Underwriting Nationwide’s LTC Rider NFM-11193AO.2 For Broker/Dealer Use Only Disclosures Keep in mind that as an acceleration of the death benefit, the LTC rider payout will reduce both the death benefit and cash surrender values. Care should be taken to make sure that your clients’ life insurance needs continue to be met even if the rider pays out in full. There is no guarantee that the the rider will cover the entire cost for all of the insured’s long-term care needs as these vary with the needs of each insured Neither Nationwide nor its representatives give tax advice. Your clients should consult their attorney or tax advisor If your client is collecting LTC benefits from another company in addition to benefits from Nationwide, the total benefits that can be received tax free is the greater of the daily HIPAA limits or actual costs incurred. Any amount in excess of these limits will be taxed as ordinary income As your clients’ personal situations change (e.g., marriage, birth of a child, or job promotion), so will their life insurance needs. Care should be taken to ensure these strategies and products are suitable for long-term life insurance needs. You should weigh your clients’ objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in the policy Underwriting the LTC rider • LTC underwriting can differ greatly from life insurance underwriting(referred to as base coverage) • Life decisions are usually based on primary medical condition and/or diagnosis. However, if an individual has multiple medical conditions, the LTC risk may be compounded • The assessment of recovery from an impairment and the resultant level of stability are significant factors in the overall determination of the risk Long Term Care Rider Specifications • The LTC rider is intended to provide an insured with supplemental long term care coverage • It is not intended to be the primary source of financial resources needed to pay for long term care expenses. It is a rider to a life insurance policy and should not be construed to be a separate LTC policy • The underlying death benefit should be the primary consideration in the overall sale Available Classes & Ratings • Preferred Non-Tobacco & Tobacco. Preferred Plus rates are not available • Standard Non-Tobacco & Tobacco • Rated Non-Tobacco and Tobacco(maximum Table E) • Rated but the face amount of the rider decreased • Declined. The LTC rider can be rated or declined even if the base policy is Standard or better Preferred Class Qualifications • Preferred classes must be available on the product requested • The rate class of the base life policy must be Preferred or better without the use of Special Underwriting Programs, such as Wellness Credits Ratings • If the base policy is rated, the LTC rider will be rated at the same rate or higher • The base policy must qualify for Table E or better on its own merit without the use of Special Underwriting Programs, such as Placement Improvement Program (PIP) or Wellness Credits • The LTC rider can be rated separately from the base life policy up to and including Table E (except in NY, KY and Virgin Islands) Flat Extra Ratings –Medical Risks • If the life insurance is rated with a flat extra due to a medical impairment, the LTC rider may be issued with a table rating • Due to the nature of these risks, these will be reviewed on a case-by-case basis • The LTC rider will be declined on cases where a flat extra is being offered due to avocation (i.e. aviation, motor sports, etc) Example: Decrease LTC Amount • 75 year old applying for a $400,000 LTC rider • This individual is probably more interested in obtaining LTC coverage as opposed to the underlying life insurance since the potential pay out of the rider would probably cover most, if not all, of the monthly cost of the long term care • In these circumstances, Nationwide may consider reducing the amount of the LTC rider Example: Wellness Credits • Application for $500,000 life insurance with a $250,000 LTC rider • The rating on the life insurance is determined to be a Table B and the rating for the LTC rider is also determined to be Table B • The life insurance rating was “moved” to Standard with the use of Wellness Credits • The LTC rider remains at Table B Example: Wellness Credits • Application for $1,000,000 life insurance with $500,000 LTC rider • The rating for the life insurance is determined to be Table F • The rating on the life insurance was “moved” to Table E with Wellness Credits • The LTC rider would be declined since the original life assessment was Table F Citizenship Requirements • The LTC rider is only available to US/Canadian citizens and permanent residents (green card holders) who plan to reside in the United States without prolonged periods of time outside the United States • For those with a green card with plans to permanently reside in the U.S., we may require their alien registration number, the number of years they have lived in the U.S., and information concerning their employment history Considerations for LTC Underwriting • Cognitive impairment • Functional capacity – ability to perform ADL’s and IADL’s • Mobility – osteoporosis, falls, & fractures • The use of multiple medications • Frailty • Co-morbid conditions – multiple medical problems which typically are more significant than each problem alone (i.e. overweight/arthritis, CAD/DM) Favorable Factors • • • • • • • Currently working, either full or part-time A spouse in good health Family or friends living in the same household Participation in hobbies & outside activities The current ability to drive The ability to travel & visit independently Exercising several times a week Situations Suggesting Declination • Currently receiving disability benefits, social security income, or Medicaid benefits • Currently exercising Power of Attorney by another individual • ADL & IADL Deficits – requiring the help of another person to perform ADL’s & IADL’s • Currently using Long Term Care Services • Currently using Durable Medical Equipment Activities of Daily Living • • • • • • • Ambulating/mobility Bathing Control of bladder/bowel (continence) Dressing Eating Toileting Transferring out of bed or chair Instrumental Activities of Daily Living • • • • • • • • Using the telephone Managing finances Handling transportation Shopping Laundry Housework Taking all medications Preparing meals/cooking Long Term Care Services • • • • • Assisted Living Home health care Nursing care Adult day care Other qualified LTC services (i.e. foster home care for elderly, etc). Durable Medical Equipment • • • • • • • Hospital Bed Stair Lift and or chair lift Wheelchair Ventilator/Respirator/Oxygen equipment 4 pronged (quad) cane Motorized cart Walker Height & Weight Guide • An individual with functional or physical impairment complicated by their weight is considered a high risk for the LTC rider • Overweight associated risks: depression, eating disorders, HTN, diabetes, cancer, heart disease, back problems & edema • Underweight associated risks: frailty, malnutrition, cancer, depression, eating disorders, and osteoporosis Medication Guide • Any medication taken by a proposed insured may be significant to the risk • When an individual is taking 10 or more medications, the case will be underwritten very carefully • Medications used for memory loss, moderate or severe depression, or chronic pain indicate significant health impairments which will typically result in declination of the LTC rider Scenario #1 – Breast Cancer • History of breast cancer 8 years ago with no metastasis, no recurrence, and no complications • Life insurance coverage approved Table B + $5.00 flat extra for 5 years • Consider LTC risk at Table D rates (+50 for base coverage and +50 for flat extra) Scenario #2 - Aviation • Private pilot with aviation risk not requiring a rating • Medical assessment is favorable & he meets Nationwide’s Preferred criteria. • We would allow Preferred for both the Life and LTC rider • If aviation was assessed with a flat extra, the LTC rider would be declined Scenario #3 – Diabetes • 65 year old male with onset of type II diabetes 12 months ago, treated with oral meds only, diabetes is well controlled and no co-morbid conditions present(CAD, obesity, etc.) • Life insurance policy assessed at Std Non-Tobacco rates. LTC rider rated Table B for his diabetes • If diabetes is uncontrolled or recently discovered, the LTC rider would be declined, even if an offer can be extended for the base life coverage Summary • Similar to life insurance underwriting, the LTC rider is underwritten on an individual basis • Underwriting considerations include cognitive impairment, functional capacity, mobility, frailty, comorbid conditions, and age • Please call the underwriting team to discuss any long term care scenario. We are always happy to help! Questions? Life insurance is issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio Nationwide, Nationwide Financial, the Nationwide framemark and On Your Side are service marks of Nationwide Mutual Insurance Company .