Digging in to the detail Income Replacement products

1. Digging in to the detailIncome Replacement products Marc Fabris Strategic Marketing Manager – Life Risk LPAN-000478-2007

2. Disclaimer • The information contained in the following presentations is general information and is only intended for the use of professional advisers. It does not take into account the objectives, financial situation or needs of any person. These factors should be considered before acting on this information. • Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 of 5 Blue St., North Sydney, is the issuer of Zurich Wealth Protection products. • A Product Disclosure Statement (PDS) for Zurich Wealth Protection products is available and can be obtained by calling 131 551. The PDS should be considered before making any decision in relation to the product. • Zurich Australia Limited and its related companies receive remuneration such as fees, charges or premiums for the products which they issue. Details of these payments including how they are calculated and when and how they are payable can be found in the relevant PDS or other disclosure document for Zurich financial products. • Also refer to the important disclosures on the final slide. SWAS-000355-2007

3. Agenda • Income Replacement • Agreed Value Vs Indemnity • Capability Clauses • Partial Vs Total disability • Zurich’s 2007 product update & Service Awards

4. Indemnity Vs Agreed value Around 1/3 of all policies are indemnity .. So beware • Income forecasts/projections • Disclosure requirements remain • Reduced benefits • Aviva – 2 years partial, mental illness restrictions, 2 yrs ‘own’ then ‘any’ • MLC Std – 6 months partial, mental illness restrictions, 2 yrs ‘own’ then ‘any’ • Employment breaks • Study • Childbirth Source: Plan for Life detailed statistics 2006

5. Agreed Value Vs Indemnity

6. Zurich’s Approach • Agreed value as standard • Indemnity available with a discount • No other product limitations apply • Financial endorsement is available for Agreed Value • Then no financials needed for total disablement claims • Details in Zurich Risk Illustrator’s ‘Documents and Forms’

7. Capability Clauses • Ratings were introduced in late 2005 by ProPlanner • Researcher concern over excessive life company capacity to offset ‘notional’ income Issues to consider: • Policy intent should be clear for the insured – unknowns should be avoided • However .. The lack of any control can leave the insurer at risk from illegitimate claims Some examples follow …

8. Capability Clauses • If you are partially disabled and not working to your capability, 'B' will be calculated based on what you could reasonably be expected to earn if you were working to the extent of your capability Asteron (C) Source: ProPlanner Risk Researcher April 2007

9. Capability Clauses • When the Life Insured is Partially Disabled but not working, 'B' will be calculated on the monthly income it would be reasonable for the Life Insured to earn if working as determined by Us. If work is unavailable or cannot be found then, following receipt of medical advice from the Life Insured's Medical Practitioner and any Medical Practitioners nominated by Us, We will determine what type of work the Life Insured could perform and the amount of income it would produce AIG (C) Source: ProPlanner Risk Researcher April 2007

10. Capability Clauses • If the life insured is not working to their assessed capacity then 'B' will be the amount they could expect to earn if they were ING (B) • When assessing capacity, consideration will be given to medical evidence, and other factors related to the life insured's condition. Source: ProPlanner Risk Researcher April 2007

11. Capability Clauses • We will only pay benefits where the loss of income is a result of Sickness or Injury. Zurich (B) • We will take into account available medical evidence (including the opinion of your registered doctor) and any other relevant considerations directly related to your medical condition (including information provided by you) Source: ProPlanner Risk Researcher April 2007

12. Capability Clauses No policy controls Potential claims blow-out (bad for insurer) Broad / undefined provisions Potentially unfair ‘notional’ offsets (bad for insured)

13. Capability Clauses Source: ProPlanner Risk Researcher April 2007

14. Loss of Income in practice “unable to generate at least 80% of your Pre-Disability Income” Benefit paid any impact Waiting period 20% impact • 10% allowed before offset • Indexed quarterly • Direct credited • ½ monthly payments

15. Finalised Zurich claims 18.6% 2.5% 78.9% Total 93% Total before Partial Partial/Total 7% Partial before Total Partial Does Day 1 Partial matter? Source: Zurich claims to April 2007

16. Does Day 1 Partial matter? Total only 78.9% Day 1 partial doesn’t matter Partial only 2.5% Day 1 partial or no payment Day 1 partial not needed unless total is only a few days [< 7 OR 14] Total/Partial 17.3% Day 1 partial needed for initial payments, otherwise delays Partial/Total 1.3% Source: Zurich claims to April 2007

17. Is Total Disablement required before partial? Source: ProPlanner Risk Researcher April 2007

18. 2007 Zurich Product Enhancements Commission options • 4 Competitive alternatives (Year 1 -> 33% up to 121%) • Split trail commission available • Dial down options with permanent policy discounts • Shown on Risk Illustrator reports

19. Commission options

20. Zurich’s focus on service ..

21. WA Taylor Intermediaries Study number Life Insurance Company number Life Insurance Company number Life Insurance Company 1 1 1 ‘06 ‘05 ‘04

22. AFA/Plan for Life – Product and Service Awards Inaugural awards presentation for 2006 • Zurich – Finalist – Trauma product • Zurich – Winner – Service Quality Award

23. Service awards – reinforced by new business quality • 2006 results • 2.3 Average days Initial requirements sent • 28% Cases completed within 5 working days • 92% If 3pm UW acceptance - Completed same day + Policy docs sent within 48 hours • 19 Median days from creation to conversion

24. Summary • Zurich’ Loss of Income definition stands out in the crowd • Clarity • Intent • Agreed Value Vs Indemnity • Beware Indemnity limitations • Correct income disclosure • Zurich continues to position well • Service • Product • Pricing • Remuneration

25. Thankyou

26. Disclaimer The general information in this publication is dated September 14 and is given in good faith and is derived from sources believed to be accurate as at this date, and may be subject to change. Neither Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 nor any of its related entities or any of their employees or directors (Zurich) give any warranty of reliability or accuracy nor accept any responsibility arising in any way by including by reason of negligence for errors or omissions. Zurich 5 Blue Street North Sydney NSW 2060. Phone 131551. Note: The references to Number One overall for Life Risk is in relation to the results of the WA Taylor 2006 Intermediaries Study - a Study into the Life Insurance and Wealth Management Industry in Australia. Policy definitions have been extracted from ProPlanner – April 2007.