CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Meeting Chronic and Terminal Illness
Care Needs with Life Insurance
PruLife Universal Protector
featuring BenefitAccess Rider
®
Mike Tollefsrud
Title: Regional Life Consultant
Date: Thursday, Aug. 8, 2013
The Prudential Insurance Company of America, Newark NJ 07102
0248082-00001-00 ED. 6/2013 EXP. 01/24/2015
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Important Information
Bank of America Corporation (“Bank of America”) is a financial holding company that, through its subsidiaries and
affiliated companies, provides banking and investment products and other financial services .
Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner &
Smith Incorporated (“MLPF&S”), a registered broker-dealer and member SIPC, and other subsidiaries of Bank of
America Corporation (“BAC”).
Investment products offered through MLPF&S and insurance and annuity products offered through Merrill Lynch Life
Agency Inc.:
Are Not FDIC Insured
May Lose Value
Are Not Bank Guaranteed
Are Not Insured by Any Federal
Government Agency
Are Not Deposits
Are Not a Condition to Any
Banking Service or Activity
Merrill Lynch Life Agency Inc. is a licensed insurance agency and a wholly owned subsidiary of Bank of America
Corporation.
The views and opinions expressed in this presentation are not necessarily those of Bank of America Corporation;
Merrill Lynch, Pierce, Fenner & Smith Incorporated; or any affiliates.
Nothing discussed or suggested in these materials should be construed as permission to supersede or circumvent
any Bank of America, Merrill Lynch, Pierce, Fenner & Smith Incorporated policies, procedures, rules, and guidelines.]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Agenda
1. The 5 Ws of chronic illness care
2. How PruLife Universal Protector featuring
®
the optional BenefitAccess Rider can help
3. Target markets and value proposition for
your FPs
4. UL Protector Repricing
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
The Realities of an Aging Population
10,000
1
Baby Boomers Retire. Pew Research Center, December 2010. Last accessed on March 29, 2013.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
What you don’t know could hurt you:
Understanding the 5 Ws of chronic illness care
5 Ws
of Life Insurance
Primarily for conditions
that require care for
long durations:
• Alzheimer’s Disease
• Stroke
• Arthritis
Why
73% of people who need
Chronic care receive it at
home from a family
member5
NOT FOR CONSUMER USE.
Who
?
Where
7 in 10 Americans age 65 and older will
require chronic care2
What
duration
When
Care can be
needed for many
years, sometimes
Decades3,4
At older ages,
often when alone
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Sources
1
Baby Boomers Retire. Pew Research Center, December 2010. Last accessed on
March 29, 2013.
2 http://www.longtermcare.gov/LTC/Main_Site/index.aspx.
Last accessed April 29,
2013.
3 Kemper
P, et al. Long-term care over an uncertain future: What can current retirees
expect? Inquiry Winter 2005/2006. Vol.42:335-50. Data derived from Tables 1 and 2.
4
http://longtermcare.gov/the-basics/how-much-care-will-you-need/. Last accessed
April 29, 2013.
5
Redfoot DL, Houser A. More older people with disabilities living in the community:
Trends from the National Long-Term Care Survey, 1984-2004 AARP Public Policy
Institute. September 2010.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
What is BenefitAccess?
Life Insurance Accelerated Death Benefit Rider
• BenefitAccess advances up to 100% of policy’s face amount if insured becomes chronically or
terminally ill and otherwise satisfies terms of rider
• It is not long-term care insurance nor is it intended to replace the need for long-term care
insurance
• It is an optional rider for an additional cost, that provides benefits if the insured is diagnosed
as chronically and/or terminally ill by a Licensed Health Care Practitioner
• Must be purchased at point of sale- requires additional underwriting
Benefit
• Provides a maximum monthly benefit equal to lesser of the 2% of the face amount or the IRS
Per Diem. Also provides an annual lump sum option. IRS Per Diem Limit (2013: $320/day)
and IRS Per Diem Limit at issue compounded at 4% annually
• Benefit payments reduce death benefit dollar-for-dollar and may eliminate it completely
• Benefits may be used for any care, services or needs that the insured may have during their
illness
Premium Impact
• Generally, adding the rider increases premium about 5-15% for males and 15-20% for
females of the base policy premium
Compensation
• CTP is increased in relation to the rider
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
The Reality
•Chronic illness is likely
•Primary caretaker = family
member
•Emotional and financial
sacrifices
•Financial considerations
need to address chronic
illness care
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
A New Choice
Introducing …
BenefitAccess on
PruLife® Universal Protector (UL Protector)
Guaranteed
death benefit
protection
Chronic and
terminal
illness
protection
Dual
Protection
UL Protector can provide lifetime death benefit protection. With the
optional BenefitAccess Rider, the insured may also qualify for 100%
acceleration of the policy’s face amount
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
UL Protector + BenefitAccess = Answer to 5 Ws
5 Ws
of Life Insurance
Cost-effective way to
address clients’ death
benefit and chronic
and terminal illness
needs
Who
Why
The insured has the
flexibility to receive
care at home.
What
5Ws with
BenefitAccess
Rider and UL
Protector
Where
• Any claims payments made for chronic or terminal illness will reduce
the amount the policy’s death benefit, which could be reduced to $0.
• A discount factor is applied to payments made under the terminal illness option
NOT FOR CONSUMER USE.
Clients who want to plan
for the future in case of a
chronic or terminal Illness
When
BenefitAccess Rider
accelerates up to 100% of
the death benefit* if insured
becomes chronically or
terminally ill and qualifies
under the terms and
conditions of the rider.
No waiting period.
*Face amount on UL Protector.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
How BenefitAccess Works – Chronic illness
Qualification for Benefits
• Certification of Chronic Illness by a
Licensed Health Care Practitioner
• The condition is expected to last the rest of
the insured's life
BenefitAccess Benefit
Payments—Impact on Policy
• Death benefit reduced $ for $
• Account Value reduced
proportionately
• Recertified annually
Maximum Monthly Benefit
• Maximum Monthly Benefit is equal to
2% of the death benefit at the time of
claim, not to exceed the lesser of:
• The IRS per diem limit at the time of
claim ($320 per day for 2013); or
Charge for the Rider
• Generally, 5% to 20% increase of
UL Protector, lifetime premium
• Included as part of Monthly
Deductions
• The IRS per diem limit at the time of
policy issue, compounded annually at 4%
• Maximum Total Benefit = 100% of
death benefit
We suggest that clients seek assistance from a personal tax advisor regarding the implications of receiving payments.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Activities of Daily Living
Bathing
Continence
Transferring
Basic functions
needed for self-care
& independent
living (BCDETT)
Dressing
Toileting
Eating
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
How BenefitAccess Works – Terminal illness
Qualification for Benefits
• Certification by a Licensed Health Care
Practitioner as being terminally ill with a life
expectancy of six months or less
Terminal Illness Benefit
Payments—Impact on Policy
• Benefit payment is reduced by a
discount factor resulting in lower
net payment to client
• Account Value of policy is reduced
proportionately
Benefit Payment Options
• One-time total lump sum
• One-time partial lump sum1
• Available even if chronic illness option has
been partially exercised2
Charge for the Rider
• No up-front charge for terminal illness
benefit
• Benefit payment is reduced by a
discount factor, resulting in lower net
payment to client
• Fee = Max of $150 per transaction
(may vary by state)
1If
a partial lump sum is taken, $25,000 must remain as a death benefit in the policy. If a second and final acceleration is requested, it must be the
full amount that remains available.
2Chronic illness benefits are not available after the terminal illness benefit has been exercised
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
BenefitAccess vs Living Needs Benefit
SM
Key Feature
BenefitAccess
Advances the death benefit1 if insured has a chronic illness condition
●
Up-front charge for rider (generally 5%-20% additional premium)
●
Pays a monthly benefit, generally tax-free, with no restrictions on
how benefits can be used 2
●
Provides lapse protection feature while policy is on chronic illness
claim
●
Advances the death benefit3 if insured has a terminal illness
condition
●
●
Terminal Illness benefitreduction for early payment is applied.
●
●
Advances death benefit if insured requires an organ transplant and
would have only six months or less to live without the transplant
Advances an amount to an insured who has been confined to an
eligible nursing home for at least six months and is expected to be
permanently confined3
Living Needs Benefit
●
●4
●
1 Face amount on UL Protector.
2 The IRS per diem limit at the time of claim ($320 per day for 2013); or The IRS per diem limit at the time of policy issue, compounded annually
at 4%
3 Not available in all states
4 Assumes the insured is chronically ill and meets the terms and conditions of the rider.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
BenefitAccess Rider Feature Chart
BenefitAccess rider will be available on repriced UL Protector,
based upon state approval, beginning July 1, 2013
Issue ages
•
Minimum:
•
Maximum:
•
Maximum rating class:
20
80
Class D
Face Amount Bands
•
Minimum: $ 100,000
•
Maximum: $5,000,000
Death Benefit option
•
Option A is only DB available on UL
Protector starting July 1, 2013
Riders
•
Living Needs Benefit or Benefit Access
•
Enhanced disability benefit is not
available with BenefitAccess Rider
NOT FOR CONSUMER USE.
Qualifying Conditions
•
Insured is unable to perform 2 of the 6
ADL’s or has a severe cognitive
impairment.
•
Chronic condition is expected to last the
rest of the insured's life
Elimination Period
•
None
Benefit Type
•
Indemnity
Compensation
•
CTP increases in relation to the rider
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Target Market
Target Market
•
•
•
•
45 to 70 year-olds
Consumers with annual household income of $75k+
Worried about chronic or terminal illness
See chronic and terminal illness rider as a complementary benefit in their life insurance
policy
• While life insurance sales are skewed towards males, buyers of chronic and terminal
illness riders are skewed towards females
• Generally, for face amounts between $100K and $1M
Potential Emotional Drivers
• Desires flexibility in how to spend benefit payments
•
•
•
•
Experienced a loved one go through a chronic illness event
Desire to have a family member as a caregiver
Likes multiple benefits available in one policy
Skeptical of “use it or lose it” aspect and unpredictable cost of stand-alone LTC
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Value Proposition for Financial Professionals
Why PruLife Universal Protector with
BenefitAccess?
Provide lifetime death benefit guaranteed protection with
chronic and terminal illness benefits
Differentiate yourself to achieve a competitive edge
Grow your business
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Marketing Tools
NOT FOR CONSUMER USE.
]
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
BenefitAccess Concept Kit
Printed Chronic and Terminal Illness
Concept Kit
• Provides a step-by-step action plan
• Producer focused
• Sets up chronic and terminal illness
care need
• How to engage clients
• Target client profiles
• Talking points
Concept Kit Contents
Action Plan Folder
•
•
•
Benefit Access Consumer Brochure
Chronic Illness Consumer Prospecting Sample Letter
Chronic Illness Consumer Prospecting Sample Email
Educational Material
(enclosed as a training guide or
sleeve with individual pieces)
•
•
•
•
•
UL Protector 10-in-10 Marketing Ideas
UL Protector Fast Facts
BAR Talking Points
LNB vs. BAR Flyer
eKit Content Flyer (outlining additional resources available)
]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Marketing pieces for you
Fast Facts
FAQ’s
Talking Points
]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Marketing pieces for your clients
]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Next Steps
•Review the Kit
•Familiarize yourself with the Talking Points, Fast
Facts and FAQ
•Check State Availability
•Prospect with Kit’s Letter and/or Email text
Additional Resources:
•Your CMG General Agency
•PruXpress.com
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Important Information
PruLife Universal Protector is issued by Pruco Life Insurance Company except in New York,
where, if available, is issued by Pruco Life Insurance Company of New Jersey. Both Pruco Life
companies are Prudential Financial companies and are located at 213 Washington Street,
Newark, NJ 07102-2992. Each is solely responsible for its own financial condition and
contractual obligations. These products may not be available in all states.
All guarantees and benefits of the insurance policy are backed by the claims-paying ability of
the issuing insurance company. Policy guarantees and benefits are not backed by the
broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none
of them makes any representations or guarantees regarding the claims-paying ability of the
issuing insurance company.
The BenefitAccess Rider is available for an extra premium. Additional underwriting
requirements and limits may also apply. Obtaining benefits under the terms of the rider will
reduce and may eliminate the death benefit.
Benefits paid under the BenefitAccess Rider are intended to be treated for federal tax purposes
as accelerated life insurance death benefits under IRC §101(g)(1)(b). Tax laws related to the
receipt of accelerated death benefits are complex and may be taxable in certain circumstances.
Receipt of benefits may affect eligibility for public assistance programs such as Medicaid.
Accelerated benefits paid under the terms of the Terminal Illness portion of the rider are subject
to a $150 [($100 in FL)] processing fee. You should consult your tax and legal advisors prior to
initiating any claim.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Important Information
A licensed health care practitioner must certify the chronic or terminal illness to qualify for
benefits. Chronic illness claims will require recertification by a licensed health care practitioner.
Other terms and conditions may apply. This rider is not long-term care (LTC) insurance and it is
not intended to replace LTC. The rider may not cover all of the costs associated with chronic
illness. The rider is a life insurance accelerated death benefit product, is generally not subject to
health insurance requirements, and may not be available in all states.
The Living Needs Benefit is an accelerated death benefit and is not a health, nursing home, or
long-term care insurance benefit and is not designed to eliminate the need for insurance of
these types. There is no charge for this rider but, when a claim is paid under this rider, the
death benefit is reduced for early payment, and a $150 processing fee ($100 in Florida) is
deducted. If more than one policy is used for the claim, each policy will have a processing fee
of up to $150 ($100 in Florida) deducted. Portions of the Living Needs Benefit payment may be
taxable, and receiving an accelerated death benefit may affect your client’s eligibility for public
assistance programs. The federal income tax treatment of payments made under this rider
depends upon whether the insured is the recipient of the benefit and is considered “terminally
ill” or “chronically ill.” We suggest that your clients seek assistance from a personal tax advisor
regarding the implications of receiving Living Needs Benefit payments. This rider is not
available in Minnesota to new purchasers over age 65 until the policy has been in force for one
year, and the nursing home option is not available in Connecticut, Florida, Massachusetts, New
York, or the District of Columbia. This rider is not available in Washington state. In Oregon, term
policies must include the waiver of premium benefit to be eligible for this rider.
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
Important Information
This material is designed to provide general information about the subject matter covered. It
should be used with the understanding that we are not rendering legal, accounting, or tax
advice. Such services should be provided by the client’s own professional advisors.
Accordingly, any information in this document cannot be used by any taxpayer for purposes of
avoiding penalties under the Internal Revenue Code.
This marketing material includes an expiration date, and use of this material must be
discontinued as of the expiration date.
Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial,
Inc., and its related entities.
Securities and Insurance Products:
Not Insured by FDIC or Any Federal Government Agency. May Lose Value.
Not a Deposit of or Guaranteed by Any Bank or Bank Affiliate.
[ML #]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
[
Appendix
]
NOT FOR CONSUMER USE.
CREATED EXCLUSIVELY FOR FINANCIAL PROFESSIONAL USE
[PruLife® UL Protector
UL Protector repricing, July 1, 2013
Repricing
• Due to impacts of ongoing low interest environment that continues to impact Prudential and
our competitors
Pricing Summary
• Lifetime guarantee premiums
• $250K:
average of + 2%; range of ; - 3.0% to 9.0%
• $1M :
average of + 2%; range of; - 5.2 to 8.8%
• Single pay, lifetime guarantee premiums*
• $250K:
average of + 5.3%; range of ; 2.0% to 12.0%
• $1M:
average of + 5.2%; range of ; 1.0% to 12.0%
Feature Changes
• Benefit Access Rider available
• Death Benefit B no longer be available
• Changed the guaranteed interest rate to 1%
NOT FOR CONSUMER USE.
]
*Premium limitations apply