Teleconference power of gpq 03-14-12

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Teleconference power of gpq 03-14-12

  1. 1. The Power of Prudential’s LTC3SM Guaranteed Purchase Option James Zuelsdorf LTC Regional Sales Manager March 14, 20120203375-00002-00For Financial Professional/Training Use Only – Not for distribution to the general public.
  2. 2. Objective To help you help your clients protect their retirement plans while making long-term care insurance affordable when they’re eligible 2For Financial Professional/Training Use Only – Not for distribution to the general public.
  3. 3. Agenda  Understanding the LTC3SM Guaranteed Purchase Option (GPO)  Learn how purchasing a long-term care (LTC) insurance policy with GPO at ages 40 and 50 compares to: • purchasing at age 62 • other inflation protection options • self-insuring  Summary of GPO benefits 3For Financial Professional/Training Use Only – Not for distribution to the general public.
  4. 4. Discussion Points  Medical advances = Longevity = Extended care  Extended care = $ + Family + a written plan  Do you know anyone who has received extended care?  Where are the dollars coming from?  Where would you want to receive care?  Who would be part of the care? What’s your written plan for care?  Planning = Discussion Product = DebateThe greatest threat to the most well thought out and executed retirement plan is not dying. 4For Financial Professional/Training Use Only – Not for distribution to the general public.
  5. 5. Obstacles to Extended Care Planning  Eligibility  Affordability  Complexity (the more you know the less you need to say)  Availability  The more you know Avoid? Assume? Transfer? 5For Financial Professional/Training Use Only – Not for distribution to the general public.
  6. 6. Expand Your MarketsMaximize Health and Wealth For Financial Professional/Training Use Only – Not for distribution to the general public.
  7. 7. The Market Opportunity: 40s and 50s  Allows for more robust plans  Today’s Life styles  Personal experiences  Government messages  Firewall for your retirement plan  When is the time to protect your plans? Protect wealth when you are building wealth 7For Financial Professional/Training Use Only – Not for distribution to the general public.
  8. 8. Today and Tomorrow  Chronological Age vs. Perspective Age 60 is the new ? 40  Nominal Value vs. Real Value Consider the $1 today = 20 years from today? .55 reducing future 30 years from today? .41 impact of increasing the premium (Assuming a 3% inflation rate) Today: Nominal Value = $4,000, Real Value = $4,000 In 20 years: Nominal Value = $4,000, Real value = $2,214 In 30 years: Nominal Value = $4,000, Real Value = $1,647 8For Financial Professional/Training Use Only – Not for distribution to the general public.
  9. 9. GPO: The Problems and the Concerns  Increasing cost?  Future affordability?  Inadequate future coverage?  Missed options?  Circumstances change – stop increases?  Uncertainty?  Cumulative cost? 9For Financial Professional/Training Use Only – Not for distribution to the general public.
  10. 10. Guaranteed Purchase Option (GPO) Features  Increase offers are made every three years – producers will be paid first-year commissions on these increases  Daily Benefit will increase by 5% compound for the previous three years on each policy anniversary date  No limit to the number of times client declines the increase  No evidence of insurability is required  Increases continue even while on claim  Can be upgraded to any automatic inflation option on a one-time, guaranteed- issue basis at attained age premiums on a policy anniversary Benefits  Reassurance: client is always guaranteed to acquire additional coverage  Control: client always receives advance notice of each proposed benefit increase and always has the ability to decline in writing  Continuity: declining an increase offer does not affect future increase offers 10For Financial Professional/Training Use Only – Not for distribution to the general public.
  11. 11. Example: GPO Purchased at Age 40 – NJ* Age Annual Monthly 150% HHC 40% CAB for Pool for One Premium Benefit for for One One for Both One (monthly) (monthly) 40 $2,255 $6,000 $9,000 $3,600 $438,000 43 $2,632 $6,946 $10,419 $4,168 $507,051 46 $3,076 $8,041 $12,062 $4,825 $586,964 49 $3,616 $9,308 $13,962 $5,585 $679,491 52 $4,318 $10,775 $16,163 $6,465 $786,582 55 $5,258 $12,474 $18,711 $7,484 $910,580 58 $6,508 $14,440 $21,660 $8,666 $1,054,091 61 $8,214 $16,716 $25,074 $10,030 $1,220,246Compare to: Ages 61/61, Standard I, $500 DBA, 100% HHC ($15,000 monthly), Premium = $9,808 19% more in premium:*NJ rates – Age 40, Preferred, 30% Spouse Discount , $200 DBA, 6YR BP, 150% HHC, 90-Day EP, Monthly, GPO,Shared Care Benefit What did you assume? 11 For Financial Professional/Training Use Only – Not for distribution to the general public.
  12. 12. Delaying the Purchase vs. Continuing the GPO – NJ Delay purchase of LTCi until age 61* Age Annual Monthly 150% HHC 40% CAB Pool for Premium Benefit for for One for One One for Both One (monthly) (monthly) 61 $ 9,808 $15,000 N/A $6,000 $1,095,000 -OR- Continue GPO from purchase at age 40** Age Annual Monthly 150% HHC 40% CAB Pool for Premium Benefit for for One for One One for Both One (monthly) (monthly) 64 $10,700 $19,351 $29,027 $11,611 $1,412,594 *NJ rates – Age 61, Standard I, 30% Spouse Discount , $500 DBA, 6YR BP, 100% HHC, 90-Day EP, Monthly, GPO, Shared Care Benefit **NJ rates – Age 40, Preferred, 30% Spouse Discount , $200 DBA, 6YR BP, 150% HHC, 90-Day EP, Monthly, GPO, Shared Care Benefit 12For Financial Professional/Training Use Only – Not for distribution to the general public.
  13. 13. Example: GPO Purchased at Age 50 – NJ* Age Annual Monthly 150% HHC 40% CAB for Pool for One Premium Benefit for for One One for Both One (monthly) (monthly) 50 $2,614 $6,000 $9,000 $3,600 $438,000 53 $3,094 $6,946 $10,419 $4,168 $507,051 56 $3,716 $8,041 $12,062 $4,825 $586,964 59 $4,550 $9,308 $13,962 $5,585 $679,491 62 $5,738 $10,775 $16,163 $6,465 $786,582Compare to: Ages 62/62, Standard I, $350 DBA ($10,500 monthly), 150% HHC ($15,750 monthly), Premium = $9,977 73% more in premium: What did you assume? *NJ rates – Age 50, Preferred, 30% Spouse Discount , $200 DBA, 6YR BP, 150% HHC, 90-Day EP, Monthly, GPO, Shared Care Benefit 13For Financial Professional/Training Use Only – Not for distribution to the general public.
  14. 14. Delaying the Purchase vs. Continuing the GPO – NJ Delay purchase of LTCi until age 62* Age Annual Monthly 150% HHC 40% CAB Pool for Premium Benefit for for One for One One for Both One (monthly) (monthly) 62 $ 9,977 $10,500 $15,750 $6,300 $766,500 -OR- Continue GPO from purchase at age 50** Age Annual Monthly 150% HHC 40% CAB Pool for Premium Benefit for for One for One One for Both One (monthly) (monthly) 68 $10,214 $14,440 $21,660 $8,664 $1,054,091 This *NJ rates – Age 62, Standard, 30% Spouse Discount , $350 DBA, 6YR BP, 150% HHC, 90-Day EP, Monthly, GPO, Shared Care Benefit **NJ rates – Age 50, Preferred, 30% Spouse Discount , $200 DBA, 6YR BP, 150% HHC, 90-Day EP, Monthly, GPO, Shared Care Benefit 14For Financial Professional/Training Use Only – Not for distribution to the general public.
  15. 15. Plan Designs – Age 40/40 Example: Annual Premium Comparison* Plan A: GPO $2,225 Plan B: 5% Compound 2X Max $3,604 Plan C: 5% Compound No Max $8,008 *New Jersey, Age 40/40, 6 Yr. BP, 90-Day EP, $200 DBA, 150% HHC, Preferred, 2- Spouse Discount, Monthly, Shared Care Benefit – In year 26, GPO premiums paid will exceed 5% compound premiums paid 15For Financial Professional/Training Use Only – Not for distribution to the general public.
  16. 16. Plan Designs – Age 50/50 Example: Annual Premium Comparison* Plan A: GPO $2,614 Plan B: 5% Compound 2X Max $4,847 Plan C: 5% Compound No Max $8,976 *New Jersey, Age 50/50, 6 Yr. BP, 90-Day EP, $200 DBA, 150% HHC, Preferred, 2- Spouse Discount, Monthly, Shared Care Benefit – In year 22, GPO premiums paid will exceed 5% compound premiums paid 16For Financial Professional/Training Use Only – Not for distribution to the general public.
  17. 17. Insure or Self-Insure? Age Sample LTCi LTC Self- Pool of money Daily cost # days Number of premium for Insurance created by LTCi for nursing covered from days covered one insured* Fund policy facility LTC “self- from 6 Yr. contribution compound @ care insurance” LTCi policy & compound 5% fund @ 5% net 40 $1,127 $935 $438,000 $200 5 2,190 45 $1,316 $6,855 $507,051 $255 27 1,986 50 $1,808 $16,257 $679,491 $326 50 2,086 55 $2,629 $30,683 $910,580 $416 74 2,190 60 $3,254 $52,848 $1,054,91 $531 100 1,986 * NJ, 90-Day EP, $200 DBA, 150% HHC, GPO, 6 Yr. BP, 2-Spouse Discount, Preferred, Monthly, Shared Care Benefit 17For Financial Professional/Training Use Only – Not for distribution to the general public.
  18. 18. GPO vs. Compound Inflation Age 40 GPO – NJ, started @$200 DBA 5% Compound – NJ, started@$100 DBAYear GPO 150% POM Premium Year 5% No 150% POM Premium for 2 for 2 MMB HHC Max MMB HHC1 $6,000 $9,000 $438,000 $2,254 1 $3,000 $4,500 $219,000 $4,00415 $10,775 $16,163 $786,582 $4,318 15 $5,940 $8,910 $433,598 $4,00420 $14,440 $21,660 $1,054,091 $6,508 20 $7,581 $11,372 $553,413 $4,00425 $14,440 $21,660 $1,054,091 $6,508 25 $9,675 $14,513 $706,297 $4,00430 $14,440 $21,660 $1,054,091 $6,508 30 $12,348 $18,522 $901,426 $4,00435 $14,440 $21,660 $1,054,091 $6,508 35 $15,760 $23,640 $1,150,473 $4,004 GPO: starts at twice Compound – Premium increases every 3 years, assume stop exercising option in future 5% Compound No Max: Coverage increases each year – Premium remains constantAssumptions: Age 40, H/W Preferred, 6 Yr. BP, 90-Day EP, 150%HHC, 2-Spouse Discount, Monthly, Shared Care Benefit 18For Financial Professional/Training Use Only – Not for distribution to the general public.
  19. 19. GPO vs. Compound Inflation Age 50 GPO – NJ, started @$200 DBA 5% Compound – NJ, started@$100 DBA Year GPO 150% POM Premium Year 5% No 150% POM Premium for 2 for 2 MMB HHC Max MMB HHC 1 $6,000 $9,000 $438,000 $2,514 1 $3,000 $4,500 $219,000 $4,488 15 $10,775 $16,163 $786,582 $5,738 15 $5,940 $8,910 $433,598 $4,488 20 $14,440 $21,660 $1,054,091 $10,214 20 $7,581 $11,372 $553,413 $4,488 25 $14,440 $21,660 $1,054,091 $10,214 25 $9,675 $14,513 $706,297 $4,488 30 $14,440 $21,660 $1,054,091 $10,214 30 $12,348 $18,522 $901,426 $4,488 GPO: starts at twice Compound – Premium increases every 3 years, assume stop exercising option in future 5% Compound No Max: Coverage increases each year – Premium remains constantAssumptions: Age 50, H/W Preferred, 6 Yr. BP, 90-Day EP, 150%HHC, 2-Spouse Discount, Monthly, Shared Care Benefit 19For Financial Professional/Training Use Only – Not for distribution to the general public.
  20. 20. GPO: The Problems, the Concerns, and Now… the Solutions  Increasing cost? Human Capital, Nominal Value vs. Real Value  Future affordability? Human capital, stop exercising options at 61 or 62, and you have a very significant benefit for today and for tomorrow  Inadequate future coverage? The 150% HHC handles that now and later – Home Care is the focus now and later  Missed options? Negative elections (no action needed)  Circumstances change? Change inflation option without evidence of insurability, skip options = Flexibility  Uncertainty? GPO provides certainty  Cumulative cost? See next slide and get ready to be surprised 20For Financial Professional/Training Use Only – Not for distribution to the general public.
  21. 21. Cumulative Cost: The Real Story GPO vs. 5% Compound No Max  NJ age 40/40 – can exercise options through age 64, (25 years) and cumulative cost is less  NJ age 50/50 – can exercise options through age 70, (21 years) and cumulative cost is less Assumptions: $200 DBA, 150% HHC, 6 Yr. BP, 90-Day EP, Monthly, 2-Spouse Discount, Preferred, Shared Care Benefit 21For Financial Professional/Training Use Only – Not for distribution to the general public.
  22. 22. Another GPO Thought/Opportunity Shared Care can now be issued with GPO! In age 60 range: Plan Design thought  Shared Care + GPO = Plan A -or-  Shared Care + Simple or Compound Inflation = Plan B More thoughts:  Buy more now for less options later  The sequential sale Plan A with GPO eliminates the affordable objection! 22For Financial Professional/Training Use Only – Not for distribution to the general public.
  23. 23. Consequences of Transferring the Risk vs. Assuming the Risk  Early years – client doesn’t purchase because of cost (assumption and hope: they did not require care in their 40s or 50s)  Later years • Client doesn’t purchase because of cost • Potential for one of two or both to be rated or uninsurable  Impact on Retirement plan, Estate Plan, Investment plan, Tax plan, “Life Plan:” a possible lifetime of planning in chaos  Emotional and physical impact on family: immeasurable An affordable plan established through the planning years and maintained through the retirement years would have avoided the inevitable consequences of needing care and not having a funded plan.Small financial investment vs. financial burden – which one could your client and their family live with? 23For Financial Professional/Training Use Only – Not for distribution to the general public.
  24. 24. The Power of GPO Eligibility, Affordability, Availability  Affordable premiums during working years  Getting the best classification clients will ever get and keeping the best classification they will ever get  GPO offers continue on claim  Premium is waived while on claim  Prior offer declines do not affect future offers  One-time option to change to another inflation option 24For Financial Professional/Training Use Only – Not for distribution to the general public.
  25. 25. The Power of GPO Eligibility, Affordability, Availability  GPO offers are calculated on a 5% compound basis  Meaningful benefit for a manageable premium from the beginning  Human Capital during working years allows for exercising options  Can be related to disability – dependence on ADL assistance and cognitive supervision could extend into retirement years  Long-term care is a pillar of any retirement plan  Affordable premiums in retirement 25For Financial Professional/Training Use Only – Not for distribution to the general public.
  26. 26. Meaningful Plan + Manageable Premium CAB + 150%HHC + GPO The Unbeatable Combination 26For Financial Professional/Training Use Only – Not for distribution to the general public.
  27. 27. LTC3SM long-term care insurance policy is issued by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102 (800-732-0416). This coverage contains benefits, exclusions, limitations, eligibility requirements and specific terms and provisions under which the insurance coverage may be continued in force or discontinued.Prudential is authorized to conduct business in all U.S. states and the District of Columbia. Product availability varies by state. Coverage is issued under policy number GRP 113096; however, policy numbers may vary by state. For Financial Professional/Training Use Only – Not for distribution to the general public.

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