1 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION LTC vs. CI ABRs Navigating through the Alphabet Soup PRESENTED BY: Name Title Policies issued by American General Life Insurance Company, member of AIG HIGHLY CONFIDENTIAL – DO NOT COPY. All the information contained herein is confidential and proprietary and belongs solely to AIG. The unauthorized use, reproduction or disclosure of this information is prohibited.

2 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  No one wants to think about being disabled during retirement.  It will happen to “other people”..... the reality is much different Why Bother Understanding LTC and CI Differences It Won’t Happen to Me... Or Will It? Centers for Medicare & Medicaid Services 11/14/2014

3 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION And if it Does, Can You Afford it? Fidelity.com/inside­fidelity/individual­investing/fidElity­estimates­couples­retiring­in­2013­ will­need­ ­to­pay­medical­expenses­throughout­retirement, 2013

4 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Where Will You Get Long-Term Care if Needed? Congressional Budget Office “Rising Demand for Long-Term Services and Supports for Elderly People” June 2013 Seven in ten (70%) of people with Alzheimer’s disease and other dementias live at home. 11/14/2014

5 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION What is a Chronic Illness? Chronic illness care, which is also called long-term care, is needed for 2 reasons: Needing supervision because of a cognitive impairment: such as Alzheimer’s disease or other causes of dementia. Inability to perform the activities of daily living (ADLs): Bathing, continence, dressing, eating, toileting, and transferring in or out of a bed or a chair. B O D Y M I N D

6 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Examples include:  Fractures  Joint replacement  Broken leg  Heart attack  Heart failure  Minor stroke  Diabetes  Complications of cancer treatment Short-Term Conditions

7 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Examples include:  Alzheimer’s disease  Serious stroke  Frailty at older age  Crippling arthritis  Cancer  Parkinson’s disease  Brain and spinal cord injury  Degenerative neurologic diseases Long-Term Conditions

8 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION CHRONIC ILLNESS RIDERSLONG-TERM CARE RIDERS Diagnosis Severe cognitive impairment or unable to perform 2+ ADLs Duration Usually permanentAt least 90 days Payment types IndemnityReimbursement or Indemnity Requirements Indemnity Reimbursement requires facility confinement Benefit types Face amount acceleration Face amount acceleration & Extension Benefit payments Tax favored if meet per diem requirements (Current $330 per day) Other features May waive policy monthly deductions while on claim Can have inflation adjustment Distribution Life agents can sell Requires A&H License & LTC certification Chronic Illness vs. Long-term Care Riders Benefit Comparisons

9 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION CHRONIC CARELONG-TERM CARE Use Section 101(g) onlyUse Section 101(g) & 7702(b) Pays only after permanent diagnosis for most riders Pays for both temporary or permanent diagnosis Amount above IRS limits are taxable Amount above IRS limits are not taxable if reimbursement Possible waiver of ALL policy deductions while on claim LIMITED to NO waiver of deductions available while on claim  For both chronic care and long-term care, a licensed health care practitioner determines qualification (not the insurance carrier) Chronic Care vs. Long-term Care

10 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Reimbursement products Provides a benefit if the client meets the requirements of the policy and spends money on a qualified service. Pros clients receive a benefit equal to their total cost, up to a predetermined maximum Cons: rider usually requires confinement in a facility and does not cover home care or family care. Also issues with ILIT-owned contracts Indemnity products Provides a benefit once client meets the requirements of the policy. Pros: product does not require clients to receive services in a care facility Pros: client can use the benefit to pay medical or non-medical expenses, or to enhance their savings. Reimbursement vs. Indemnity Products

11 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  Clients can accelerate all or part of their death benefit in the event of a critical, chronic, or terminal illness, depending on the carrier.  No-cost accelerated benefit payout and what client receives is based on change in life expectancy after diagnosis of a covered illness or some other discount calculation (varies by carrier)  No additional underwriting  Significantly shorter life expectancy = larger payout  Moderately impacted life expectancy = smaller payout  Depending on carrier, clients may accelerate up to 100% of the policy death benefit up to a lifetime maximum Understanding Different Chronic Care Rider Designs Discounted Death Benefit Basics – No Up-front Cost

12 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION  No charge until used  No additional underwriting  Less than 100% of the death benefit  Benefits accrue with interest  Only charged interest if you use it Understanding Different Chronic Care Rider Designs Lien Method – No Up-front Cost

13 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Accelerated Access Solution ® Understanding Different Chronic Care Rider Designs Dollar for Dollar Benefit Payout - Up-Front Cost

14 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Benefits of Accelerated Access Solution: Chronic Illness 101(g)  No LTC license necessary  Two out of six ADLs; or severe cognitive impairment  Deemed to be permanent Indemnity Benefit  No receipts  Spend benefits on anything Flexible Benefit Base  Benefit = 50% up to 100% of death benefit  $50,000 minimum up to $1,500,000 maximum  Full waiver of monthly deductions

15 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Benefits of Accelerated Access Solution: Chronic Illness Flexible Monthly Benefit  IRS Per Diem capped at 2% per month  IRS Per Diem capped at 4% per month  IRS Per Diem with No Cap! Maximum Monthly Benefit = Total Benefit 12 IRS caps the maximum daily rate each year. The 2015 maximum is $330/day or $9,900/month. Subsequent years may be higher.

16 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION White Paper: Taking an In-Depth Look Long-Term Care Benefits vs. Chronic Illness Benefits Long-Term Care Benefits vs. Chronic Illness Benefits On demand Training: LTC vs CI OverviewLTC vs CI Overview Accelerated Access Solution Resources: o Overview (PPT) Overview (PPT) o Top reasons to sell Top reasons to sell o FAQ FAQ o Consumer brochure Consumer brochure o Sales Ideas (multiple flyers) o Eye Opening Health care Statistics Eye Opening Health care Statistics o Long-Term Care Statistics Long-Term Care Statistics aig.com/Optionality More Information Available

17 FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION Important Information Policies issued by: American General Life Insurance Company (AGL), Policy Form Numbers 15442, ICC , REV0815, 13717, ICC , ICC , 14779, 14904, ICC ; Rider Form Numbers 13972, 13600, ICC ;13601, 82001, CA WMDR Rev0914. Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG). AGL does not solicit business in the state of New York. Products may not be available in all states and product features may vary by state. These product specifications are not intended to be all-inclusive of product information. State variations may apply. Please refer to the policy for complete details. There may be a charge for each rider selected. See the rider for details regarding the benefit descriptions, limitations and exclusions. Guarantees are backed by the claims paying ability of the issuing insurance company. AGLC MiN REV1015 ©2015. All rights reserved.