Long Term Care

1. Long Term Care The Vision and the Mission of Long Term Care Insurance Peter S. Gelbwaks, CLTC President, Gelbwaks Insurance Services, Inc. www.gelbwaks.competer@gelbwaks.com 800-826-1686

2. Objective Give participants a clear understanding of the Long Term Care insurance industry as it stands in our country today by providing details on product choices, the status of the marketplace, current events taking place nationally and the trends we see for the future.

3. LTCi Vision To increase the amount of covered Americans with Long Term Care Insurance from 9% to 40% within the next 5 years.

4. LTCi Mission To educate America on the need for Long Term Care insurance, and help them understand that LTCi need not be complicated nor as expensive as it is currently perceived

5. The Good News… • National acceptance of the LTCi need • Carriers putting LTCi in the forefront • New and more exciting marketing concepts • Stabilization of the industry

6. Worksite Evolution The business/worksite market is the fastest growing segment of the Long Term Care insurance industry

7. Increased Media Exposure

8. 2009 LTC Industry Update • National Awareness Campaign • Deficit Reduction Act/Partnership

9. National Awareness Campaign“Own Your Future” • Pilot program that began in 5 states in 2005: Arkansas, Idaho, Nevada, New Jersey & Virginia • Endorsement from each governor to buy LTCi • Phase II rolled out in 4 new states in 2006: Kansas, Maryland, Rhode Island & Washington • Phase III added 7 more states for the fall of 2006 and 2007: Georgia, Michigan, Missouri, Nebraska, South Dakota, Tennessee & Texas • Phase IV introduced 2 additional states in March of 2008: Ohio & Pennsylvania • Phase V brought on Iowa, Kentucky and Washington D.C. in the Fall of 2009 bringing the total to 21 states

10. To date, the Campaign has had an overall response rate of over 9%, and two of the recent States, Ohio and Pennsylvania, have experienced response rates of 21% and 23% respectively. This response rate is significantly higher than comparable private sector direct mail campaigns Campaign exceeded original expectations, both in terms of consumer interest and initiating long-term care planning actions. Based on this success, Congress provided additional support for long-term care education initiatives by establishing the National Clearinghouse for Long-Term Care Information under the Deficit Reduction Act. National Awareness Campaign“Own Your Future”

11. Deficit Reduction Act • Signed by the President on February 8, 2006 • Severe Medicaid restrictions imposed • States authorized to adopt “Partnerships” • Legislation that provides even more incentive to plan • The market potential is huge

12. Partnerships • Partnership between Medicaid & the insurance company • Allows the consumer to qualify for Medicaid if needed after using up his/her LTCI policy benefits with some protection of assets • Each state must adopt individually by filing a Medicaid Plan Amendment • Allows for reciprocity as well as inflation incentives

13. The Average Buyer • Individual LTCi – 58 years old • Group LTCi – 41 years old

14. LTCI Product Design Trends & Features for the Boomers • Combination Contracts • Survivorship Features • Limited Pay Options • Innovative Inflation Options • Cash Benefit Concept

15. Combination Contracts Some of the newest products in the marketplace today combine Life Insurance with Long Term Care insurance

16. Survivorship Survivorship riders have become very popular in the marketplace. They are especially attractive when selling to the younger client. The definitions differ from company to company.

17. Limited Pay Options Limited pay options are available with many carriers. This the wave of the future… • 10 pay • Pay to age 65 • Single pay

18. Innovative Inflation Options The benefit increase rider can drastically influence the amount of benefit that is paid. There are many approaches in the marketplace. Compound CPI Compound 2xCap GPO with conversion to Compound 3% Compound

19. Reimbursement vs. Cash Reimbursement contracts as compared to indemnity based contracts, how does each work? One type of contract is typically based upon a “pool of money” concept, while the other is based upon a flat amount of payment.

20. CASH Reimbursement Reimbursement vs. Cash (cont.) Pros Allows for total flexibility Easy to understand Very few restrictions Similar to Disability Insurance Cons Not offered by many carriers Costly Pros Widely available Competitively priced Cons Extremely complex Specific coverage limitations Does not easily allow for future trends Language differs from carrier to carrier

21. Who buys CASH LTCi?

22. Under 55 Market : Future Trends in Caregiving The future unknowns are a very real issue for the younger buyer of LTCi. When we have “robot care” in 30 or 40 years, will it be covered? We want to make sure that the policies being presented today address this through one of the following:

23. Under 55 Market:If they can’t buy DI There are five main reasons why a young buyer may be interested in a CASH Benefit LTCi plan vs Disability insurance

24. Professionals Selling some form of Cash LTCi plan to this group is key. It gives them the flexibility and control that they want. Many professionals (especially physicians) are maxed out on the amount of DI that they can purchase. CASH LTCi is a perfect supplement.

25. High End Lifestyle Many prospects live extremely high end lifestyles and are accustomed to always having the best that life has to offer. For these people, CASH LTCi is the right choice.

26. Current Economic SolutionCash LTCI- The Lifesaver • 2009 - $102,200 Tax Free • Become Disabled- Lose the Home? • Freedom and Flexibility • $3 to $4 K – Makes a Difference • Add on to current coverage

27. What Can & Does Happen to Younger People? Some examples… • Stroke • MS • Car Accidents • Skiing Accidents

28. The Cost of Waiting Sample Policy: $200 a day, 5 year benefit, 90 day EP, 5% simple inflation • A 55 Year old married female in preferred health would have an annual premium of $1356.42* • A 65 Year old married female in preferred health would have an annual premium of $2492.88* *FL Rates Quoted – John Hancock Custom Care 2009

29. The Gelbwaks Family Long Term Care Dilemma Will it be YOUR Family’s Story?

30. Actual Claim Statistics • 8.25 million Americans now own LTCi • 400,000 new Americans obtained LTC coverage in 2008 • $8.5 billion in LTC insurance claims paid (2008 estimate) • 180,000 Americans paid LTC insurance benefits (2008) • 42% of all LTCi benefits were allocated for Home Care (2008) • 27.5% of all LTCi benefits were allocated for Assisted Living (2008) • 30.5% of all LTCi benefits were allocated for Nursing Home (2008) • The largest claim to date has exceeded $1.2 million (still open – 10yrs) Source: AALTCI 2009 Sourcebook for Long Term Care Insurance Information

31. In Conclusion… More than ever before in the history of LTC insurance, opportunity is knocking at the door. We have excellent, state-of-the-art products with financially stable insurance carriers who are extremely committed to the sale of Long Term Care insurance, agents and brokers who are knowledgeable and educated on the variety of options available, in addition to the huge potential marketplace of buyers that has barely been tapped. There is a need for this product and the time is now!