Long Term Care

Peter S. Gelbwaks, CLTCPresident, Gelbwaks Insurance Services, Inc.www.gelbwaks.com peter@gelbwaks.com

800-826-1686

The Vision and the Mission of Long Term Care Insurance

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.

LTCi Vision

To increase the amount of covered Americans

with Long Term Care Insurance from 9% to 40%

within the next 5 years.

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

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

Worksite EvolutionThe

business/worksite market is the

fastest growing segment of the

Long Term Care insurance industry

Increased Media Exposure

2009 LTC Industry Update National Awareness Campaign

Deficit Reduction Act/Partnership

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

National Awareness Campaign“Own Your Future”

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.

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

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

The Average Buyer

Individual LTCi – 58 years old

Group LTCi – 41 years old

LTCI Product Design Trends & Features for the Boomers

Combination Contracts Survivorship Features Limited Pay Options Innovative Inflation Options Cash Benefit Concept

Combination ContractsSome of the newest

products in the marketplace

today combine Life Insurance

with Long Term Care insurance

SurvivorshipSurvivorship 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.

Limited Pay OptionsLimited pay options are available with many

carriers. This the wave of the future… 10 pay

Pay to age 65 Single pay

Innovative Inflation OptionsThe 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

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.

CASH

Reimbursement

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

Reimbursement vs. Cash (cont.)

Who buys CASH LTCi?

•Future Unknowns•Disability Look-A-Like

Under 55 Market

•Total Flexibility•Maxed out on DI

Professionals

•Want the best there is•Limited Exclusions

High End Lifestyle

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:

100% Cash

Hybrid Cash

Alternate Plan of Care

Under 55 Market:If they can’t buy DI

Occupation Income

Health Avocation

Cost

There are five main reasons why a young buyer may be interested in a CASH Benefit LTCi plan vs

Disability insurance

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.

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.

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

What Can & Does Happen to Younger People?

Some examples…

Stroke MS Car Accidents Skiing Accidents

The Cost of WaitingSample 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

The Gelbwaks Family Long Term Care Dilemma

Will it be YOUR Family’s Story?

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

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!