Your Business Advantage

1. Your Business Advantage LTCI as a Key Person Benefit 8530-05-06

2. “Having adequate long-term care insurance is the single most influential determinant of whether an individual will have a financially secure retirement” Employee Benefit Research Institute study, Employee Benefit News, 2/1/04

3. Overview • Purchase during high income years • Deductible as a business expense, including spouse • Benefits generally Tax-Free • You chose who to cover • Premiums may be fully paid before retirement

4. Why Plan Now • We are living longer! • Long Term Care is Expensive • LTC Costs increasing faster than inflation • Health changes may make you ineligible* *LTCi Sales Strategies, March 2005.

5. The Cost of Care* Average yearly cost of nursing home care * Health Spending Projections Through 2013, Office of the Actuary, Centers for Medicare and Medicaid Services, February, 2004 +MetLife Mature Market Institute – Market Survey of Nursing Home & home Care Costs, September 2005

6. How Will You Pay? • Health Insurance • Medicare • Medicaid • Self-insure • your own, after tax dollars! • Savings • 401k

7. What impact could this have on your retirement savings? • Assumptions • Current Ages 52 / 50 • Five Years of LTC, beginning age 72, @ $200 current cost • 5% Compound Inflation - LTC Costs • 6% Net Return on Investments, 0% Tax and other adjustments

8. LTCI As Key Person Compensation • Your business deducts the full premium for employees and spouse • includes C Corp Owner-Employee • You can discriminate by class • Premiums do not count as income • Benefits are generally tax free • Can elect a 10Pay (IRC Sec. 105(b) and IRC Sec. 106(a) Exclusions)

9. LTCI and the Self-employed Health Insurance Deduction

10. LTCI and the Self-employed Health Insurance Deduction* Deducts eligible premium amount for owner and spouse Form 1040 line 29 Example: Bonus Distribution: $100,000 (Includes LTCI Premium of $5,191) Insured age 55, Spouse age 52 Deduction for Eligible Premium = $1060 x 2 = ($2,120) AGI = $97,880 *sole proprietorships, partnerships, S corporations and most limited liability companies (IRC Sec. 162(l) Deduction)

11. Sample Plan Design • $200/day NH & HCBC • Compound benefit 5% • 90-day elimination period • Lifetime benefits • Indemnity benefits • 10 pay option

12. Joint Rates, 10Pay Annual Cum. 10yr. Daily Benefit Annual Benefit Age Premium Premium At Age 85 At Age 85 40/40 $12,000 $120,000 $1,800 $656,270 45/45 $11,000 $110,000 $1,408 $513,920 50/50 $10,500 $105,000 $1,104 $402,960 55/55 $12,000 $120,000 $864 $315,460 60/60 $12,500 $125,000 $678 $247,470 LTCI: “Walk away fringe benefit” *Rates are for illustration purposes only.

13. How to Choose a Long Term Care Company • Financials • Ratings • Engineering • 10 Pay • Indemnity Benefit • Consumer Value • Premium • Features

14. How does LTCI Help? • Helps Relieve the Financial Burden • Business Owner enjoys tax deduction during high income years • Helps Pay for Care • Avoid paying with personal. After-tax dollars • Helps Protects assets • Living Expense • Retirement Savings • Legacy

15. How does LTCI Help? • Relieves the Emotional Burden • Puts a Plan in Place • Avoids crisis planning • Provides an Advisor to help • Develop a plan of care • Locate care & service programs in your area • Arrange and monitor care • Helps ease the burden on the family • Reduces Caregiver Stress • Can remove potential sibling/family conflict • Participate in care, rather than provide it

16. Long Term Care Insurance allows your retirement plan to execute for the purpose for which it was intended.