The Marketplace for Critical Illness Coverage

1. The Marketplace for Critical Illness Coverage Presented by : Jerry Jacobs, CLU 5416 Yale Street Metairie, Louisiana 70003 Ph#(504)888-2242 Fax#(504)889-1753 8301 Delmar, #2W St. Louis, Missouri 63124 Ph#314-997-0751 Cell(504)237-8710 Email: jerry_in_metairie@msn.com

2. Introduction What is Critical Illness Insurance? U.S. Marketplace Trends Need for Critical Illness Protection Product Design Marketing Applications Global Perspective U.S. Critical Illness Marketplace Q&A/Discussion – Open Forum – Issues/Concerns AGENDA

3. FACTS • Approximately 1.5 million Americans suffer a heart attack each year. Of these, 1.1 million survive at least three (3) years. • Over 40% of the population will develop breast, prostate, or some form of cancer at some point in their lives. • The probability of surviving a critical illness before age 65 is almost twice as great as dying. Source: 1987 Employee Benefits News And Views Magazine

4. What Is Critical Illness Insurance? • Critical illness insurance (C.I.I.) has characteristics of both life insurance and health insurance. • C.I.I. pays a life insurance-type lump sum benefit, upon diagnosis of one of a number of critical illnesses rather than upon death.

5. C.I.I. Coverage • C.I.I. will pay a lump sum benefit after the insured is diagnosed with a critical illness. Virtually all products cover the “Big Three”: • Heart Attack • Stroke • Life Threatening Cancer • Nearly 70% of all deaths under age 75 are associated with heart disease, stroke and cancer.

6. The “Big Three” • Heart Attack • Death of a portion of the heart muscle (myocardium) from a blockage of one or more coronary arteries. • Stroke • Any acute cerebrovascular accident producing permanent neurological impairment resulting in at least thirty (30) days of paralysis or other measurable neurological deficit.

7. The “Big Three” • Life Threatening Cancer • Only those types of cancer shown by the presence of a malignancy identified by the uncontrolled growth and spread of malignant cells and the invasion of tissue that could result in death.

8. World Growth • Concept developed by Marius Barnard • Introduced South Africa in 1980s • United Kingdom • Japan • Continental Europe • Australia • Canada • Ireland • United States

9. U.S. Marketplace Trends • Medical technology is keeping people alive longer • The concern today is not dying too soon – it’s living long

10. People Living Longer • 65 year old male can expect to live to age 83 • 65 year old female can expect to live to age 87

11. Attitudinal Trends • Consumers have greater fears than premature death, such as: • The cost of health care • Cost of nursing homes • Having enough income to retire

12. LIFE INSURANCE INDUSTRY TRENDS • Demographics favor living benefits over death benefits • THE RESULT: Individual life sales have declined 30% over the past ten (10) years. Source: Marketing Edit LIMRA 1997

13. Why C.I. Coverage? • Probability of surviving C.I. before age 65 is almost twice that of dying • Costs associated with C.I. are not covered by traditional insurance

14. Why C.I. Coverage? • EXAMPLE: Two-thirds of all cancer-related costs are indirect, non-medical expenses, such as: • Lost income for C.I. Survivor • Lost income and work time for spouse or care giver • Housekeeping and child care expenses • Home health care needs • Home or car modifications • Non-covered experimental treatments • Expenses not covered by insurance (including co-payments • and deductibles)

15. If you survive a critical illness, what will you do? • Disability Insurance – pays a percentage of the sufferer’s monthly income and benefits are dependent upon ability to work. • Long Term Care – limited to a daily benefit available subject to a hospital stay or home nursing requirements. • Accumulation Products – intended to provide supplemental retirement income.

16. If you survive a critical illness, what will you do? • Disability Insurance – pays a percentage of the sufferer’s monthly income and benefits are dependent upon ability to work. • Long Term Care – limited to a daily benefit available subject to a hospital stay or home nursing requirements. • Accumulation Products – intended to provide supplemental retirement income.

17. Critical Illness Insurance • Insured has options • The money provided by the C.I.I. empowers the insured to exercise choice. • C.I.I. is a consumerist product

18. Family/Individual Perspective • Replace reduced earnings • Pay off personal debts • Cash for medical treatment or associated expenses • Education or Retirement

19. Business Perspective • Buy/Sell Agreements • Provide ill shareholder with benefit • Enable working shareholders to buy out ill shareholder • Key Person • Pay off creditors • Executive perquisite • Recruit replacement with similar talent

20. C.I.I. Product Critical Illness Insurance is Flexible • Life • Health • Disability • Other products

21. Open Forum – Issues/Concerns