  Rate increases are inevitable - manage your client’s expectations

LTCi is a “sale” not an order

QUESTIONS?

Susan Carlson 480.718.3153 (Direct) 800.352.3359 (Toll Free) 602.486.4557 (Cell) [email protected]

www.ipg-us.com