1 KEY MARKETS & SALES IDEAS AGENDA 1. Client and Sales Overview 2. Uncovering the CI Need 3. Key Markets – Sales Ideas and Case Studies 4. BMO Insurance Living Benefit CI Plans Critical Illness Insurance: Key Markets and Sales Ideas
2 KEY MARKETS & SALES IDEAS Critical Illness Sales Overview CI Sales in Canada: Client Profile* Average age is around 33 75% of buyers are between ages 35 and 54 Just under half of sales are to females (47%) Non-smokers represent 89% of sales * Source: Munich Re (by face amount - 2011 )
3 KEY MARKETS & SALES IDEAS Critical Illness Sales Overview CI Sales in Canada: Client Profile* Average annual premium is just under $1,130 Average face amount is $80,000 Almost 90% of policies have 20 or more covered conditions 70% of sales have a Return of Premium Feature * Source: Munich Re Canada (2011)
4 KEY MARKETS & SALES IDEAS Critical Illness Sales Overview * Source: Munich Re (2011) CI Sales in Canada: By Product Type Total 2011 Sales: $102 million (+9%)
5 KEY MARKETS & SALES IDEAS Uncovering the CI need 1. How do you open the CI discussion with your clients? 2. What are the most important questions? 3. Needs Analysis for CI? 4. Educating your client
6 KEY MARKETS & SALES IDEAS Uncovering the CI need How do you open the CI discussion with your clients? Do you know anyone who was recently diagnosed with a critical illness? Can you weather the financial impact of a serious illness? Did you know that a certain type of insurance pays a tax-free benefit 30 days after diagnosis?
7 KEY MARKETS & SALES IDEAS Fact Find 1. Any CI experiences in your family? 2. Impact? 3. If you had a CI what’s important to you? 4. Benefits at work / private coverage? 5. Emergency funds in place? 6. Would cash help? Uncovering the CI need
8 KEY MARKETS & SALES IDEAS Key Markets: Matching the product to your market Key Markets Mortgage market “I want to pay off my debts” Over 50 market “I want a comfortable retirement” Disability market “I don’t have enough disability coverage” Small Business market “I am the business” Corporate market “I need to protect our shareholders”
9 KEY MARKETS & SALES IDEAS KEY MARKET Mortgage market Debt protection Little disposable income Combination with life insurance is better Need affordable coverage Convertible later IDEAL PLAN Living Benefit 10 Living Benefit 20 Living Benefit 100 with ROPS “I want to pay off my debts”
10 KEY MARKETS & SALES IDEAS “I want to pay off my debts” Mortgage market The Critical Illness Benefit is used to reduce or eliminate the outstanding debt. If diagnosed with a critical illness, there is a strong chance you will lose your job or be away from work for a long time. The last thing you need to worry about is losing your home.
11 KEY MARKETS & SALES IDEAS CI Sales Idea: “Mortgage Protection and Your Money Back” Eric, 35, has just been approved for a $175,000 mortgage. The mortgage rate is 6% and Eric’s selected an amortization period of 25 years. Eric also wants the financial security of knowing that his mortgage will be paid off if he becomes critically ill. Eric makes the right choice and purchases a BMO Insurance Living Benefit 100 critical illness plan providing a benefit of $175,000. If Eric suffers a critical illness, the Benefit can be used to pay off his mortgage. And with BMO Insurance, his critical illness plan also includes a Return of Premium on Surrender Benefit Rider, which gives him the option to surrender coverage anytime after the 10th year and receive back a portion of his premiums. After the 15th year, he can receive 100% of his annual premiums … anytime!
12 KEY MARKETS & SALES IDEAS CI Sales Idea: “Mortgage Protection and Your Money Back” Mortgage is $100,000 and CI premiums are $221/mo. Case Study - Eric Monthly mortgage payment$1,120 *Monthly critical illness premium$221 Total Monthly Payment$1,341 On the 15th policy anniversary: Mortgage principle just over$100,000 Critical Illness Benefit$175,000 *(based on a Male, age 35, and non-smoker rates)
13 KEY MARKETS & SALES IDEAS CI Sales Idea: “Mortgage Protection and Your Money Back” Now that Eric’s mortgage has been reduced, he may want to surrender $75,000 of coverage. If he reduces his Critical Illness Benefit to $100,000, he receives a premium refund of $16,560! Eric can use these funds to pay down his mortgage principal and pay off his mortgage two years earlier! Partial surrender of coverage is available provided that a minimum coverage of $25,000 is maintained in force. The return of premium on a partial surrender is based on the annual base premium excluding the policy fee. The policy fee is only returned when there is a full surrender of coverage. Mortgage is $100,000 and CI premiums are $221/mo. Surrender excess Critical Illness coverage of $75,000 for a refund of $16,560!
14 KEY MARKETS & SALES IDEAS CI Sales Idea: “Mortgage Protection and Your Money Back” Case Study - Eric Monthly mortgage payment$1,120 *Monthly critical illness premium$129 Total Monthly Payment$1,249 On the 23rd policy anniversary: Mortgage is Nil *(Premium for $100,000 of coverage) Eric’s monthly critical illness premium is now reduced from $221 to $129 … Mortgage is $0 and CI premiums are $129/mo.
15 KEY MARKETS & SALES IDEAS CI Sales Idea: “Mortgage Protection and Your Money Back” Now that Eric’s mortgage is paid off, he may want to surrender his Critical Illness Policy and receive a premium refund of $35,720! Surrender Critical Illness policy for remaining $100,000 for a refund of $35,720! Mortgage is $0 and CI premiums are $129/mo.
16 KEY MARKETS & SALES IDEAS Eric can use this money to top up his RRSP, add a sun room to his home or other improvements, fund his children’s education, take a trip... And most importantly... through the term of his mortgage, if Eric becomes critically ill, his Critical Illness Benefit will pay off his mortgage. CI Sales Idea: “Mortgage Protection and Your Money Back”
17 KEY MARKETS & SALES IDEAS “I want a comfortable retirement” KEY MARKET Over 50 Market Retirement savings protection More income, less debt Level cost of insurance more attractive Need to protect retirement lifestyle IDEAL PLAN Living Benefit 75
18 KEY MARKETS & SALES IDEAS “I want a comfortable retirement” Over 50 Market Critical Illness Benefits can be used to prevent the need to use retirement savings for medical treatments outside of Canada, homecare, home upgrades, medication or other unforeseen expenses. If diagnosed with a critical illness, many individuals would need to use their RRSPs or home equity to fund their medical and non- medical expenses. The cost of lost retirement income can be in the hundreds of thousands.
19 KEY MARKETS & SALES IDEAS Your client calls to thank you! “Thanks for encouraging me to save and invest … now whenever I need cash, I can simply use my savings to get me through hard times.” If your client is diagnosed with critical illness, what happens to their savings and investments? CI Sales Idea: Protecting Your Savings/Investments
20 KEY MARKETS & SALES IDEAS Will your clients need to dip into their retirement nest egg? Will your client reach their retirement and other goals as planned? Did you complete a full needs analysis for your client? Why not suggest protecting their savings and investments? CI Sales Idea: Protecting Your Savings/Investments
21 KEY MARKETS & SALES IDEAS CI Sales Idea: Protecting Your Savings/Investments Case Study – Jennifer Jennifer, 50, purchases $100,000 of Living Benefit 75 critical illness coverage for an annual premium of $1,815* At age 58, Jennifer is diagnosed with an aggressive form of breast cancer She decides to get experimental cancer treatment in Rochester, New York The critical illness benefit of $100,000 covers the cost of treatment (rather than using some of her $350,000 of retirement savings) * Quote using BMO Insurance Wave illustration software as of November 22, 2011 using non-smoker rates
22 KEY MARKETS & SALES IDEAS CI Sales Idea: Protecting Your Savings/Investments With CI coverage, Jennifer has almost $220,000 more in retirement savings at age 75* * Includes cost of LB 75 CI policy premiums; assuming 6% annual interest Without CIWith CI
23 KEY MARKETS & SALES IDEAS KEY MARKET Disability Market Supplemental disability coverage Off-the-job coverage Disability income protection IDEAL PLAN Living Benefit 10 Living Benefit 20 “I don’t have enough disability coverage”
24 KEY MARKETS & SALES IDEAS “I don’t have enough disability coverage” Disability Market The Critical Illness Benefit is used to top-up the income derived from a disability plan. If diagnosed with a critical illness, many conditions are similar to those that pay for disability coverage. Unlike disability coverage, critical illness will pay a lump sum amount immediately after the 30 day wait period, AND will not be altered because of your income level.
25 KEY MARKETS & SALES IDEAS Explain the difference between CI and DI 1. Lump sum vs. monthly income with limited benefit period 2. CI claim is not dependent on your client’s ability to work 3. Adjudication once (diagnosis) vs. ongoing claims process & validation of disability (own occ/any occ definition) 4. 30 day survival vs. 90 day plus elimination/waiting period 5. DI may not cover additional medical costs associated with your illness Fact Find (also means educating your client)
26 KEY MARKETS & SALES IDEAS If I could show you a way to receive a tax free, lump sum payment in the event of a heart attack, cancer or stroke, would you be interested? If I could show you how to replace one year’s salary for less then 1.0% of your salary, would you be interested? CI Sales Idea: The 1.0% Solution
27 KEY MARKETS & SALES IDEAS Insuring One Year’s Salary - $50,000 AGEMALEFEMALEMALEFEMALE 3012.4213.4114.6716.11 3515.7117.7820.7522.37 4021.3824.4831.0131.46 4531.1433.2148.4745.00 * Monthly premium as a Living Benefit rider; all rates are non-smoker $50,000 @ 1.0% = $500 per year = $45 per month LB 10*LB 20*
28 KEY MARKETS & SALES IDEAS Insuring One Year’s Salary - $75,000 AGEMALEFEMALEMALEFEMALE 3018.6320.1222.0124.17 3523.5626.6631.1233.55 4032.0636.7246.5147.18 4546.7149.8272.7067.50 * Monthly premium as a Living Benefit rider; all rates are non-smoker $75,000 @ 1.0% = $750 per year = $68 per month LB 10*LB 20*
29 KEY MARKETS & SALES IDEAS KEY MARKET Small Business Market Family business protection Business income protection Need to hire help to keep the business running Avoid the need for an immediate sale IDEAL PLAN Living Benefit 10 Living Benefit 20 Living Benefit 75 “I am the business”
30 KEY MARKETS & SALES IDEAS “I am the business” Small Business Market The Critical Illness Benefit is used to keep the business running and continue the income stream. If diagnosed with a critical illness, there may be a need to sell the business or close the doors due to illness. Losing the family business or being forced to sell to meet a called bank loan can be devastating.
31 KEY MARKETS & SALES IDEAS CI Sales Idea: Business Monthly Expenses How much would you need to cover your business monthly expenses for 6 months, 9 months, 12 months? Allows your client and their business to adjust to the reality of their changed lifestyle in the event of a critical illness.
32 KEY MARKETS & SALES IDEAS The CI rider offers the same benefits as a standalone Critical Illness policy It also includes value-added services at no extra cost: Critical Care Assist Benefit and HelpingHands (provided by Best Doctors and Shepell.fgi)! † No CI policy or rider fee! CI Sales Idea: CI as a Rider † BMO Insurance may change the service providers or cancel access to these services at any time without notice unless otherwise specified in the contract. Other restrictions may apply.
33 KEY MARKETS & SALES IDEAS CI Sales Idea: CI as a Rider Case Study – Anthony and Parveen Anthony, 38, owns and runs a small bakery Anthony recently married Parveen, who works part-time at a travel agency Anthony is looking to purchase $200,000 of term life insurance His advisor recommends also purchasing $50,000 of Living Benefit 10 renewable critical illness insurance
34 KEY MARKETS & SALES IDEAS The monthly premium for $50,000 of Living Benefit 10 critical illness coverage from BMO Insurance is only: $19 * Ironically, the monthly cost for Anthony to have purchased just Best Doctors family coverage was also $19 ** CI Sales Idea: CI as a Rider * Based on non-smoker rates ** Source: Best Doctors (04/06/2010)
35 KEY MARKETS & SALES IDEAS Anthony, while playing in his men’s regular weekly hockey game, started coughing persistently His family doctor prescribed antibiotics but with no relief of the coughing Despite monthly visits to his doctor, nothing serious could be detected Anthony subsequently developed pneumonia, and x-rays indicated an infection in his right lung CI Sales Idea: CI as a Rider
36 KEY MARKETS & SALES IDEAS Over a period of months, with constant chest pain and severe coughing, a respiratory specialist ordered two bronchoscopies in addition to a needle biopsy, all which had inconclusive results Even with the suspicion of cancer, without the pathology to support the diagnosis, treatment could not commence With all local pathology reports being inconclusive, specialist recommended consulting with a surgeon to undergo a surgical biopsy CI Sales Idea: CI as a Rider
37 KEY MARKETS & SALES IDEAS CI Sales Idea: CI as a Rider Anthony turned to Best Doctors, who reviewed his medical files and test results, including tissue samples from the first biopsy Best Doctors confirmed lung cancer that had metastasized into his left hip Specialist immediately referred Anthony to regional oncologist, who supported Best Doctors findings and recommended treatment, which included a trial drug treatment Best Doctors also recommended bone maintenance medication used to treat osteoporosis
38 KEY MARKETS & SALES IDEAS CI Sales Idea: CI as a Rider After many months of treatment, Anthony was able to return to work at his bakery The $50,000 critical illness benefit allowed Anthony to hire a temporary worker to keep his bakery going, and Parveen to take a temporary leave of absence from work to stay at home to assist in Anthony’s recovery The critical illness benefit also covered the $5,000 cost of the trial drug treatment not covered under Anthony’s provincial health care plan
39 KEY MARKETS & SALES IDEAS Best Doctors provided expert and timely life saving recommendations to assist Anthony’s local hospital physicians HelpingHands services provided Anthony and Parveen stress counseling services through this difficult time Each of these services saved thousands of dollars in costs and valuable time for unnecessary invasive surgical procedures All this for a CI rider cost of $19/month! CI Sales Idea: CI as a Rider
40 KEY MARKETS & SALES IDEAS “I need to protect our shareholders” KEY MARKET Corporate Market Key man coverage Fund buy-sell agreements Shared ownership agreements Protection of the day-to-day operation IDEAL PLAN Living Benefit 75 Living Benefit 100 15-Pay Living Benefit 100
41 KEY MARKETS & SALES IDEAS “I need to protect our shareholders” Corporate Market The Critical Illness Benefit is used to provide an uninterrupted income flow of the company due to the loss of a key employee and assist in the finding of a replacement. If diagnosed with a critical illness, the loss of a key employee or executive can cause havoc with the daily operation as well as possibly affect the stock price of the company if there is any significant lost revenue.
42 KEY MARKETS & SALES IDEAS Corporate Market: Case Study Case Study – Jarred Omega Limited Partnership was trying to recruit Jarred, 50, a highly regarded and experienced local engineer As part of an attractive offer package which included partnership, Omega entered into both a buy/sell and shared ownership agreement with Jarred The partnership purchased, with Jarred as the life insured, a 15-pay Living Benefit 100 critical illness policy with a benefit of $400,000 and annual premium of $15,963* * Quote using BMO Insurance Wave Illustration software as of Nov. 1, 2011, based on non-smoker rates
43 KEY MARKETS & SALES IDEAS Corporate Market: Case Study The CI coverage included a return of premium on surrender (ROPS) feature which would return 100% percent of premiums paid after 15 years if no CI benefit was paid The partnership owned the underlying critical illness benefit, but Jarred owned the ROPS benefit In the event that Jarred were to suffer a critical illness, the partnership could use the CI benefit to hire a temporary replacement If Jarred was unable to return to work, the CI benefit could also be used to buy-out Jarred’s partnership
44 KEY MARKETS & SALES IDEAS Corporate Market: Case Study After many years of a productive and healthy career with the partnership, Jarred decided to retire at 65 Since no CI benefit under the policy was paid, Jarred decided to exercise his ROPS ownership right The ROPS benefit paid to Jarred was $239,445*, which he could use any way he wanted Jarred felt that he did not need to supplement his retirement income, so he used the ROPS proceeds to renovate and enlarge his family cottage, and to purchase an adjacent parcel of land that would give him an additional 75 feet of lake frontage * It is recommended to consult professional advisors regarding the taxation and deductibility of CI benefits and premiums under buy/sell and shared ownership agreements. BMO Insurance makes no representation or warranty regarding this tax treatment.
45 KEY MARKETS & SALES IDEAS BMO Insurance: Living Benefit Critical Illness Plans Broad range of critical illness plans with competitive rates and standardized definitions Industry leading number of covered conditions, including built-in Loss of Independent Existence* CI riders available on Preferred Term and UL policies (no additional rider or policy fee – bundle up and save!) Renewable CI plans convertible will full commission Best Doctors coverage for the life insured, their immediate and extended family members Helping Hands assistance from Shepell-FGI Multi-policy fee discount for family and business relationships * 15-Pay Living Benefit 100 does not include Loss of Independent Existence
46 KEY MARKETS & SALES IDEAS It’s just that easy! Our application for Life Insurance also includes the application for Critical Illness. No need for supplementary health questionnaires. Also, remember that your clients can pay their first year premium, up to $50,000 with their MasterCard or VISA. Getting Started
47 KEY MARKETS & SALES IDEAS Plan for the unexpected FOR ADVISOR USE ONLY Information contained in this document is for illustrative purposes and is subject to change without notice. Concept illustrations are not contracts and the values shown are not guaranteed. Refer to an up-to-date policy illustration for this plan for a current statement of benefits. Insurer: BMO Life Assurance Company. ® Registered trade-mark of Bank of Montreal, used under license. No matter what plan you have in place, nothing can prepare you for the financial burden associated with surviving a critical illness. Critical Illness insurance is a vital part of the financial planning process to protect your assets, your lifestyle and your financial future.
48 KEY MARKETS & SALES IDEAS We’re here to help. Give us a call! WESTERN CANADA SALES OFFICE 1-877-877-1272 ONTARIO REGIONAL SALES OFFICE 1-800-608-7303 QUEBEC-ATLANTIC REGIONAL SALES OFFICE 1-866-217-0514
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