ForeCare:
A Fixed Annuity for the 21st Century
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
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Training Objectives
The Likelihood of
Long-Term Care
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The Need for a
Long-Term Care Plan
The Benefits of ForeCare
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
The Likelihood of Long-Term Care
Statistics have shown that our
clients will be living longer in
retirement.1
As our clients live longer, there is a
greater probability that they will
need some form of Long-Term Care.
30%
50%
70%
Over the age of 65, what
percentage of people will need
some form of Long-Term Care?
1
90%
Society of Actuaries, Risks and Process of Retirement Survey Report, July 2006
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
The sobering reality
70%
FACT: 70% of people over age 65 will need long-term care1
You just witnessed an exercise that, according
to the statistics, each one of us could
experience over the course of our lives. The
question is, “Will your clients be part of the
30% of people over age 65 who may not need
Long-Term Care or will your clients be one of
the 70% of people over age 65 who will have to
face the sobering reality that you will need
Long-Term Care?” We all would like to think
that we can be part of the 30% but more and
more people are being afflicted with conditions
requiring Long-Term Care.
1. U.S. Department of Health and Human Services, September 2008
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Are your clients prepared to fund it?
Do your clients know
someone who is afflicted
with a condition requiring
long-term care?
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How are they funding it?
How would
YOUR CLIENTS
fund it?
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Hypothetical costs associated with LTC
Service
Private room
$ Per Day
$ Per Month
$ Per Year
$229
$6,870
$82,440
$205
$6,150
$73,800
$106
$3,180
$38,160
$84
$2,520
$30,240
$76
$2,280
$27,360
$67
$2,010
$24,120
(nursing home)
Semi-private room
(nursing home)
One-bedroom unit
(assisted living)
Home health aide
(4 hours/day)
Homemaker services
(4 hrs/day)
Adult day care center
(5 days/wk)
Costs as of 2010, www.longtermcare.gov
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Hypothetical costs associated with LTC
Service
Private room
$ Per Day
$ Per Month
$ Per Year
$229
$6,870
$82,440
$205
$6,150
$73,800
$106
$3,180
$38,160
$84
$2,520
$30,240
$76
$2,280
$27,360
$67
$2,010
$24,120
(nursing home)
Semi-private room
(nursing home)
One-bedroom unit
(assisted living)
Home health aide
(4 hours/day)
Homemaker services
(4 hrs/day)
Adult day care center
(5 days/wk)
At this rate, 5 years at an assisted living facility will cost $190,800.
Costs as of 2010, www.longtermcare.gov
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Where is the money your clients plan to use?
Most people:
• Have set aside emergency funds
• Commonly for health-related incidents
• Are not willing to take a risk with these funds
Does this sound like the plan your clients have created for their health emergency funds?
Resource
$100,000
Annual
Rate1
5-Year
Gain
Certificate of Deposit (“CD”)
0.50%
$2,525
Money Market Account
0.90%
$4,582
Savings Account
0.25%
$1,256
Fixed Annuity
3.00%
$15,927
Certificate of Deposits (CDs), Money Market Accounts, Savings Account and Fixed Annuities are all different product types and as such have different risk
and suitability profiles. CDs and Saving Accounts are typically bank products and are FDIC insured up to certain dollar values. Money Market Accounts are
securities and are not FDIC insured and although these funds seek to preserve the value of an investment at $1.00 per share, there is no guarantee they
will maintain this value. Fixed Annuities are insurance products intended for retirement or other long-term needs.
1Returns
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are hypothetical and for illustrative purposes only and are not intended to be representative of the performance of any specific product type.
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Where is the money your clients plan to use?
These assets usually end up being invested in
CDs, savings and money market accounts or
fixed annuities. However, in a low interest rate
environment, returns on these types of
products can be lower than expected.
Other options such as stocks, bonds, mutual
funds, variable annuities, or real estate could
potentially provide greater returns but typically
require exposure to greater market risk which
your clients may not be willing to take. 3
73% of Fixed Annuity owners plan to use their annuity savings for health care emergencies 2
Resource
$100,000
Annual
Rate1
5-Year
Gain
Certificate of Deposit (“CD”)
0.50%
$2,525
Money Market Account
0.90%
$4,582
Savings Account
0.25%
$1,256
Fixed Annuity
3.00%
$15,927
Certificate of Deposits (CDs), Money Market Accounts, Savings Account and Fixed Annuities are all different product types and as such have different risk
and suitability profiles. CDs and Saving Accounts are typically bank products and are FDIC insured up to certain dollar values. Money Market Accounts are
securities and are not FDIC insured and although these funds seek to preserve the value of an investment at $1.00 per share, there is no guarantee they
will maintain this value. Fixed Annuities are insurance products intended for retirement or other long-term needs.
1Returns
are hypothetical and for illustrative purposes only and are not intended to be representative of the performance of any specific product type.
of Owners of Non-Qualified Annuity Contracts, The Committee of Annuity Insurers, 2009
3Stocks, bonds, mutual funds and variable annuities are securities and have different risk/reward characteristics, liquidity properties and tax consequences,
particularly when compared to products such as CDs, savings accounts, money market accounts and fixed annuities.
2Survey
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Is there another way?
Fixed Annuity
Benefits
•
•
•
•
Interest crediting
Income options
Tax-deferral
Remaining
contract value
passes as death
benefit proceeds
Fixed annuities have been an
attractive option for many
investors looking for a
guaranteed interest rate, a
choice of payment options,
tax-deferral, and the
opportunity to pass any
remaining contract value to
their beneficiaries through a
death benefit without the
complications of probate.
Guarantees are based on the claims-paying ability of Forethought Life Insurance Company and subject to compliance with benefit rules.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Is there another way?
But as we saw, rates are low so you may need a hybrid solution.
Even if rates rebound, how long would it take you to build the
value of your annuity two or three times?
Fixed Annuity
Benefits
•
•
•
•
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Interest crediting
Income options
Tax-deferral
Remaining
contract value
passes as death
benefit proceeds
Long-Term
Care Benefits
• Potential to
multiply the
contract value
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Is there another way?
ForeCareSM Fixed Annuity : A fixed annuity for the 21st century
Simple Process
• ½ hour screen
Fixed Annuity
Benefits
•
•
•
•
Interest crediting
Income options
Tax-deferral
Remaining
contract value
passes as death
benefit proceeds
F
O
R
E
C
A
R
E
Long-Term
Care Benefits
• Double or triple
contract value*
Guarantees are based on the claims-paying ability of Forethought Life Insurance Company and subject to compliance with benefit rules.
*Expenses are first reimbursed from the contract value, without withdrawal charges. Once the contract value is exhausted, the Multiplier kicks in,
providing additional resources for expenses, all tax-free
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Is there another way?
ForeCareSM Fixed Annuity : A fixed annuity for the 21st century
We are pleased to introduce you to our
ForeCare Fixed Annuity. We call ForeCare a
Fixed Annuity for the 21st century because
we have added an enhancement option
specifically designed to help your clients pay
for Long-Term Care Expenses which could
potentially have a catastrophic impact on
their retirement funds.
As people are living longer in the 21st Century and the probability for Long-Term
Care increases, our ForeCare Fixed Annuity provides Long-Term Care coverage
equal to 2 or 3 times the contract value. We have created a simple process to
help you determine if ForeCare could be a key component of your clients’
retirement protection programs. If ForeCare is right for them, they can find out if
they are approved quickly through a simple ½ hour process.
*Expenses are first reimbursed from the contract value, without withdrawal charges. Once the contract value is exhausted, the Multiplier kicks in,
providing additional resources for expenses, all tax-free
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
ForeCare Facts: Up to 3x for LTC expenses
ForeCare will provide coverage of 2x or 3x the Contract Value for long term care
expenses. The multiple, known as the ForeCare Multiplier, is determined through simple
underwriting. Expenses are first reimbursed from the contract value, without withdrawal
charges. Once the contract value is exhausted, the Multiplier kicks in, providing
additional resources for expenses, all tax-free.
•
•
•
Up to 3x the contract value for
qualified long-term care
expenses1
More value accessible to help
defray the effect of long-term
care costs on family and finances
Uses tax-deferred dollars to
provide tax-free benefits
1 Expenses
Enhancing the Value for Qualified Expenses
$350,000
$250,000
2x
$200,000
$150,000
$100,000
$50,000
$0
are first reimbursed from the contract value, without withdrawal charges.
The ForeCare Multiplier provides two or three times (depending on underwriting eligibility) the
amount of contract value in long-term care coverage to spend on qualified long-term care
expenses up to the maximum monthly benefit. These benefits are only available to use for a
qualified long-term care benefit and will not become part of the contract value or the death
benefit. Withdrawals, other than for qualified long-term care expenses, will adversely affect the
amount of coverage in the future.
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3x
$300,000
Contract
Value
ForeCare
@ 2X
ForeCare
@ 3X
Potential Value for LTC Expenses
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
ForeCare Tax Benefits
Tax-Deferred Growth
Long-term care rider charges are not taxed as distributions
Benefits received for qualified long-term care expenses are tax-free
Existing non-qualified fixed annuities may be exchanged tax-free for a ForeCare Fixed Annuity by
utilizing IRC section 1035*
*Repositioning of assets from an existing fixed annuity contract into a ForeCare fixed annuity contract may not be suitable for all clients. Clients should
carefully consider factors such as remaining surrender charge schedule, possible market value adjustments and any other charges before determining if
repositioning and/or exchanging of an existing annuity contract is right for their particular situation. State insurance replacement regulations may also apply.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Amount available to pay for long-term care
Let’s take a look at an example. Let’s say your
clients have a total income tax rate of 28%.
They have $100,000 to invest. Let’s take a
look at how much two of the most common
types of accounts would yield after 15 years.
CD
Rate: 0.5%
Fixed Annuity
Rate: 3%
$100,000
$100,000
Today
Today
*15 year values are after-tax values. CDs are typically bank products and are FDIC insured up to certain dollar values. Fixed Annuities are insurance products intended for
retirement or other long-term needs. Both have different risk/reward characteristics, liquidity properties and tax consequences. Returns are hypothetical and for illustrative
purposes only and are not intended to be representative of the performance of any specific product type.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Amount available to pay for long-term care
Let’s take a look at an example. Let’s say your
clients have a total income tax rate of 28%.
They have $100,000 to invest. Let’s take a
look at how much two of the most common
types of accounts would yield after 15 years.
CD
Rate: 0.5%
$100,000
$105,538
Fixed Annuity
Rate: 3%
With an initial $100,000 investment, a CD
would grow to $105,538 in 15 years.
$140,174
What about a traditional fixed annuity?
$100,000
At a 3% rate, your clients’ annuity would
grow to $140,174 in 15 years.
Today
15
Years*
Today
15
Years*
How does ForeCare Fixed Annuity stack up?
*15 year values are after-tax values. CDs are typically bank products and are FDIC insured up to certain dollar values. Fixed Annuities are insurance products intended for
retirement or other long-term needs. Both have different risk/reward characteristics, liquidity properties and tax consequences. Returns are hypothetical and for illustrative
purposes only and are not intended to be representative of the performance of any specific product type.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Amount available to pay for long-term care
Let’s say your client’s rating comes back at standard,
meaning he or she is approved for the 2x contract
value.
CD
Rate: 0.5%
$100,000
$105,538
ForeCare
Standard (2X)
Fixed Annuity
Rate: 3%
$140,174
$100,000
$200,000
$200,000
Today
15
Years
ForeCare
Multiplier
$100,000
2X
Today
15
Years*
Today
15
Years*
We can see how
their coverage
starting today
compares to how
long it would take
them to make
significantly
smaller gains in a
regular fixed
annuity or CD.
*15 year values are after-tax values. CDs are typically bank products and are FDIC insured up to certain dollar values. Fixed Annuities are insurance products intended for retirement or other long-term needs. Both have
different risk/reward characteristics, liquidity properties and tax consequences. Returns are hypothetical and for illustrative purposes only and are not intended to be representative of the performance of any specific
product type.
The ForeCare Multiplier provides two or three times (depending on underwriting eligibility) the amount of contract value in long-term care coverage to spend on qualified long-term care expenses up to the maximum
monthly benefit. These benefits are only available to use for a qualified long-term care benefit and will not become part of the contract value or the death benefit. Withdrawals, other than for qualified long-term care
expenses, will adversely affect the amount of coverage in the future.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Amount available to pay for long-term care
If approved at Premier, their coverage is worth 3X or $300,000.
That coverage starts today; they don’t have to wait 15 years.
ForeCare
Premier (3X)
Which one of these options would your clients choose?
CD
Rate: 0.5%
$100,000
$105,538
Fixed Annuity
Rate: 3%
$140,174
$100,000
$300,000
ForeCare
Standard (2X)
$200,000
$200,000
$300,000
ForeCare
Multiplier
$100,000
3X
ForeCare
Multiplier
$100,000
2X
Today
15
Years*
Today
15
Years*
Today
15
Years
Today
15
Years
*15 year values are after-tax values. CDs are typically bank products and are FDIC insured up to certain dollar values. Fixed Annuities are insurance products intended for retirement or other long-term needs. Both have
different risk/reward characteristics, liquidity properties and tax consequences. Returns are hypothetical and for illustrative purposes only and are not intended to be representative of the performance of any specific
product type.
The ForeCare Multiplier provides two or three times (depending on underwriting eligibility) the amount of contract value in long-term care coverage to spend on qualified long-term care expenses up to the maximum
monthly benefit. These benefits are only available to use for a qualified long-term care benefit and will not become part of the contract value or the death benefit. Withdrawals, other than for qualified long-term care
expenses, will adversely affect the amount of coverage in the future.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Long-Term Care Benefit
Single Life
•
Joint Life
•
Standard
42 month Accelerated Benefit
42 month Extended Benefit
36 month Accelerated Benefit
36 month Extended Benefit
•
•
Premier
24 month Accelerated Benefit
48 month Extended Benefit
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Standard
Premier
30 month Accelerated Benefit
60 month Extended Benefit
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
ForeCare Covered Care




Home Health Care
Homemaker Services
Home Health Aide and Personal Care
Chore Services
 Nurse and Therapist
 Adult Day Care
 Respite Care
 Assisted Living Facility
 Bed Reservation
 Nursing Home Facility
 Hospice Care
To qualify for long-term care benefits, the insured must be diagnosed
as chronically ill, which means he or she is unable to perform at least 2
of the 6 ADLs or requires substantial supervision due to severe
cognitive impairment.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
ForeCare Fixed Annuity Facts
Issue Ages: 50-80
Years Old
Single Premium
Guaranteed fixed interest rates declared
annually on Contract Anniversary
Minimum Annuity Deposit is $35,0001
Maximum Annuity Deposit is $400,000 Single or $600,0001 Joint
No waiting period
90 day elimination period (within 270 consecutive days, waived for home
health care with qualifying plan of care)
Rider charge rate is guaranteed to remain unchanged through the life of the Contract
The contract value at month end will not be less than the contract value at the
prior month end, less any applicable withdrawals.
Withdrawal Charges – 8%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0% thereafter1 2
10% Free Withdrawal During Withdrawal Charge Period2
1 May
vary by state
2 Market
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Withdrawals not related to LTC will reduce the LTC benefit on a proportionate benefit
Value Adjustment Applies During Withdrawal Charge Period
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Market Value Adjustment
• Market Value Adjustment (MVA) only applies to withdrawals that incur a
withdrawal charge.
• The MVA may either increase or decrease a withdrawal charge depending on
whether benchmark rates have fallen or risen since the Contract issue date.
• MVAs will not be applied to any free amounts or death benefit proceeds
paid.
• MVAs may not be available in all states.
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
ForeCare’s Easy Application Process
 Visual View - Check height and weight parameters
 Eleven Questions For Your Client
 15 Minute “Re:Call” Interview
 Decision: Find out if your client is approved*
 ForeCare Multiplier: Approved at Standard (2x), or Premier (3x)
Simplified underwriting (20-30 minutes) completed at point of sale
* Medication Review will be conducted prior to approval decision
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Inflation Protection Rider
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•
Optional Benefit
•
Single Rider Fee at issue deducted from Initial Deposit
•
Only available at Issue
•
Can not be terminated once elected
•
The Maximum Monthly Benefit and remaining unused Extended
Benefit Amount will increase at each anniversary by 5%
•
Accelerated Benefit period will be shortened because the maximum
monthly benefits will be increased. The length of the Extended
Benefit period will be the same as without the rider
Non-Forfeiture Rider
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•
Optional Benefit
•
Single Rider Fee at issue deducted from Initial Deposit
•
Only available at Issue
•
Can not be terminated once elected
•
If, after the policy has been in-force for at least 3 years, the client
surrenders the contract, Forethought will return all rider charges,
without interest, via LTC benefit payments (subject to limits)
•
Subject to the 90 day elimination period
FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Training Review
The Likelihood of
Long-Term Care
FACT: 70% of people over age 65
will need long-term care1
The Need for a
Long-Term Care Plan
The Benefits of ForeCare
Long-Term Care Expenses can
be expensive and quickly drain
a client’s assets.
 Double or Triple the Contract Value for
Qualified LTC Expenses
 No Income Tax on Withdrawals for
Qualified LTC Expenses
 Remaining Contract Value at death passes
to heirs
 Instant-Decision Simplified Underwriting
1. U.S. Department of Health and Human Services, September 2008
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.
Thank you!
Guarantees are backed by the financial strength and claims paying ability of Forethought Life Insurance Company.
ForeCareSM fixed annuities are issued by Forethought Life Insurance Company and available in most states
with Contract FA1101SPDA-01 (certificate GA1101SPDA-01, as applicable). ForeCare is issued with Rider for
Long Term Care Benefits Form LTC2000-01, Optional Inflation Protection Rider Benefit Rider form LTC2001-01
and Optional Nonforfeiture Benefit Rider Form LTC2002-01 (certificate series LTCG2000-01, LTCG2001-01 and
LTCG2002-01, as applicable). This is a solicitation of LTC Insurance. Products and features are subject to
state variations and availability. Read the Contract for complete details.
HA5058 8-13 100765
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FOR TRAINING PURPOSES ONLY. NOT FOR USE WITH THE PUBLIC.