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PRODUCT TRAINING
For agent use only. Not for the general publicFor agent use only. Not for the general public
Living Care® Annuity
AFN41121
For agent use only. 2
Introduction / Agenda
Background – A New Retirement Landscape
Living Care® Annuity Overview
Target Market and Marketing Materials
Living Care® Annuity Sales Ideas
For agent use only. 3
Background
A New Retirement Landscape
For agent use only. 4
Background
A Challenge to Quality of Life
Two Common Retirement Risks:
Longevity Risk
Long-Term Care Risk
For agent use only. 5
Longevity Risk
Percentage of survivors at age 65 expected to live to ages 70+
Survivors to age: Men Women
70 88% 92%
75 74% 82%
80 56% 69%
85 36% 51%
90 17% 31%
95 6% 13%
100 1% 4%
Source: WISER and the Actuarial Foundation, 2003
For agent use only. 6
The Need for LTC
Reasonable people believe they are going to live a long life.
The reality of living a long life and getting old is that eventually most people will get sick and need care.
How are your clients going to fund their long-term care?
For agent use only. 7
Innovation is needed
Innovation is needed to:
Protect retirement assets against stock market volatility;
Provide extra financial resources for potential long-term care expenses; or
Ensure retirement income that lasts many years in retirement.
For agent use only. 8
Product Details
For agent use only. 9
Living Care® Annuity
Issue Ages - 40-79
Contract Premiums - Non-qualified dollars only
Minimum - $50,000
Maximum - $300,000
Owner, annuitant and claimant must all be the same person (no joint owners)
Guaranteed Interest Rate - 3.00%
For agent use only. 10
Living Care® Annuity
Withdrawal Charges –
Surrender Free Withdrawals - 10% after Year 1
Waiver of Withdrawal Charges - Death, Chronic, and/or Terminal Illness
Annuitization - After Year 2 – Full value for lifetime annuity options
30-day free-look
For agent use only. 11
Living Care® Annuity
For agent use only. 12
Living Care® Annuity
®
For agent use only. 13
Living Care® Annuity
If they need long-term care, they can:
Receive up to three times the annuity value in long-term care benefits
Help preserve their overall retirement plan assets by using this portion of their money to pay for up to six years of long-term care
Help protect a spouse and/or family members from the emotional, physical, and financial toll of care-giving
Help ensure their choice of care options
For agent use only. 14
Living Care® Annuity
Covered long-term care benefits include:
Nursing Home Care
Home Health Care
Assisted Living Facility Care
Alternative Care Services
Adult Day Care
Care Coordinator Service
Caregiver Training
Homemaker Services
Personal Care
Respite Care
Care Planning
Hospice Care
For agent use only. 15
Living Care® Annuity
If they don’t need long-term care, they can:
Earn a guaranteed rate of interest on their savings
Take advantage of tax-deferred growth
Access their principal through partial withdrawals or lifetime income options
Provide a death benefit to their beneficiaries that are equal to the annuity value
Avoid probate of these funds
For agent use only. 16
Eligibility for LTC Benefits:
Annuitant is chronically ill
Inability to perform 2 out 6 Activities of Daily Living (ADL) or Cognitive Impairment (Alzheimer’s)
A least two years from issue date following 90-day elimination period
Cost of rider is waived when the claim is approved
For agent use only. 17
LTC Daily Benefit Example
Annuity Value: $100,000
Max. Daily Benefit: $100,000 / 730 days = $136.99 per day based on daily expenses incurred
Max. Lifetime Benefit: $100,000 x 3 = $300,000
The long-term care daily benefit is deducted from the annuity until $1.00 of annuity value is left
Then, the daily benefits are provided by United of Omaha until the client has exhausted the Maximum Lifetime Benefit.
This provides a minimum of 6 years of benefits assuming no excess withdrawals.
For agent use only. 18
Cost of the LTC Rider
Long-term care charges are deducted from the account values on a monthly basis based on the age at issue. The Annuity and Surrender Values reflect these charges. The cost is waived when a claim for long-term care benefits is submitted and approved.
Example (69 year old):
$100,000 x .0103 =$85.83 monthly charge
For agent use only. 19
Inflation Protection Endorsement
Increases the daily benefit amount to help keep pace with the rising cost of long-term care services.
It requires additional premiums to be added annually if the annuity value has not increased the Maximum Daily Benefit by 5%.
This endorsement may only be elected at issue.
There is an additional charge of .029% for this endorsement that is deducted monthly as a percentage of the annuity value.
For agent use only. 20
Living Care® Annuity
Inflation Protection Endorsement
How it works
Hypothetical Initial Premium: $100,000
Hypothetical Net Interest: 3.25%
For agent use only. 21
Living Care® Annuity
Non-forfeiture Benefit – Shortened Benefit Period Endorsement
Under the Shortened Benefit Period Allowance, United of Omaha will pay:
100% of the sum of all Monthly Deductions, excluding any waived Monthly Deductions, or;
30 times the Maximum Daily Benefit in effect at the time of termination.
For agent use only. 22
Taxation
Interest income earned in the annuity accumulates on a tax-deferred basis.
A 10% federal tax penalty may apply for withdrawals taken prior to age 59 ½ unless an exception applies.
Distributions of income from the annuity, at death or otherwise, are taxable as ordinary income.
Withdrawals taken in tax years beginning prior to January 1, 2010 that pay qualified long-term care benefits and charges may be taxable as ordinary income, and if the contract owner is not at least 59 ½, may be subject to the 10% tax.
Due to the Pension Protection Act of 2006January 1, 2010 the Living Care® Long-Term Care Rider is intended to be tax-qualified long-term care insurance. At that time rider charges and benefits will no longer be taxed due to the provisions of The Pension Protection Act of 2006.
For agent use only. 23
Living Care® Annuity – Henry’s Story
Henry – Age 65Wants to protect his wife and son from informal care-giving
Wants to protect his overall retirement plan assets
Wants to leave an inheritance for his son
For agent use only. 24
If Henry needs long-term care…
Henry, Age 65, $100,000 Single Premium, Assumed Interest Rate of 3%
For agent use only. 25
If Henry doesn’t need long-term care…
For agent use only. 26
Underwriting and
New Business Processing
For agent use only. 27
Application
Section A – General InformationSection B – Beneficiary InformationSection C – Contract Information Section D – Health Insurability Questions (Knock out type)Section E – Other Coverage / ReplacementSection F – LTC Rider BenefitsSection G – Signatures
General FormsAnnuity FormsLong-Term Care Forms
For agent use only. 28
Items to be reviewed:
Assets above $300,000 total and under $2.5 MM total
Net worth
Amount of investment
Investment time frame
Goals of investment
Surrender charges/bonuses (replacing)
Suitability
For agent use only. 29
Living Care® Annuity
12 Pre-qualifying Health Questions
Phone Interview – Health, memory and general questions
MIB and Pharmaceutical Review
Goal is to make underwriting decision based on this information
If any question is answered “yes”, the applicant will not be eligible for coverage through the Living Care Annuity.
If applicant has been previously declined for LTC coverage, they will be unable to purchase this annuity.
Underwriting and New Business Processing
For agent use only. 30
Personal Health Interview
All clients are required to complete the Health Interview
Review the “Preparing your client for the Health Interview Guide”
At the Time of Application, complete the Interview with the “LifePlans” Interviewer (1-800-544-4326; 8 a.m. – 8 p.m. EST Monday – Friday)
If unable – schedule a time or leave a message for when LifePlans can contact the client
For agent use only. 31
Personal Health Interview
Agent provides the following to the Life Plans Interviewer…
Agent NameAgent TNClient NameClient TNClient Address (incl. City, State and Zip) Client Social Security NumberClient DOBClient Gender
***Make aware any need for re-schedule and/ or interpreter at this time ***
For agent use only. 32
Personal Health Interview
RULE #1 - You MUST call to schedule the interview before you leave the house
RULE #2 - You will be given a Reference # you MUST write this on page 1 of the App (Provide to client as well)
If After Hours :
1. Leave Voicemail at 1-800-544-4326 or
2. Send an E-mail to [email protected] with all info from previous slide listed. You will receive an E-mail confirmation back.
For agent use only. 33
Personal Health Interview
Reminder: LTC Underwriting DOES NOT see the case until ALL the Pharmaceutical checks, MIB and Interview are completed
(They won’t even know the case exists until those are completed)
For agent use only. 34
Living Care® Annuity
Example - HT / WT Differences
LCA LTC I - II
For agent use only. 35
Living Care® Annuity
Scrubbing the application:
Current forms required and completed correctly
Signatures where needed
Underwriting pre-qualifications
Agent appointment requirements met
Underwriting and New Business Processing
For agent use only. 36
Sales and Marketing
For agent use only. 37
Who to talk to?
• Children of retirees or aging parents• Empty nesters• Boomers preparing for retirement• Retirees• CD owners• Widows
For agent use only. 38
Who can benefit from Living Care® Annuity?
Individuals ages 40-79 who have total assets above $300,000 and most likely under $2.5 million
Target buyers ages 55-79
Individuals who do not currently have existing long-term care coverage
Individuals seeking a “better economic value” than paying stand-alone long-term care premiums
Target Market
For agent use only. 39
Target Market
Who can benefit from Living Care® Annuity? (cont.)
Individuals with retirement needs including asset maximization, longevity risk management and income management with guarantees
Individuals concerned about the risk of long-term care expenses and their impact on their overall retirement plans
Individuals concerned about burdening their family members with the emotional and financial effects of informal care-giving
Individuals wanting to set limits, or boundaries, on the impact long-term care risks can have on their overall retirement assets, family members, and long-term care choices
For agent use only. 40
The Keys to Selling Annuities
Let them know what you do
Ask meaningful questions to:Find out what they want to do in retirement
Uncover the money
Determine their needs – income or growth?
Discuss the benefits in terms they understand
For agent use only. 41
Let ‘em know what you do
“One of the areas we do a lot of work in is helping retirees protect their way of life.”
For agent use only. 42
Ways to Open the Door
What does your retirement look like?
Is there anything special you want to do?
Do you know anyone who lived into their 90s?
Have you had a personal experience dealing with LTC?
How did that impact you or your family?
Are you interested in tax deferral?
Do you keep money in CDs?
Who do you have your LTC with?
How much money have you set aside for LTC expenses?
Are you worried about outliving your money?
For agent use only. 43
Senior Age Fact Finder
For agent use only. 44
Senior Age Fact Finder
For agent use only. 45
Where’s the Money?
Bank accounts – savings, CD’s and money marketsOther deferred annuities (1035 exchange)Sale of an asset – residence, business, propertyInheritance, life insurance proceedsAssets that would better serve your client if they were “repositioned”
For agent use only. 46
Repositioning Assets
Not creating a bill - we’re using readily available assets in annuities, CD’s and savings accounts to:
Protect wealth
Provide guaranteed income
Provide dollars for long-term care expenses
Secure a legacy
Achieve peace of mind
For agent use only. 47
Repositioning Assets
For agent use only. 48
Self Funding LTC
Long-Term Care RiskSelf-Funding of Long-Term Care
For agent use only. 49
Self Funding
Alternative
For agent use only. 50
Long-Term Care Risk
Self-Funding of Long-Term Care
Don’t Forget they will have ….
1. Taxation issues
2. Lost Opportunity Cost
On the Money they use to “Self Fund”
Make your Money work “Smarter” for you.
For agent use only. 51
LTC Add-on
Added protection for non-partnership states, the Living Care Annuity is a great add-on product to an existing LTC strategy or LTC stand alone policy that has a short benefit period such as a 3-year or 5-year option.
If the base LTC policy benefits are depleted, the Living Care Annuity provides an extra pool of dollars to tap into if faced with an extended nursing home stay.
For agent use only. 52
Retirement Planning Checklist
What’s your client’s vision of retirement? Budget – base income, lifestyle income Income sources Asset inventory Risk tolerance Health
For agent use only. 53
Winflex
For agent use only. 54
For agent use only. 55
For agent use only. 56
For agent use only. 57
Marketing Materials
For agent use only. 58
Living Care® Annuity Provides You:A more efficient approach to limiting, or setting boundaries on, longevity and long-term care risks
The ability to better position a portion of your clients’ retirement assets
Simple hybrid annuity concept that uses a 3x factor
Quick and easy underwriting process
Innovation from an A+ carrier
The foundation of a strong Mutual of Omaha brand
Excellent Compensation
Superior Sales Support from an Industry Leader
Begin Today
For agent use only. 59
Compensation
Ages 40 – 75: 6%
Ages 76 – 79: 4½%
For agent use only. Not for the general public.For agent use only. Not for the general public.
Thank You for ALL You Do !!!
For agent use only. 61
Disclaimer
Annuities are underwritten by United of Omaha Life Insurance Company, Mutual of Omaha Plaza, Omaha, NE 68175. Not available in all states. Coverage may vary by state. Exclusions, limitations and reductions may apply.
For agent use only. Not for use with the general public.
For agent use only. 62
Disclaimer
Thanks
Craig Taylor
Regional Sales Manager
402.351.3708 (phone)
402.321.4691(Mobile)