CI Market in Canada Challenges still present in Canada: Lack of claims experience Product was developed on statistics Desire to preserve premium rate guarantees Aggressive product features How will advances in medical science affect CI? Munich Re March 2004
Bright Future Long-term sustainable product Greater awareness, availability of the product with innovative enhancements Initial claims are within expected limits Learning from other countries’ ‘growing pains’ and avoiding some major pitfalls Munich Re March 2004
Canadian CI Claims Munich Re March 2004. MaleFemale
Policy Series 2004 Heart Attack Heart Attack means the acute presentation of heart symptoms accompanied by the death of a portion of heart muscle as a result of inadequate blood supply and as evidenced by: a) new electrocardiographic (ECG) changes indicative of a myocardial infarction; and b) the elevation of cardiac markers to levels considered diagnostic for acute myocardial infarction in accordance with standardized laboratory values for the accredited hospital in Canada or the U.S. performing the test and with criteria published by one of the following: the Canadian Cardiovascular Society the American Heart Association; or the American College of Cardiology, or a successor organization to any of the above. Heart Attack does not include: Elevated cardiac markers after coronary angioplasty unless there are diagnostic changes of new Q wave infarction on the ECG.
Policy Series 2004 Stroke Stroke means a cerebrovascular event producing neurological sequelae lasting more than 30 days and caused by intracranial thrombosis or haemorrhage, or embolism from an extra-cranial source. There must be evidence of measurable, objective neurological deficit. For greater certainty, findings on imaging studies, such as lacunar infarcts, which are not compatible with clinical neurological signs due to a cerebrovascular event do not satisfy the definition of Stroke. Stroke does not include transient ischemic attacks. For the purposes of this definition, transient ischemic attack means a neurological event caused by focal brain or retinal ischemia with measurable objective evidence of neurological sequelae lasting less than 24 hours with or without imaging study changes.
Policy Series 2004 Parkinson’s Disease Parkinson’s Disease means permanent primary idiopathic Parkinson’s disease, resulting in significant neurological impairment or in loss of cognitive function. The degree of neurological impairment or loss of cognitive function must be sufficient to cause an inability to perform, 2 or more of the following 6 activities of daily living while participating in a generally accepted drug treatment program: dressing – the ability to put on, remove, fasten and unfasten all necessary clothing, braces, artificial limbs or surgical appliances. toileting — the ability to get to and from the toilet and complete related personal hygiene; transferring — the ability to move yourself into or out of a bed, chair, or wheelchair; feeding — the ability to get food from a plate into the mouth; driving — the ability to legally operate a motorized vehicle; and mobility — the ability to walk 10 metres without aid. The Diagnosis must include a current physical assessment from an occupational therapist who is not related by blood or marriage to the Insured or the Owner, and is not in a business relationship with the Insured or the Owner.
Policy Series 2004 Loss of Speech Loss of Speech means the total and irreversible loss of the ability to speak due directly to damage to the speech organs (commonly known as the “voice box”) vocal cords as the result of injury or disease.
New Covered Conditions Aplastic Anemia –means the complete and irreversible bone marrow failure resulting in anemia, neutropenia and thrombocytopenia. –Most common in adolescents and young adults –Potentially life threatening - people who could not receive a bone transplant may have not been previously covered Bacterial Meningitis –It is a bacterial infection of the fluid in a person's spinal cord and fluid that surrounds the brain. –Particularly adding value for LifeAdvance Child rider
RMC Management Meeting 2004 Rate Increases by Plan Type * Approximate overall rate increase for Base Plans ** Ignores the impact of removing the built-in ROP from the Lifetime plan 0 5 10 15 20 25 T75/65T75T10Lifetime ** Percentage Increase
Improved Illness Assist Benefit $250,000$275,000 Canada Life Company ACompany B $250,000 10% to max $25,000 25% to max $50,00010% to max $15,000 Example $250,000 lump-sum benefit More Improvements with LifeAdvance Illness Assist – Waiting period has been removed Does not reduce premium payback benefit More Improvements with LifeAdvance Illness Assist – Waiting period has been removed Does not reduce premium payback benefit $250,000 CI Lump-sum $25,000 Illness Assist $250,000 CI Lump-sum $50,000 Illness Assist $250,000 CI Lump-sum $25,000 Illness Assist
New Surgery Advance Example $250,000 lump-sum benefit Canada Life Company ACompany B 10% to max $15,00010% to max $10,000Not Applicable CI Lump-sum Illness Assist CI Lump-sum Surgery Advance CI Lump-sum Illness Assist Advance Benefit
Canada Life continues its trendsetting pace 1 in 4.6 men and 1 in 7.8 women will develop both heart disease and cancer during their lifetime.* *Based on Heart and Stroke, 2004 and National Cancer Institute of Canada: Canadian Cancer statistics 2004 During their lifetime, the probability of developing cancer is 1 in 2.6 for women and 1 in 2.3 for men and the probability of developing heart disease is 1 in 3 for women and 1 in 2 for men. The probability of developing both cancer and heart disease is calculated assuming the conditions are independent,
Second Event Rider Heart Attack or Stroke Life-Threatening Cancer Life-Threatening CancerHeart Attack If the insured received a critical illness benefit before his or her 65 th birthday for: The second event coverage will be the lesser of 50% of the benefit amount selected for the basic policy and $50,000.
Second Event Rider In Action 30 days12 months 1 st Event Second event rider coverage continues until the earlier of 11 years or age 75 2 nd Event Elimination period $50,000 $250,000
Lifetime Permanent (T100 Paid up at age 100) Ideal for wealthy client Who want to quick pay Option A It’s also ideal for middle income clients. Option B younger clients and those who would like the most affordable premium payback offer. Option C
Premium Payback at Withdrawal Request T100 Issue Ages18-65 100% Year 15 50% Year 10 Option A 100% Year 20 75% Year 15 Option B 100% Year 25 50% Year 15 Option C Note: Optional withdrawal dates available at each year After the first option date.
Price Comparisons With ROP – T100 Option A Existing PlanNew Plan – Option A Age 35 $1,088 $1,980 % increase 44% Age 40 $1,489 Age 45 $2,145 Age 50 $3,024 $1,564 $2,918 $4,281 33% 36% 41% Note: T100 plan, $100,000 coverage with ROPD and ROP option A
Price Comparisons With ROP – T100 Option B Existing PlanNew Plan – Option B Age 35 $1,088 $1,779 % increase 32% Age 40 $1,489 Age 45 $2,145 Age 50 $3,024 $1,438 $2,581 $3,728 20% 21% 23% Note: T100 plan, $100,000 coverage with ROPD and ROP option B
Price Comparisons With ROP – T100 Option C Existing PlanNew Plan – Option C Age 35 $1,088 $1,162 % increase 25% Age 40 $1,489 Age 45 $2,145 Age 50 $3,024 $1,360 $2,340 $3,444 11% 9% 14% Note: T100 plan, $100,000 coverage with ROPD and ROP option C
Partial Withdrawals Reduced Paid-up Pay-up all future premiums by reducing coverage Options begins once PPB reaches 100% Each 5 year interval Rate card will be available Receive eligible premiums when surrendering a portion of coverage Remaining coverage stays inforce with premium payback Built-in Options
T100 Option A in action… Example Proposal Prospect: Non-Smoker MaleAge 50 yrs Plan:Term 100 (Permanent level) Optional Benefits:- Second Event - PPB at Death - PPB at Widthdrawal (Option A) Face Amount:$250,000.00 Annual Premium$10,103.89
75 Premium Payback $50,519 Premium Payback $151,558 50% Partial Withdrawal at age 65 Face Amount $125,000 Partial Premium Payback $ 70,398 Paid-Up Feature At age 75 Premium Payback $251,885 Result $250,000 Paid-Up Policy Plus $64,365 Premium Payback Age 50 Option A - T100 (Permanent)
Level Term to 75 Premium Payback Options Issue Ages18-49 100% Year 15 50% Year 10 Option 1 100% Age 65 50% Age 60 Option 2 100% Age 75 0% At Expiry Issue Ages 18-60 Note: Optional withdrawal dates available at each year After the first option date on option 1 and option 2. Issue Ages18-60
T75 with PPB Cost Compare T75 With PPB (Option 1) T75 With PPB (Option 2) T75 With PPBX At Expiry Male, Age 40, Non-Smoker Benefit Amount: $100,000 Annual Premium$1,902$1,586 <16% A $1,443 <23% A, <8% B Total Premiums Paid $66,557$55,478$50,480 PPB at 10 th Anniversary $9,509$0.00 PPB at 15 th Anniversary $28,526 100% return $0.00 50% age 60 100% age 65 $0.00 100% Expiry Note: The premium payback benefit amount will vary from the amount illustrated – upward or downward – if the policy is modified at the request of the owner by, example, the addition or removal of optional riders/benefits.
Level Term to age 75 40 yrs45 yrs50 yrs55 yrs60 yrs65 Monthly Investment $1,000.00 Assume 6% annually $679,581 Asset Protection Strategy $583,733 Monthly Investment $1,000.00 *Less CI Monthly Premium $ 141.04 Net Monthly Investment $ 858.96 Issue ages 18-49 *CI Plan Level T75 – S100,000, 2 nd Event, PPB/D/W/E In 15 yrs $100,000 are required To cover expenses incurred Due to a Critical Illness $410,953
Opportunity Cost After 46% marginal tax rate $ 53,536 $ 28,909 $1,156 Annual opportunity cost ……………………………… Before tax opportunity cost Annual LifeAdvance Premium $1,692.48 versus Example Cont’d ROP Benefit available at age 65* $ 42,312 Invest $1,000 per month at 6% over 25 years $679,581 Invest $858.96 per year at 6% over 25 years $583,733 +
10yrs R&C with Premium Payback Riders 100% Year 15 50% Year 10 Issue age 50 > PPBW 100% Age 65 50% Age 60 Issue age < 50 PPBW Note: Optional withdrawal dates available at each year After the first option date on PPBW. Issue Ages18-60 100% Age 75 0% At Expiry PPBX
Premium Payback Summary Permanent, paid up at 100 plan Level premium term to 75 plan 10-year renewable term to 75, convertible to 65 plan Available for all to 75 plans Available for all plans Option A, Option B, Option C Option 1, Option 2 Premium Payback at Withdrawal or Expiry Benefit Premium Payback at Expiry Premium Payback on Death
Applications dated on or before December 31, 2004 and received in Head Office by January 10, 2005 - clients may apply for existing policy series (22 critical illnesses plus illness assist benefit) or new November 2004 policy series (24 critical illnesses plus illness assist benefit) by specifying on application.. Transition Rules Applications dated on or after January 1, 2005 or received in Head Office after January 10, 2005 - will be issued as new November 2004 policy series only.
“It’s Not the Strongest of the Species That Survives, nor the Most Intelligent, but Rather the One Who Is Responsive to Change.” Charles Darwin
1934 Depression 1935Spanish civil war 1936Economy still struggling 1937 Recession 1938 War clouds gather 1939War in Europe 1940France falls 1941Pearl Harbor 1942 Wartime price controls 1943 Industry mobilizes 1944 Consumer goods shortages 1945 Postwar recession predicted 1946 Dow tops 200 – market too high 1947 Cold war begins 1948Berlin blockade 1949 Russia explodes A-bomb 1950Korean War 1951Excess profits tax 1952U.S. seizes steel mills 1953 Russia explodes H-bomb 1954Dow tops 300 – market too high 1955 Eisenhower illness 1956 Suez crisis 1957 Russia launches Sputnik 1958 Recession 1959 Castro seizes power in Cuba 1960 Russia downs U-2 plane 1961 Berlin Wall erected 1962 Cuban missile crisis 1963 Kennedy assassinated 1964 Gulf of Tonkin 1965 Civil rights marches 1966 Vietnam War escalates 1967 Newark race riots 1968 USS Pueblo seized 1969 Money tightens – markets fall 1970 Cambodia invaded – Vietnam War 1971 Wage/price freeze 1972 Largest U.S. trade deficit ever 1973 Energy crisis 1974 Nixon resigns 1975 Clouded economic prospects 1976 Economic recovery slows 1977 Market slumps 1978 Interest rates rise 1979 Oil prices skyrocket 1980 Interest rates at all-time high 1981 Steep recession begins 1982 Worst recession in 40 years 1983 U.S. Embassy, Marine barracks bombed 1984 Record federal deficits 1985 Economic growth slows 1986 Dow nears 2000 – market too high 1987 Record-setting market decline 1988 Junk bond scandal 1989 October “Mini-Crash” 1990 Persian Gulf crisis 1991 Recession 1992 Riots sweep Los Angeles 1993 Bombing of World Trade Center 1994 Rising U.S. interest rates 1995 Oklahoma City bombing 1996 U.S. government shutdown 1997 Collapse of Thailand economy 1998 President impeachment proceedings 1999 Y2K 2000 Internet stocks plummet 2001 September 11 terrorist attacks 2002WorldCom accounting scandal 2003SARS/Blackout/War in IRAQ 2004US Election Reasons Not to Invest
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