Prudential Long-Term Care Insurance Selling to Businesses and Associations

1. Prudential Long-Term Care InsuranceSelling to Businesses and Associations Steven Ellis, Regional Sales Manager For Financial Professional Use Only – Not for distribution to the general public.

2. Prudential Financial Strength and Stability • From a name you know and trust • 130 years in Financial Services Industry • $568 billion in assets under management* • 15 million customers worldwide* • Prudential name and distinctive “Rock” logo are among the most widely recognized brands in the US Solid Financial Strength Ratings** A.M. Best A+ Standard & Poor’s AA- Moody’s Aa3 Fitch AA * As of 6/30/2006. **As of February 2006. A.M. Best ratings range from A++ (Superior) to F (In Liquidation); Standard & Poor’s ratings range from AAA (Superior) to CCC (Extremely Vulnerable); Moody’s ratings range from Aaa (Exceptional) to C (Lowest Rated); Fitch ratings range from AAA (Negligible Risk Factors) to DD (Company under Order of Liquidation).

3. Prudential Long-Term Care Insurance • Total LTC Solutions • 20 years in LTCi business with no rate increases • Innovative and comprehensive products • Markets we service: • Individual • Multi-life • True Group • Centralized 800# handles all producer LTC inquiries

4. Multi-life Opportunity • The “multi-life” LTC market is one of the fastest growing components of LTCi sales • Executive Carve Outs • Employee Benefits • Opens door for cross-selling approach • Prudential offers LTCi products to: • Individuals (small employer groups) • Associations • Large corporations

5. Impact of Caregiving on Employers • The National Alliance for Caregiving and AARP Survey1 found: • 1 out of 4 U.S. households are involved in caregiving • 2 out of 3 caregivers are employed fulltime • 1 out of 3 caregivers lose up to 16 hours of work per month due to caregiver responsibilities 11Caregiving in the U.S. National Alliance for Caregiving (NAC) and AARP. May, 2005.

6. Impact on Employer & Employee • Result of care-giving: • Businesses lose up to $33 billion annually1 • Absenteeism • Decline in productivity • Interruptions (emergencies and calls) • Decreased morale and motivation • Unwillingness to travel & inability to relocate • Employees are physically, emotionally, & financially drained • 30% of employees with parent age 65+ miss work2 • 31% quit work3 • 67% adjust work schedules4 • Impacts retirement & educational saving • Can place career limits during “key wage earning” years1 2/3The State of Aging and Health in America 2004. 1 National Alliance for Caregiving

7. The Financial Costs of “Informal” Caregiving • 1 out of 2 caregivers provide more than 8 hours of caregiving per week.1 • 17% provide more than 40 hours per week.1 • Estimated loss to “informal” caregiver: • $25,494 in social security benefits • $67,202 in pension benefits • $566,433 in wages Total lifetime loss = $659,1392 1 Source:The State of Aging and Health in America 2004. http://www.caregiver.org/factsheets/selected_caregiver_statistics.html.

8. Why LTC Insurance? • One of the newest employee benefits being used to attract and retain top-talent • Awareness and interest in LTC is increasing: • Media attention • LTC Awareness programs • Baby boomers seeing parents needing help • Facing their own futures • Employers can have a positive effect on employees in planning for their future needs • Help diminish the negative effects of caregiving • LTC market is untapped with only 3% of small businesses offering LTCi

9. LTC Advantages for Businesses • Group discounts • Tax advantages • Deductible premiums • No income / tax-free benefits • Executive benefit perk (carve outs) • Employers pay premiums for select employee groups • Benefits received by employee are not taxable • Employee owns policy and it’s portable • Method of providing a “raise” to key employees • Multiple “employee” classes with no nondiscrimination requirements* • Ease of administration (list billing) *Source: http://www.irs.gov/publications/p15b/ar02.html#d0e731.

10. LTC Tax Advantages For Individuals • Premium payments • Unreimbursed medical expenses and LTCI premium deductible to extent they exceed 7.5% of Adjusted Gross Income (AGI) • Benefits taxed • Excluded from income as long as insured is chronically ill* and benefits are used for qualified LTC services Example: Based on AGI of $60,000 & Annual Premium of $2,400 $1,060 Determine age bracket (58 yr individual) $6,000 Unreimbursed medical expenses (excluding LTC premium) $7,060 $4,500 Deduction allowed is the portion that exceeds 7.5% of AGI ($60k x 7.5%) $2,560 Total Allowable Deduction + - *As defined by the Internal Revenue Code.

11. Maximum Tax-Deductible Premiums (2006) 2006 Eligible Premiums Age 40 or below $280 Age 41 to 50 $530 Age 51 to 60 $1,060 Age 61 to 70 $2,830 Age 71 and above $3,530

12. Tax Advantages for C-Corporations • Premiums are 100% deductible as business expense • Fully deductible to firm, not taxable to employee • Spouse premiums are fully deductible to the firm, not taxable to the employee

13. What to Ask C-Corporations • Why do you want to pay for LTC yourself when your company can pay it for you? • Corporate paid premium after taxes is approximately 60% of actual premium (assume 40% personal and corporate tax bracket) • Example: • $8,000 premium is discounted to $4,800 • Personal after-tax paid premium approximately 140% of actual premium • $8,000 premium would cost $11,200 in after-tax dollars

14. Business Owner C-Corp: Couple $300/day,10-year, 90/180 EP, Monthly, 150 HHC (LTC3SM), Return Of Premium (LTC3), $2,190,000. Total initial benefits pool of money created for both… Keeping It Simple, Selling to a business owner $33,224* Annual 10 Pay Premium$13,290Estimated C-Corp Deduction (-40%) $19,934 Estimated net out of pocket cost to business $199,340 Total 10 pay net out of pocket cost to business $332,240 Gross premium paid by business $332,240 Amount paid to insured’s estate at death, minus any claims. *Please note – Premiums are LTC3. LTC3 is not approved for use in NY.

15. Tax Advantages: • S-Corporations • Premiums are deductible for owners, limited to an age-based amount • Fully deductible to firm, not taxable to employee • Greater than 2% of owners, eligible premium is deductible above the line*; all other fully deductible to firm, not taxable to employee • Spouse premiums are fully deductible to firm, not taxable to employee * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder. * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

16. Tax Advantages: • Partnerships • Fully deductible to firm, not taxable to employee • Eligible premium is deductible above the line* • Spouse premiums are fully deductible to firm, not taxable to employee • Premiums reported as guaranteed income on Schedule K-1 • LLCs • Fully deductible to firm, not taxable to employee • Eligible premium is deductible above the line* • Spouse premiums are fully deductible to firm, not taxable to employee • Income reporting depends on Corp or Partnership status * Above the line – treated as an adjustment to gross income on the Individual Income Tax Return Form 1040 (I.e., before itemized deductions) for sole proprietor, partner, LLC shareholder, >2% S Corp shareholder.

17. Business income * $350,000 Eligible (ILTC) Premium (2006 limit) treated as self-employed health insurancededuction for 61 – 70 ages: ($2,830) Adjusted gross income: $347,170 Tax savings on $2,830 Fed (28%): $792 Fed (33%): $934 State (5%) $142 State (5%) $142 Total savings: $934 Total savings: $1,076 * Schedule C for sole Proprietor, K-1 for Partner/Shareholder Financial Impact on Sub S, Partnership, LLC Based on $5,000 Annual Premium.

18. The Solution: Prudential Multi-Life Programs True Group Employer-Sponsored Affiliations

19. Employer Sponsored Program (ESP) Highlights • Employer group size requirement • 10 to 500 lives (must work minimum of 30+ hours per week) • Minimum participation requirement • 10 lives (including spouses) • Discounts • 10% discount to employees & spouse/partner • 5% discount to family members* • No maximum on discounts • Preferred health rate class not available to employees under ESP • Modified underwriting (employees ages 18 - 70*) • Customized plan design for every client • Buy-ups available * Parents, in-laws, aunts, uncles, siblings, grandparents, grandparents in-law, and children ages 18 and older.

20. ESP Plan Design • Options with modified underwriting • $50 - $300 Facility: daily, monthly, or cash benefit • 50%, 75% or 100% home care • Benefit periods: 2, 3, 4, 5, or 6 years • Elimination period: 60, 90, 120, 180, or 365 days • All Inflation options available • Accelerated premium options available • 10 pay • Paid-up at 65 • Buy-ups available • Lifetime, shared care rider, etc.

21. Benefits: Part of Every LTC3SM Policy • Restoration of benefits • Calendar day elimination period • Waiver of premiums • Cash alternative • Home support services benefit • Alternate plan of care benefit • International coverage benefit • Care management (including a Private Care Consultant benefit)

22. Optional Riders* • With modified underwriting • Flexible cash benefit rider • Cash benefit rider • Return of premium upon death benefit • Available as buy-up with full underwriting • Shared care benefit • 150% home care daily benefit • Joint waiver of premiums benefit • Survivor waiver of premiums benefit * For the Prudential LTC3 product only. Contact your Regional Sales Manager with questions on LTC By DesignSM.

23. ESP Modified Underwriting Questions • Do you use: walker, oxygen, respirator, or kidney dialysis? • Within past 12 months have you: used adult day care, needed home health care, or been medically advised to enter or been confined to nursing home, assisted living facility, or other LTC facility? • Do you currently need assistance or supervision by another person in performing any of the following activities: bathing, eating, toileting, bowel or bladder control, moving in and out of bed or chair, dressing, or taking your medication? • Have you had, do you currently have, or have you ever been diagnosed as having any of the following medical conditions: • Organic Brain Syndrome, Dementia, Senility, Confusion, Memory Loss, or Alzheimer’s Disease? • Metastatic Cancer (cancer that has spread from original site or location?) • Multiple Sclerosis (MS), Muscular Dystrophy, Multiple Transient Ischemic Attacks (TIA), Parkinson’s Disease, Amyotrophic Lateral Sclerosis, Stroke, or Cerebrovascular Accident (CVA)?

24. ESP Billing Options • List bill • Monthly payment sent to Prudential by mail or electronic transfer • All participants premium is sub-totaled on one bill • Direct bill • Employees deducted monthly with or without EFT • Quarterly, semi-annual, or annual available

25. Initiating A Request for an ESP Case

26. Opening Doors • Who are your clients? • Do they own a business? • Are they executives with a company? • Do they belong to professional or personal associations? • What associations do you or someone in your personal network belong to? • Can you conduct a seminar?

27. Who to partner with? Property/Casualty Agents Accounting Firms Trade Associations Employee Benefit Consultants Chambers of Commerce Corporate Attorneys What industry to target? Favorable: Higher Education Physicians Law Firms Accounting Engineering Challenging: Retail Hospitals Manufacturing Finding the Right Businesses

28. Why Prudential? Effortlessly Handling All of Your Long-Term Care Insurance Needs Long-term care insurance is underwritten by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102 (800-732-0416). Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ, USA and its affiliates. For Broker/Producer Use Only. Not to be distributed to the public.

29. Questions & Answers Steven Ellis, Regional Sales Manager 866-829-4012 (toll-free)