1. Extended Care Planning “Tackling the 800 Pound Gorilla”
John Clarkson
Allstate Insurance Agency

2. Disclaimer
These materials are provided for educational purposes only and do not constitute the solicitation of an insurance product to the public. Not to be used with securities-registered products or for products funded by distributions from or owned within an IRA or employee benefit plan. Products and programs offered through Crump are issued by various insurance companies and may not be available in all states. Policy terms, conditions and limitations will apply. Not all applicants will qualify for coverage. You can obtain more information about insurance products by contacting your insurance agent. Crump makes no representation regarding the suitability of a particular insurance product to your needs. Neither Crump nor the insurance carriers provide tax or legal advice regarding these products or programs. You should consult your own tax, legal and other advisors before purchasing an insurance product.

3. Why Plan for Extended Care?

4. “There are only four kinds of people in this world…
Those who have been caregivers
Those who currently are caregivers
Those who will be caregivers
Those who will need caregivers.”
- Rosalynn Carter*, 1997
[Read slide to provide relevance of long term care to everyone.]
*Carter, Rosalynn. Speech given as Honorary Chair of Last Acts, National Program of the Robert Woods Johnson Foundation, 13 February 1997.

5. This is not a discussion about the risk of you needing care, since you may never need it. However, it is essential to have a discussion about the consequences on those you love and promised to take care of, if you ever did need care.
Planning is the key.
Funding the plan is an option. For most people that means Long Term Care Insurance.

6. Doesn’t Medicare pay for Long Term Care costs?
Research Shows
Average National Costs:
Nursing home - $6,844 (semi-private), $7,698 (private) per month
Assisted living facility - $3,628/month
Home health aide services - $20.25/hour
3%+ - average inflation in nursing home costs since 2011
Doesn’t Medicare pay for Long Term Care costs?
Let’s take a look at some of the average national costs associated with this type of care:
Nursing home - $6,844 (semi-private) - $7,698 (private) per month
Assisted living facility - $3,628 per month
Home health aide services - $20.25 per hour
3% (+) – average inflation in nursing home costs since 2011
But wait… you may be thinking, doesn’t Medicare pay for long term care costs?
Genworth – “Cost of Care” app, 2017

7. What is Average?
We just discussed the average national costs and while the statistics are important, average is just a mid-point in a specific set of data. It is important to remember that some data will fall far below the average and some data will be well above the “average”.

8. How Would The Extended Care
Who Provides Care?
How Would The Extended Care
Be Paid?
What would the affects of these costs have on family members, spouse, children and finances…
Who might be providing care… family? How long could they provide care?
What is the impact on the care giver?
Is this a second marriage? - Have the children discussed providing care?
And how would the extended care be paid?

9. Ways to Pay for LTC Costs
Self Fund
Risk is in the hands of the owner
Timing may be a concern
Traditional Long Term Care
Ongoing premiums – not guaranteed, no return of premium
“Pay as you go” or “Lose it if you don’t use it”
Partnership Protection
Less Expensive
Self fund – risk is in (your or your clients’) hands and timing may be a concern
Traditional LTC policies
Ongoing premiums are not guaranteed and can increase, there’s also no return of premium – “pay as you go” or “lose it if you don’t use it”
Hybrid (asset based) LTC policy (investment)
Guaranteed benefits and no additional premium requirements
Flexibility and control – live, die, quit
Hybrid LTC Policy (Asset Based Investment)
Guaranteed benefits, no additional premium requirements
Combined protection and control – live, die, quit
All guarantees are subject to the claims paying ability of the issuing insurer. Details of product used available upon request.

10. Loss of future income possibilities
Self Fund
Tax implications
Market timing
It’s true, wealthy clients may be able to cover the cost of care, however have they considered these factors?
Possible Concern with Timing
Tax implications of funding LTC out of pocket may mean using qualified money or income from current investments, which have the potential to significantly increase taxes.
Market Timing - Being forced to sell things like stocks, due to the need for cash flow at the wrong time may result in significant loss.
Liquidity - Selling property at the wrong market timing can result in significant losses.
Loss of Future Income Possibilities - If you’ve sold your future income possibilities, you have a future income loss as well.
Liquidity
Loss of future income possibilities

11. Traditional LTC Policy
Monthly/daily benefit
Benefit duration
Inflation protection
Shared Care Rider
Services - home healthcare, assisted living, nursing home care, adult day care, hospice
Potential tax-advantaged LTC premium and benefits
Disadvantages:
Use it or Lose it
Premium not guaranteed
Highly Customizable – Flexible Design
(You Choose)
Highly customizable – flexible design
You choose:
Monthly/daily benefit – ex. - $150/day or $5,000/month
Elimination period (deductible) – ex. 90 days, 180 days
Benefit length – ex. 2 to 6 years
Inflation protection – ex. 5% compound, 3% compound, no inflation
Shared Care Rider – joint pool of month that can be used by either spouse
Premiums can be paid annually, semi-annually, quarterly or monthly
Covers a variety of services, such as home healthcare, assisted living, nursing home care, adult day care, hospice
Possible disadvantages – use it or lose it, premium not guaranteed

12. Hybrid LTC Policy (Asset Based Investment)
LTC policy + death benefit = leverage
Premiums payment method (1,3,5,7,10 years)
Potential tax-advantaged LTC benefits
Tax-free death benefit
Enhanced surrender value endorsement
Inflation options available
Services - home healthcare, assisted living, nursing home care, adult day care, hospice
Reallocation of assets
Combined
(Linked Benefits) – Live, Die, Quit Solution
Combined (linked benefits) Solution – use it, die with it or walk away
Combination LTC policy with a death benefit
Premiums funded with a lump sum or flexible short pay (3, 5, 7 or 10 years)
Elimination Period
Provides potential tax-advantaged long term care benefits and more leverage for your clients’ (or your) LTC dollars
Offers a tax-free death benefit if all or some of the LTC benefits are not used
Enhanced surrender value endorsement – guarantees at least your clients’ (or your) original premium amount, should they (or you) want to walk away from the contract
Inflation options available
Covers a variety of services, such as home healthcare, assisted living, nursing home care, adult day care, hospice
Reallocation of assets

13. Consider This
What is your current plan or strategy to pay for the cost of health care in retirement? …What does that plan look like?
What would the impact be to you, your spouse/family, business and your retirement income―if you needed help to get through your day?
If I gave you a sticky note, what asset would you write on that note that you would use first to pay for the care?
I would like to discuss a risk a lot of (clients, like yourself or your clients) may face…
What is the your current plan or strategy to pay for the cost of health care in retirement and what does this plan look like?
What would the impact be to you, your spouse/family, business and your retirement income – if you needed help to get through your day?
If I provided you a sticky note, what asset would you place on that note to use first to pay for the care?

14. Questions?

15. Next Steps… (if presenting to clients)
Contact your Crump representative and schedule a meeting
(if presenting to advisors)
Contact your Crump representative to learn more and how to profile clients within your book of business to look for opportunities