Brought to you by the Nationwide ® Advanced Consulting Group Discussing LTC with Men and Women: How...

Brought to you by the

Nationwide® Advanced Consulting Group

Discussing LTC with Men and Women: How Their Needs and Product Solutions May Differ

NFM-11795AO.1 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

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Disclosure• This presentation was not intended by the author to be used, and cannot be

used, by anybody for the purpose of avoiding any penalties that may be imposed on you pursuant to the Internal Revenue Code. The information contained herein was prepared to support the promotion, marketing and/or sale of life insurance contracts, annuity contracts and/or other products and services provided by Nationwide Life Insurance Company.

• Federal tax laws are complex and subject to change. Neither the company nor its representatives give legal or tax advice. Please consult with an attorney or tax advisor for answers to your specific questions

• Keep in mind that as an acceleration of the death benefit, the LTC rider payout will reduce both the death benefit and cash surrender values. Care should be taken to make sure that your clients' life insurance needs continue to be met even if the rider pays out in full. There is no guarantee that the rider will cover the entire cost for all of the insured's long-term care as these vary with the needs of each insured. The long term care rider may be known by different names in different states, may not be available in every state and has an additional charge associated with it. A life purchase should be based on the life policy, and not optional riders or features. The cost of a rider may exceed the actual benefit paid under the rider.


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Disclosure• As your personal situations change (i.e., marriage, birth of a child or job

promotion), so will your life insurance needs. Care should be taken to ensure these strategies and products are suitable for long-term life insurance needs. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in the policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs.

• This information assumes that the life insurance is not a modified endowment contract, or MEC. As long as the contract meets the non-MEC definitions of IRC Section 7702A, most distributions are taxed on a first-in/first-out basis. Surrender charges may apply to partial surrenders. Loans and partial surrenders from a MEC will generally be taxable, and if taken prior to age 59 ½, may be subject to a 10% tax penalty. Loans and partial surrenders will reduce the cash value and the death benefits payable to your beneficiaries, and withdrawals above the variable free amount will incur surrender charges. If your contract were to lapse with a loan outstanding, the loan amount in excess of basis will be treated as a distribution and all or a portion will be subject to income tax.


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Disclosure• Riders are offered at an additional cost and may not

be available in all states. A life insurance purchase should be based on the life insurance contract, and not optional riders or features.

• Life insurance is issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio, member of Nationwide Financial®.

• © 2013, Nationwide Financial Services, Inc. All rights reserved.• Not a deposit • Not FDIC or NCUSIF insured

• Not guaranteed by the institution

• Not insured by any federal government agency • May lose value


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Agenda• The client appointment and discussion• Long-term Care solutions and how they work• The differences between men and women:

– Longevity– Claims– Product sales– Motivation

• Factors for determining the right product• Case study – The Split Sale• Other considerations that affect product choice


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1American Association for Long-term Care Insurance (AALTCI) 2011 Sourcebook2 American Association for Long-term Care Insurance (AALTCI) 2012-2013 Sourcebook

• What does “Long-term Care” mean to clients?

• The wrong opening will kill the discussion• Avoid the term “long-term care” in the beginning

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Opening the LTC Discussion


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Opening the LTC Discussion

80% of people who start long-term care at

home stay at home1

80% of people who start long-term care at

home stay at home1

Home Health Care

Assisted Living

Nursing Home

• 34% of nursing home claims end in recovery or return home for care2

• Approximately 87% of claims last 3 years or less2

• Chance of having a LTC claim of 5 years plus is 4 ½ %2

1American Association for Long-term Care Insurance (AALTCI) 2011 Sourcebook2 American Association for Long-term Care Insurance (AALTCI) 2012-2013 Sourcebook

There is some positive news!


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LTC Solutions to Consider and how they work


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Long-term Care Stand Alone Policy

PremiumPremiumLTConly

• Premium paid for life - short pays available– Full waiver of premium generally included

• Pool of money (purchased as a daily benefit) only available for long-term care – No death benefit

• Most customizable and can be the least expensive of the solutions– Customize features, benefit periods, etc. (which can add expense)– But subject to unlimited premium hikes

• Purchases the most LTC• If you don’t use the policy, or very little of it, there is little or no return

– Note: Return of premium is offered at a significant additional charge


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Life Insurance with LTC Rider(Living Benefits)

Premium

• Pay premium – variety of premium schedules• One pool of money for LTC and/or Death Benefit• Entire amount is paid out, either as LTC or DB• Guaranteed Residual DB paid*• Provides the smallest pool of LTC benefits• Provides the most Death Benefit , avoids loss of premium

– IRR can be a good selling point with this product

* Not available in NY, KY, and V.I. with Nationwide products


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Asset Based (Linked) LTC Policy

Premium Guaranteed

ROP

Premium Guaranteed

ROP

•Guaranteed Return of Premium included• Large amount of total LTC coverage• Inflation feature at an additional charge• Death Benefit is greater than premium paid• Guaranteed residual DB is paid

Residual DB

Residual DB

#1

#2

• Single premium – (short pays)

• 1st bucket – used first• 2nd bucket – for LTC only• LTC benefit - 6 yrs total


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• Offering the same identical LTC solution to both spouses may not be ideal. Could result in:– Wife purchasing LTC coverage, but husband does not

– Both purchasing coverage, but optimal solution not reached

• Wife is more likely to want and buy LTC – AND - want her husband to purchase coverage as well.

• Husband is more likely to not want LTC coverage for himself, but willing to purchase LTC for wife

• How can the ideal solution for both be reached?

Which Product Do You Offer?


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Differences Between Men and Women in Reference

to Long-term Care


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During the Client Appointment

• Be aware of the interest each spouse shows - or the lack of interest - when LTC is brought up

• Watch the interaction of the couple– Is the wife acting passively, or is she vocal and engaged?

– Is the husband deferring to his wife, or taking charge?

– Are they starting to agree, or are they at opposite ends?

• Clue into why each does or does not show interest– Wife wants coverage at any cost – spare children of burden

– The husband sees LTC as a waste of money


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How Men and Women Differ in –

Longevity

1American Association for Long-term Care Insurance (AALTCI) 20112 Why Women May Live Longer than Men”, SHAPE Magazine, November 10,2011


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Long-term Care Claims

American Association for Long-term Care Insurance (AALTCI) 2012-2013 Sourcebook

Claims consistent among all LTC product solutions


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Long-term Sales - Traditional


With Traditional Stand Alone LTC Policies

Who is purchasing long-term care policies?


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Long-term Sales - Hybrid


With HYBRID Long-term Care Solutions

Men appear to gravitate to solutions with life insurance benefits


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• Men tend to use more logic in the decision• Women tend to see LTC more emotionally• A good solution for a woman may not be a good

solution for a man of similar age and net worth– It’s not just about a good solution, it’s also about a

palatable solution

How Men and Women Differ in – Motivation


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Desired Outcome Determines Solution

• Traditional LTC Policies– Wants the most coverage for the least amount of premium

– Willing to risk price hikes

– May be for people with income but few assets

– Doesn’t care about a death benefit or cost recovery

• Asset Based LTC (also known as Linked Benefits) – Wants a lot of LTC coverage & features similar to traditional LTC policies

– Looking for cost recovery, return of premium

– Fine with single premium/short pays - they have assets to re-position

• Life Insurance with a LTC Rider (Living Benefits)– Have LTC concerns

– More concerned with estate enhancement or other life insurance need

– Value flexible payment options, not giving up use of the asset at once

– Looking for cost recovery – or - a rate of return on the DB


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Presenting LTC Solutions

What is the common thread between men and women?

CONSEQUENCES• People instinctively don’t want to believe they’ll need long-

term care– Women are more aware of, and fear consequences to their children

• physically – emotionally – job impact - impact to family and marriage

– Men may need to be shown , but do fear the financial consequences • Spouse’s financial security • Inheritance – hard earned assets depleted

American Association for Long-term Care Insurance (AALTCI) 2012-2013 SourcebookNFM-11795AO.1 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

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Presenting LTC Solutions to Men

• Men are less likely to purchase LTC than women

• But statistics show a man is more likely to purchase LTC coverage if a death benefit is part of the plan

• Statistics also show that men are more likely to purchase the product with the highest death benefit

• Positioning DB as a conservative non-correlated asset in the portfolio with IRR – and LTC – may be more palatable



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Presenting LTC Solutions to Women

• Women are more accepting that LTC coverage is important

• Women are more concerned with having enough coverage

• Positioning a product that supplies a longer benefit period and a larger benefit pool may be most palatable

*Source: American Association for Long-term Care Insurance (AALTCI) 2012-2013 Sourcebook


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Case Studies and Other Considerations

The following case studies are hypothetical in nature and are not intended to represent actual client cases.


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The Split Sale – Liquidity and Assets Available

Assumptions:• SHE is worried about:

– being a burden to family,– exhausting hard earned assets for LTC expenses– wanting good LTC coverage - BUT - doesn’t want to “waste” money

• HE :– believes he’ll die first and not need care– agrees she may need care one day– doesn’t want to waste money– wants maximum legacy for heirs– wants a palatable rate of return

Solution:• Asset (linked) LTC policy for her

• Life Insurance with LTC Rider for himNFM-11795AO.1 FOR BROKER/DEALER USE ONLY—NOT FOR USE WITH THE PUBLIC

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The Split Sale – Liquidity and Assets Available

Why this works:• SHE gets:

– the full coverage she wants

• Longer benefit period, inflation protection

– cost recovery via death benefit if LTC is not needed

– no risk repurposing of asset with guaranteed return of premium

• HE gets: – Life/LTC Plan that pays whether he needs care or not

• More money for wife’s care or legacy for heirs

– Annual premium - so another asset is not tied up

– Rate of return on death benefit he is comfortable with


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Other combinations and considerations

• Generally, women need more coverage– When dividing an asset, allocating more for the wife’s LTC coverage should be considered

• When a couple has disposable income but no assets– Stand alone LTCi or Life/LTC combo may be better choice– Annual premiums may work better with the budget

• When a couple has assets but limited disposable income– Asset based product may be better choice– Repositioning an asset won’t impact income obligations


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Other combinations and considerations

•When the couple has a budget to consider– Sell a stand-alone LTC policy to one person

• Generally to the wife – she’s twice as likely to go on a LTC claim• Less likely to “waste “ the policy

– Sell asset based LTC or Life/ LTC rider to the other person• Generally to the husband• Cost recovery - or full leveraged death benefit more important• Less likely to go on LTC claim, so death benefit is good feature

•When one is uninsurable– An indemnity product for the insurable provides flexibility– If insured is on claim, excess benefits can be used to help pay expenses of the other spouse.


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In Summary

• Women generally:– have different LTC needs and concerns– more likely to understand the need for LTC– are easier to position LTC to

• Men generally:– don’t think they will need LTC– may agree their wife will– are more likely to purchase LTC with a death benefit

• LTC products are like different types of fruit– trying to choose one piece of fruit for both may prove fruitless– the best plan for a couple may be a fruit basket


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Questions?

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