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For Financial Professional Use Only – Not for distribution to the general public.

Prudential Long-Term Care InsuranceSelling to Businesses and Associations

Fred Sherman, CLU, ChFC,

Regional Sales Manager

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Multi-life Opportunity

The “multi-life” LTC market is one of the fastest growing components of LTCi sales– Executive Carve Outs– Employee Benefits

Opens door for cross-selling approach Prudential offers LTCi products to:

– Individuals (small employer groups)– Associations– Large corporations

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Why LTC Insurance?

One of the newest employee benefits being used to attract and retain top-talent

Awareness and interest in LTC is increasing:– Media attention– LTC Awareness programs– Baby boomers seeing parents needing help– Facing their own futures

Employers can have a positive effect on employees in planning for their future needs

Help diminish the negative effects of caregiving LTC market is untapped with only 3% of small businesses

offering LTCi

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LTC Advantages for Businesses

Group discounts Tax advantages

– Deductible premiums– No income / tax-free benefits

Executive benefit perk (carve outs)– Employers pay premiums for select employee groups– Benefits received by employee are not taxable– Employee owns policy and it’s portable– Method of providing a “raise” to key employees

Multiple “employee” classes with no nondiscrimination requirements*

Ease of administration (list billing)

*Source: http://www.irs.gov/publications/p15b/ar02.html#d0e731.

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2006 Eligible PremiumsAge 40 or below $280Age 41 to 50 $530Age 51 to 60 $1,060Age 61 to 70 $2,830Age 71 and above $3,530

Maximum Tax-Deductible Premiums (2006)

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Tax Advantages for C-Corporations

Premiums are 100% deductible as business expense– Fully deductible to firm, not taxable to

employee

– Spouse premiums are fully deductible to the firm, not taxable to the employee

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What to Ask C-Corporations

Why do you want to pay for LTC yourself when your company can pay it for you?– Corporate paid premium after taxes is approximately

60% of actual premium (assume 40% personal and corporate tax bracket)

– Example: $8,000 premium is discounted to $4,800 Personal after-tax paid premium approximately 140% of

actual premium $8,000 premium would cost $11,200 in after-tax dollars

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Tax Advantages:

S-Corporations– Premiums are deductible for owners, limited

to an age-based amount Fully deductible to firm, not taxable to employee Greater than 2% of owners, eligible premium is

deductible above the line*; all other fully deductible to firm, not taxable to employee

Spouse premiums are fully deductible to firm, not taxable to employee

* Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder. * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

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* Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

Tax Advantages:

Partnerships– Fully deductible to firm, not

taxable to employee– Eligible premium is

deductible above the line*

– Spouse premiums are fully deductible to firm, not taxable to employee

– Premiums reported as guaranteed income on Schedule K-1

LLCs– Fully deductible to firm, not

taxable to employee– Eligible premium is

deductible above the line*

– Spouse premiums are fully deductible to firm, not taxable to employee

– Income reporting depends on Corp or Partnership status

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The Solution:

Prudential Multi-Life Programs

Employer-Sponsored

Affiliations

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Employer Sponsored Program (ESP) Highlights

Employer group size requirement– Three to nine employees (all must be insured)– 10 to 500 lives (must work minimum of 30+ hours per week)

Minimum participation requirement– The greater of 5% of the group or 10 lives (including spouses)

Discounts– 10% discount to employees & spouse/partner– 5% discount to family members*

– No maximum on discounts– Preferred health rate class not available to employees under ESP

Modified underwriting (employees ages 18 - 70*) Customized plan design for every client Buy-ups available

* Parents, in-laws, aunts, uncles, siblings, grandparents, grandparents in-law, and children ages 18 and older.

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ESP Plan Design

Options with modified underwriting– $50 - $300 Facility: daily, monthly, or cash benefit– 50%, 75% or 100% home care– Benefit periods: 2, 3, 4, 5 or 6 years – Elimination period: 60, 90, 120, 180, or 365 days– All Inflation options available– Accelerated premium options available

10 pay Paid-up at 65

– Buy-ups available Lifetime, 150% Home Care, etc…

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Optional Riders*

With modified underwriting – Flexible cash benefit rider– Cash benefit rider– Return of premium upon death benefit– Shared Care Benefit

Available as buy-up with full underwriting– 150% home care daily benefit– Joint waiver of premiums benefit– Survivor waiver of premiums benefit

* For the Prudential LTC3 product only. Contact your Regional Sales Manager with questions on LTC By Design SM.

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ESP Modified Underwriting Questions

1. Do you use: walker, oxygen, respirator, or kidney dialysis?

2. Within past 12 months have you: used adult day care, needed home health care, or been medically advised to enter or been confined to nursing home, assisted living facility, or other LTC facility?

3. Do you currently need assistance or supervision by another person in performing any of the following activities: bathing, eating, toileting, bowel or bladder control, moving in and out of bed or chair, dressing, or taking your medication?

4. Have you had, do you currently have, or have you ever been diagnosed as having any of the following medical conditions:

a) Organic Brain Syndrome, Dementia, Senility, Confusion, Memory Loss, or Alzheimer’s Disease?

b) Metastatic Cancer (cancer that has spread from original site or location?)

c) Multiple Sclerosis (MS), Muscular Dystrophy, Multiple Transient Ischemic Attacks (TIA), Parkinson’s Disease, Amyotrophic Lateral Sclerosis, Stroke, or Cerebrovascular Accident (CVA)?

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ESP Billing Options

List bill– Monthly payment sent to Prudential by mail or

electronic transfer

– All participants premium is sub-totaled on one bill

Direct bill– Employees deducted monthly with or without EFT

– Quarterly, semi-annual, or annual available

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Affiliation/Association Program Highlights

Qualification– Minimum 100 Association members and formed for

common purpose*

– Businesses may also qualify for discount**

Participation requirement– 5 lives within a 6-month period

Program Features– 5% discount for members & extended family– Full underwriting– Unlimited benefits and riders available

*Other than to buy insurance. Other restrictions may apply. **May not be used in combination with ESP.

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Opening Doors

Who are your clients?– Do they own a business?

– Are they executives with a company?

– Do they belong to professional or personal associations?

What associations do you or someone in your personal network belong to?– Can you conduct a seminar?

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Finding the Right Businesses

Who to partner with?– Property/Casualty Agents

– Accounting Firms

– Trade Associations

– Employee Benefit Consultants

– Chambers of Commerce

– Corporate Attorneys

What industry to target?– Favorable:

Higher Education Physicians Law Firms Accounting Engineering

– Challenging: Retail Hospitals Manufacturing

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Sample Opening Statements

“I work with businesses to help the owners protect against unexpected personal financial risks and build tax-free cash so that they retire

with peace of mind and security.”

“I help business owners & management build tax-free cash funds to ensure a risk free retirement.”

“I help business owners and key employees build large pools of cash so they are protected from unexpected financial risks and can retire with complete confidence and peace of mind.”

“Did you know that you can extend the current limits of your healthcare before you retire?”

“I help companies provide their owners, employees and families with cash protection for the biggest threat to their financial security.”

“I work with business owners and key staff to help them maximize their personal compensation by using pretax dollars to fund million dollar tax-free benefits.”

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Why Prudential?

Effortlessly Handling All of Your Long-Term Care Insurance Needs

Long-term care insurance is underwritten by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102 (800-732-0416).

Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ, USA and its affiliates.

For Broker/Producer Use Only. Not to be distributed to the public.

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Questions & Answers

Fred Sherman, CLU, ChFC

Regional Sales Manager

763-553-8707