Long Term Care

Take Charge of Your Future Robert T. Billingsley, J.D. Financial Representative Long Term Care Insurance 29-5045-01 LTC (0607)

Concerns About Financial Security Take Charge of Your Future! What happens if I am unable to earn an income? How will inflation, market volatility and taxes affect my savings? How long will I live? Will I have enough money to retire comfortably? What type of legacy will I be able to leave? What happens if someone in my family experiences an event requiring long-term care? Can I help my kids with their education costs?

Today’s Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

What is Long-Term Care? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Long-term care are those services provided to individuals suffering from any chronic condition.

Understanding Long-Term Care Continuum of Care Most Dependent Person Most Independent Person Home Health Care Community Services Alternate Living Facility Nursing Home Generally, long-term care starts at home.

Understanding Long-Term Care Source: National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services, http://www.longtermcare.gov/LTC/Main_Site/Understanding_Long_Term_Care/Basics/Basics.aspx. Paper copies available upon request. Long-term care insurance may not pay for all expenses incurred. This statistic includes services or short durations that would not qualify for benefits from a LTC policy and services for which the LTC policy does not provide benefits. 40% 60% Age 65+ Age 18-64 Adults Receiving Long-Term Care LTC is not just a retirement issue.

Why is LTC a Growing Concern? ,[object Object],[object Object],[object Object],LTC is becoming a more important consideration.

[object Object],[object Object],Longer Life Expectancy Source: National Center for Health Statistics, “Health, United States, 2006 with Chartbook on Trends in the Health of Americans”, Hyattsville, MD: 2006, page 176 People aren’t necessarily living independently longer. 80 75 70 65 60 55 50 45 40 Average Life Expectancy 1900 1950 1960 1970 1980 1990 2000

Changing Family Demographics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Changes in family dynamics can put pressure on care.

Cost of Long-Term Care Current vs. Projected Annual Cost of LTC (2006 to 2036) $73,000 $315,502 $32,292 $139,564 $70,810 $306,037 National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services, http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx. Paper copies available upon request. Future cost based on 5% annual increase $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Home Health Aide (8hrs/day) Assisted Living Facility Private Room (Nursing Home) Costs are significant today and will increase with inflation.

What Are Perceived Options? Most prefer that their families provide support, and not be required to provide care. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Disability Income Insurance Designed to protect your ability to earn income $5,000 $9,500 ,[object Object],[object Object],[object Object],Regular, on-going (mortgage, car payment, groceries) Disability affecting income and requiring care Expenses increase with a disability affecting income and requiring care. Monthly Expenses ,[object Object],$10,000 $8,000 $6,000 $4,000 $2,000 $0 Disability Insurance Only

Medicare (Health Insurance) ,[object Object],[object Object],[object Object],Medicare and health insurance are for short-term events. Source: U.S. Department of Heath and Human Services, “ Medicare & You 2007”, Centers for Medicare & Medicaid Services, Baltimore, MD, page 9 Payment Period Limitation for Medicare Days 1-20 - Medicare pays in full Days 21-100 - Medicare pays Balance over $124 (2007) Days over 100 - Medicare pays nothing

Medicaid ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Also referred to as Title 19 or welfare. Note: Also called MediCal in California and MassHealth in Massachusetts

Private Pay Projection based on annual increase of 5% in long-term care costs provided by a home health aide 8 hours per day for 5 years. ,[object Object],[object Object],[object Object],Source: National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx, Paper copies available upon request. Future cost based on 5% annual increase. At $1.7 million over 5 years, paying is not realistic for many. $1,743,347 Total Resources Needed $ 383,494 $73,000 2040 $ 365,233 $73,000 2039 $ 347,841 $73,000 2038 $ 331,277 $73,000 2037 $ 315,502 $73,000 2036 Cost (future dollars) Cost (today’s dollars) Year

Long-Term Care Insurance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Policies are flexible and offer full continuum of care.

Long-Term Care Insurance Policies ,[object Object],[object Object],[object Object]

Long-Term Care Insurance Policies ,[object Object],[object Object],[object Object],Defining the benefit amount is a key consideration. Source: National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx, Paper copies available upon request. Future cost based on 5% annual increase. Cost: National Daily Averages Full-time home health aide $200/day Assisted living facility $88/day Private room in nursing home $194/day ,[object Object],[object Object],[object Object],[object Object]

Long-Term Care Insurance Policies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Defining when the policy begins to pay is also important.

Average Length of Care in Months* Home Care 16 Assisted Living Facilities 38 Nursing Home 25 *Source: 2004 Cost of Care Survey, CareScout. Long-Term Care Insurance Policies Unlimited or lifetime benefits mitigate the most risk. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Long-Term Care Insurance Policies Source: National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx Paper copies available upon request. Future cost based on 5% annual increase Inflation protection riders increase the benefit amounts.

[object Object],[object Object],[object Object],[object Object],Available discounts may reduce your premium. Long-Term Care Insurance Policies In Montana, spousal discounts are not available. A caregiver discount is available in Montana only. Please see your licensed financial representative (a licensed insurance agent) for more information.

Buying Long-Term Care Insurance $566.10 $1,444.88 $3,940.23 $14,592.26 Premium cost for an individual purchasing $150/day at age 40 (inflation-adjusted at 5% compound for ages 50 ($246/day), 60 ($401/day) and 70 ($653/day)), 91 day beginning date. Lifetime benefit period. Does not include an inflation protection option. Premiums reflect a 15% Spousal Discount. Premiums shown are based on the current premium rate schedule for comparable units of coverage. In Montana, spousal discounts are not available. A caregiver discount is available in Montana only. 40 50 60 70 When to Purchase Insurance Premium Costs by Age $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 There is a cost advantage to buying young.

Buying Long-Term Care Insurance 83.9% 74.7% 46.5% Percentage of LTC Insurance Applicants Approved 86.7% 30.7% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 18-49 50-59 60-69 70-79 80+ Age Wakely Actuarial Services, American Association for Long-Term Care Insurance, LTCi Sales Strategies, Volume 6, Number 4, March 2006 Consider purchasing before health changes occur.

Evaluating Insurance Providers ,[object Object],[object Object],[object Object],[object Object],It is important to consider more than costs and benefits. The four agencies listed base ratings on the financial strength of the insurance company. These ratings are not recommendations of specific policy provisions, rates or practices of the insurance company. Since its entrance into the long-term care insurance market in 1998, all four agencies have given Northwestern Long Term Care Insurance Company the best possible insurance financial strength ratings. At the time of this publication, our most current ratings are for the following dates: A.M. Best (May 2006), Fitch Ratings (August 2006), Moody’s (March 2006) and Standard & Poor’s (June 2006) .

Recommendations ,[object Object],[object Object],[object Object],[object Object],[object Object],Meet with a qualified, licensed Financial Representative.

Evaluation Form Please complete and hand in form.

Long Term Care Insurance Thank You Take Charge of Your Future

Northwestern Long Term Care Insurance Company (long-term care insurance) is a subsidiary of The Northwestern Mutual Life Insurance Company Milwaukee, WI (life insurance, annuities and disability income insurance) Northwestern Long Term Care Insurance Company's long term care insurance policy contains exclusions and limitations. The purpose of this material is for the marketing and solicitation of insurance. Policy Form: RS.LTC.(1101) RS.LTC.ML.(1101) Take Charge of Your Future RS.LTC.ML.(1101) is only available in New Jersey, New York and Pennsylvania.

Long Term Care

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