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Hybrid Long-Term Care Policies: How Do They Work and The Client Profile

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FOR LIFE Hybrid Long-Term Care Policies: How Do They Work and The Client Profile Timothy Lockwood Lincoln MoneyGuard Specialist Not a deposit Not FDIC-insured Not insured by any federal government agency
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FOR LIFE Hybrid Long-Term Care Policies: How Do They Work and The Client Profile Timothy Lockwood Lincoln MoneyGuard Specialist Not a deposit Not FDIC-insured Not insured by any federal government agency Not guaranteed by any bank or savings association May go down in value The Lincoln National Life Insurance Company LCN What is a hybrid life long-term care product? Also commonly known as combo or linked benefit products Life insurance policy with a death benefit (that can be accelerated for long-term care) Provides additional LTC benefits after the death benefit has been exhausted for long-term care needs Tax Status: Death Benefit is generally received by the beneficiary income tax-free under Section 101(a)(1) of the Internal Revenue Code (IRC) and The Long-Term Care benefits paid are not taxed as income under IRC Section 104(a)(3). In general gross income does not include amount received through accident or health insurance for personal injuries or sickness. 2 The appeal of hybrid solutions Common hybrid product features Underlying life policies are typically either whole life or universal life Majority are reimbursement policies LTC benefits Return of premium options (may be lifetime or limited period) Death benefits Benefits whether or not your clients need long-term care LTC benefit periods range from 2 years to lifetime benefits Benefits may be current assumption or guaranteed Inflation protection Elimination period (some 90 days some none) Covered expenses (from home healthcare to facilities care) Premium payment options (single-pay, short-pay and lifetime) 3 The appeal of hybrid solutions What consumers like This feels like a win/win. You don t lose! Consumer, age 50 to 65 with $100K+ income It s over and done with I don t have to deal with it anymore Consumer, age 50 to 65 with $100K+ income Source: LIMRA, Combination Products, Target markets Single premium solutions: Clients with large retirement nest eggs High net-worth clients Why hybrids? Asset leverage Return of premium* Benefits whether or not your clients need LTC Inflation protection* (*Available for an additional charge) 5 Target markets Flexible premiums: Highly-compensated young professionals Sandwich generation Nearing retirement funding via an annuity Why hybrids? Asset leverage Return of premium* Benefits whether or not your clients need LTC Inflation protection Flexible premium options* (*Available for an additional charge) 6 Lincoln MoneyGuard Reserve Plus One payment Healthy Female Age 60, Alabama Excess cash or CD One $100,000 payment Internal rate of return (IRR) at age 80 on LTC reimbursement: 7.2% Death benefit: 2.7% Maximum benefit is $6,618/month, or $79,416/yr. for 6 yrs. $476,481 income tax-free reimbursements for qualified LTC expenses 1 $158,827 income tax-free death benefit 2 The death benefit would be reduced by any loans, withdrawals and benefits paid. $100,000 Full return of premium is available after year 5. 3 The money returned will be adjusted for any loans, withdrawals and benefits paid, and will have tax implications. Hypothetical example only. Maximum amounts shown. Benefit amounts will vary by client s age, health status, and gender, except where gender and marital status do not affect rates or benefits. 1 LTC reimbursements are generally income tax-free under IRC Section 104(a)(3). 2 Beneficiaries can receive an income tax-free death benefit under IRC Section 101(a)(1). 3 Through the Enhanced Surrender Value Endorsement, available at issue on all single premium policies and flexible premium policies for ages Endorsement contains complete terms and conditions. Return of premium vesting schedule Months 0 6 = 100% Months 7 12 = 90% Year 2 = 92% Year 3 = 94% Year 4 = 96% Year 5 = 98% Year 6 = 100% Lincoln MoneyGuard Reserve Plus is a universal life insurance policy with a Convalescent Care Benefits Rider (CCBR)* that accelerates the specified amount of death benefit to pay for covered long-term care expenses. An Extension of Benefits Rider (EOBR)* to continue long-term care benefit payments after the entire specified amount of death benefit has been paid. The money back guarantee is featured through the Enhanced Surrender Value Endorsement (ESVE), included in the policy cost for all single premium policies and for flexible premium policies for issue ages The additional surrender benefit provided will be adjusted by any loans/loan interest/loan repayments, withdrawals taken, or claim payments made. The cost of riders will be deducted monthly from the policy cash value. The insurance policy and riders have limitations, exclusions, and/or reductions. Additionally, long-term care benefit riders may not cover all costs associated with long-term care costs incurred by the Insured during the coverage period. Issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, on Policy Form LN870 with the Convalescent Care Benefits Rider* (CCBR) on Rider Form LR870, an optional Enhanced Surrender Value Endorsement (ESVE) on Endorsement Form B10465F, an optional Extension of Benefits Rider (EOBR)* on Rider Form LR871, and an optional Nonforfeiture Benefit Rider (NFO) on Rider Form LR872. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. Products and features, including benefits, terms, and definitions, may vary by state. Additionally, long-term care benefit riders may not cover all costs associated with long-term care costs incurred by the insured during the coverage period. Not available in New York. *State variations apply Lincoln National Corporation Visit LincolnFinancial.com Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. Not a deposit Not FDIC-insured Not insured by any federal government agency 8/12 Z01 Order code: MGR-NALB-PPT001 Not guaranteed by any bank or savings association May go down in value 8
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