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ICB’s Multi-Life Team
Jan Daley, CLTC Ext. 314 [email protected]
Lawrence Vivenzio Ext. 318 [email protected]
Richard Eldridge, CLTC Ext. 324 [email protected]
ICB’s Multi-Life DepartmentThe Advantages of Selling Multi-Life
An Introduction to Long Term Care
• Not everyone will need long term care, but everyone needs long term care planning – Reasonable people can agree with two
important statements:• There is a good chance that I will live a long life
– The longer I live, the more likely I may need long term care
• The emotional, physical, and financial consequences to my family and my retirement plan may be devastating
Therefore, I need a plan for Long Term Care
An Introduction to Multi-Life
• More than likely all of, or at least most of, your clients are part of the multi-life market
• There are basically two types of clients:– Employers– Employees
Tax Advantages• Favorable tax treatment
– On premiums for employers
– On premiums for employees
– On benefits paid for employees
DISCLAIMERAll tax information given in this presentation is general and its purpose is to give an informational guideline. Under no circumstances is this information considered to be tax advice from a tax professional. Also, this information may not be pertinent to a particular situation on which you are working.
Tax laws may change at any time and this information may not be supported.
Consult a tax professional for advice based on the specific case situation on which you are working.
Nonprofit Entities
• Do not pay federal income taxes• Generally no tax implications for premiums
on LTC policies• Employees not taxed on employer paid
premiums– Not limited on an age basis
• Benefits considered reimbursements for medical care– Excluded from policy owner's income– Tax free “per diem” limit for 2011 is $300
Sole Proprietorship• Generally can take a business deduction on premiums
paid• No deduction is allowed if the sole proprietor is a
beneficiary of any kind to the policy• Premiums must be considered reasonable compensation
for the deduction to exceed to age based limits• An owner may only deduct premium up to the age based
limit• Employees are not taxed on employer paid premiums• Benefits are treated as reimbursements for medical care• Benefits in excess of $300 per day (2011 per-diem limit)
are taxable
Eligible LTCi Premiums
Age
At End of Taxable Year
2011
Age-Based Limits
40 and younger $340
41 through 50 $640
51 through 60 $1,270
61 through 70 $3,390
71 and older $4,240
Partnership• Partners are treated as self-employed• Generally can take a business deduction on
premiums paid• No deduction is allowed if the business is a
beneficiary of any kind to the policy• Premiums must be considered reasonable
compensation for the deduction to exceed to age based limits
• An owner may only deduct premium up to the age based limit
• Employees are not taxed on employer paid premiums
Eligible LTCi Premiums
Age
At End of Taxable Year
2011
Age-Based Limits
40 and younger $340
41 through 50 $640
51 through 60 $1,270
61 through 70 $3,390
71 and older $4,240
S Corporation• Generally may deduct all premiums paid• Employees – less than 2% of stock• Deduction is not subject to age based limits• Premiums must be considered reasonable compensation for the
deduction to exceed to age based limits• No deduction is allowed if the business is a beneficiary of any kind
to the policy• Employees are not taxed on employer paid premiums• May deduct all premium paid for owners who provide compensable
services to the corporation• An owner owns more than 2% of the company’s stock• Deduction is not subject to age based limits• To be deductable, premiums must be paid without regard to
business income• Benefits received are not considered taxable income• Benefits paid are treated as reimbursements for medical care
– Excluded from the policy owner’s income• Benefits in excess of $300 per day (2011 per-diem limit) are taxable
C Corporation
• May generally deduct all premiums• Deduction is not subject to age based limits• Premiums must be considered reasonable compensation
for the deduction to exceed to age based limits• No deduction is allowed if the sole proprietor is a
beneficiary of any kind to the policy• Carving out
– Can not define a class solely by ownership status
• Employees are not taxed on employer paid premiums• Benefits paid are treated as reimbursements for medical
care– Excluded from the policy owner’s income
• Benefits in excess of $300 per day (2011 per-diem limit) are taxable
Underwriting Concessions• Prudential
– Simplified Underwriting• 7+ issues employee lives issued• Spouses if 100% employer paid AND actively at work 25+ hours per week outside the
home
• Genworth– Simplified Underwriting
• 7+ issued employee lives with employer money
• Mutual of Omaha/United of Omaha– Modified Guaranteed Issue
• Minimum of 10 eligible employees with at least 10 employees issued– Simplified Underwriting
• Minimum of 10 eligible employees with at least 10 employees issued
• MedAmerica– Simplified Underwriting
• 50+ actively at work employees/members in the group• 100% ER funded for 10+ active employees
OR• 100% ER funded for a combination of 10+ active employees and care partners
– At least half must be employees
– Modified Underwriting• 3-49 actively at work employees/members• PHI only
Group Discounts• Prudential
– 5%• Genworth
– 5%• Mutual of Omaha/United of Omaha
– 5% Full Underwriting– 10% Simplified Underwriting– 10% Modified Guaranteed Issue
• John Hancock– 5%
• MedAmerica – 5%
• Mass Mutual– 10%
• America General– 5%
Why Should an Employer Plan for LTC?
“There are only 4 types of people:those who have been caregivers,
those who are caregivers,those who receive care, and
those who will be caregivers in the future.”
-Rosalynn Carter
Employer Benefits
• Favorable tax treatment– Deductable as a business expense
• Presenting more value to your employees– Raise or bonus
• A plan to protect employee turnover– Should their spouse or care partner need care
• A plan to protect your family
• An increase in employee loyalty
Employee Benefits
• Funding for your LTC plan– To protect your loved ones– Preserve their retirement nest egg– Preserve their legacy for their loved ones
• Underwriting concessions as an applicant– Much less obtrusive underwriting process
• No phone interview• No medical records• No face to face interview
• Group discount• The opportunity for care partners• A fully portable policy upon retirement
Agent/Broker Benefits
• More premium in one setting– One client can turn into dozens
• Underwriting concessions– A less obtrusive offer for your clients
• Group discounts
• More stability for renewals– Employer funded
Expand your Long Term Care profile with your clients
• We are here to assist you to be successful beyond your initial contact with one person
• Allow us to aid you in expanding your business
• Even if you only sell Long Term Care every now and then, you client is more than likely an employer or an employee somewhere– Why not gain access to everyone they work with? – Why not allow yourself to go beyond your client?
Thank YouICB’s Multi-Life Team
Jan Daley, CLTC Ext. 314 [email protected]
Lawrence Vivenzio Ext. 318 [email protected]
Richard Eldridge, CLTC Ext. 324 [email protected]