Discovering ways living benefits can fit into your practice Presented by: Garrick MacBride Living Benefits Consultant garrick_macbride@canadalife.com

criticaluncovered.ca GO TO THIS SITE TO VIEW VIDEOS Sandra’s Story – It can happen to you Sandra’s Story – Why financial security planning matters Sandra’s Story – Anyone can get sick – even the active and healthy On this slide, we’ve included some of the videos that are featured on the Critical Uncovered website. These videos are emotionally engaging and may help clients recognize that a critical illness can happen to anyone and that insurance may help to significantly reduce the personal costs of a life-altering diagnosis. You are your most valuable asset How you can protect your family

Here’s what you want to avoid If injuries or illnesses strikes, what will they do? This slide shows the impact without the ability to earn an income. Debt begins to rise as income drops.

Properly protected This is the goal, to avoid the crossover of increased expenses and decreased income. 4

Disability Insurance: Build it right What does a claimaint do when their benefit period ends at age 65? What would their retirement look like? Nearly everyone needs a total disability payout until end of life. The gold standard: Lifetime

Lifetime benefit accident and graded sickness Total benefit payout – see the potential payout difference by simply adding the Lifetime rider Base + Lifetime accident and graded sickness + cost of living $3,568,796 Base + Lifetime accident and accident sickness rider $2,340,000 Base coverage $1,500,000 By adding lifetime benefit accident graded sickness and cost of living riders, the monthly benefit is increased annually up to age 65 and then continues to age 78. You may ask, are these riders expensive? The illustrated example is based on the monthly benefit available as a result of an accident. The monthly benefit reduces after age 65 if total disability occurs after age 55 due to sickness. In this scenario the client receives $2.06 million more if he adds lifetime benefit accident and graded sickness and cost of living riders to his base coverage than if he just purchases base coverage alone. Assumption: 2.5% annual cost of living increase, based on $5000 /mo

Why do we need CI? People would pay anything to repair themselves Unfortunately our body does not come with a 100 year warranty

Coronary Artery Bypass Surgery Blindness Deafness 100 Year Warranty? – think about all the thinks people could be diagnosed with over their entire lifetime Heart Attack Stroke Cancer Coronary Artery Bypass Surgery Blindness Deafness Heart Valve Replacement Alzheimer’s Disease Aortic Surgery Parkinson’s Disease Motor Neuron Disease Kidney Failure Major Organ Transplant Major Organ Failure on Waiting List Paralysis Severe Burns Coma Multiple Sclerosis Benign Brain Tumour Loss of Limbs Loss of Speech Aplastic Anaemia Bacterial Meningitis Acquired Brain Injury Occupational HIV *LOIE: Bathing, Dressing, Toileting, Incontinence, Transfer, Feeding

Critical Illness - last 30 CL claims as at August 31, 2016 Age Gender Policy Years Condition Benefit Amount Plan type 30 F 1 Squamous Carcinoma Cancer $100,000 T75 34 M 2 Heart Attack T10 39 Breast Cancer $60,000 56 $30,000 49 3 $250,000 Lifetime 61 4 Uterine Cancer $25,000 Thyroid Cancer $50,000 50 5 Brain Tumour $75,000 62 Liver Cancer 64 6 Heart Valve Replacement 51 $150,000 42 7 Pancreas Cancer 46 8 Lymphoma Cancer $300,000 68 58 9 Angioplasty 40 10 Colon Cancer 60 11 $500,000 52 65 Prostate Cancer 12 $40,000 48 $200,000 13 57 14 63 15 18 Parkinson’s Disease 19 Critical Illness - last 30 CL claims as at August 31, 2016 Age Gender Policy Years Condition Benefit Amount Plan type 30 F 1 Squamous Carcinoma Cancer $100,000 T75 34 M 2 Heart Attack T10 39 Breast Cancer $60,000 56 $30,000 49 3 $250,000 Lifetime 61 4 Uterine Cancer $25,000 Thyroid Cancer $50,000 50 5 Brain Tumour $75,000 62 Liver Cancer 64 6 Heart Valve Replacement 51 $150,000 42 7 Pancreas Cancer 46 8 Lymphoma Cancer $300,000 68 58 9 Angioplasty 40 10 Colon Cancer 60 11 $500,000 52 65 Prostate Cancer 12 $40,000 48 $200,000 13 57 14 63 15 18 Parkinson’s Disease 19 Critical Illness - last 30 CL claims as at August 31, 2016 Age Gender Policy Years Condition Benefit Amount Plan type 30 F 1 Squamous Carcinoma Cancer $100,000 T75 34 M 2 Heart Attack T10 39 Breast Cancer $60,000 56 $30,000 49 3 $250,000 Lifetime 61 4 Uterine Cancer $25,000 Thyroid Cancer $50,000 50 5 Brain Tumour $75,000 62 Liver Cancer 64 6 Heart Valve Replacement 51 $150,000 42 7 Pancreas Cancer 46 8 Lymphoma Cancer $300,000 68 58 9 Angioplasty 40 10 Colon Cancer 60 11 $500,000 52 65 Prostate Cancer 12 $40,000 48 $200,000 13 57 14 63 15 18 Parkinson’s Disease 19 Critical Illness - last 30 CL claims as at August 31, 2016 Age Gender Policy Years Condition Benefit Amount Plan type 30 F 1 Squamous Carcinoma Cancer $100,000 T75 34 M 2 Heart Attack T10 39 Breast Cancer $60,000 56 $30,000 49 3 $250,000 Lifetime 61 4 Uterine Cancer $25,000 Thyroid Cancer $50,000 50 5 Brain Tumour $75,000 62 Liver Cancer 64 6 Heart Valve Replacement 51 $150,000 42 7 Pancreas Cancer 46 8 Lymphoma Cancer $300,000 68 58 9 Angioplasty 40 10 Colon Cancer 60 11 $500,000 52 65 Prostate Cancer 12 $40,000 48 $200,000 13 57 14 63 15 18 Parkinson’s Disease 19 If you can’t read the numbers, not to worry. I’ll highlight the salient points. Here are 30 consecutive CL CI policy claims paid as of Aug 31, 2016. Build 1: Of the 30, 60% claimed in their first 10 years of the policy. Build 2: 30% of these 30 policies were T-10 Build 3: 33% were aged under 40 when they bought the policy Build 4: And of that under 40 group, half bought and claimed on a T-10 There is an appetite for the mid-market to buy T-10, whether they can’t afford permanent now, or other reasons. Not to mention, there is a clear need for these young people to be protected. For any client interested in a critical illness insurance solution but don’t want permanent now that’s ok – there is a more affordable T-10 solution. And this is certainly a better alternative than not getting any CI and ending up in financial hardship after being diagnosed with a covered condition. Source: Canada Life Claims Department; September 2016.

When should our clients have protection? In conclusion, the need for critical illness or long term disability coverage never goes away. Earlier in life one would be carrying expenses such as a mortgage, during the latter working years where most are building a pension program and into retirement very few Canadians set an emergency funds…critical illness insurance designed well can provide that protection. Disability insurance helps replace a portion of income to help cover regular monthly expense normally covered with salary. When disabled and unable to work, income replacement is critical to help maintain a family’s standard of living and dignity. Generally this need disappears around age 65 when many people retire and start drawing from savings to fund their lifestyle.

Case Study: Unmatched Options Demo how T-10 can be secured young, still affordable after a renewal, at age 50 you can convert to permanent CI, ROP 20 can be added non-medically, then at age 70 they have unmatched options. Options explored in next 4 slides, special attention to PAID UP OPTION 1. Full withdrawal 2. Partial withdrawal 3. Paid-up option 4. Maintain contract in force 1. Full withdrawal Take the 100 per cent of eligible premium paid and terminate policy 2. Partial withdrawal Reduce coverage by approximately 40% and take a portion of return of premium 3. Paid-up option Take a paid-up policy 4. Maintain contract in force Keeping in mind that what we are talking about is the creation of a lifetime wealth preservation strategy. A strategy designed to provide benefits if a covered illness occurs while one is still alive.

Option 1 Full Withdrawal – Terminate Contract In this slide, after 20 years (based on the return-of-premium option on his policy) Harry chooses to take a partial withdrawal of an eligible return of premium benefit and reduce his lump-sum critical illness coverage to $60,000. Further, if he wishes to withdraw the balance of his return of premium he may do so at any eligible policy anniversary date after the 20th year. In Harry’s case, he’d be eligible for $26,314.40 in return of premium. Full withdrawal The amounts shown under the partial withdrawal are not guaranteed, and are likely to vary upward or downward. The factors used to determine these amounts are affected by a number of variables such as interest rates, morbidity and mortality. Zoom illustration version 13.3.

Option 2 Partial withdrawal resulting in reduced coverage In this slide, after 20 years (based on the return-of-premium option on his policy) Harry chooses to take a partial withdrawal of an eligible return of premium benefit and reduce his lump-sum critical illness coverage to $60,000. Further, if he wishes to withdraw the balance of his return of premium he may do so at any eligible policy anniversary date after the 20th year. In Harry’s case, he’d be eligible for $26,314.40 in return of premium. The amounts shown under the partial withdrawal are not guaranteed, and are likely to vary upward or downward. The factors used to determine these amounts are affected by a number of variables such as interest rates, morbidity and mortality. Zoom illustration version 13.3.

Option 3 Paid up option – keeps coverage no longer pays premiums Option 3: Harry may elect the paid up option under the return of premium at withdrawal rider benefit on this policy. Depending on the circumstances, he may pre-pay a reduced benefit amount or the same benefit amount with a residual cash benefit. All optional benefit riders terminate with the paid up option with the exception of LOIE. Harry is retired, and at age 70, he’s now on a fixed income and paying $4,138.33 annually for critical illness insurance coverage. He no longer needs to pay premium to continue receiving the basic coverage he needs. This option is available once the return-of-premium benefit has reaches 100 percent. With his annual premium prepaid, he has more flexibility with his fixed income. If there is return-of-premium left over (in Harry’s case- $27,768.09), he can add to his retirement plan. To find out how to illustrate a paid-up option contact your living benefits specialist as they would be happy to explain and walk through the proposal with you for your client. The amount shown under the paid-up benefit is not guaranteed, and is likely to vary upward or downward. The factors used to determine this amount is affected by a number of variables such as interest rates, morbidity and mortality. The above example is not a complete illustration. Zoom illustration version 13.3. $54,381.31

Your clients’ lifetime needs change Provide them critical illness insurance solutions that change with them Recap the presentation – high level The young family market – the financial risk is being able to pay off debt requirements (student loans, mortgage, vehicles, renovations), cover medical expenses. The mid-life market – the financial risk of being able to pay off debt requirements still exists. Additional uses of a lump sum critical illness benefit could be to cover medical expenses, have a spouse take time off work to provide care, and maintain retirement savings contributions, even if not earning an income due to an illness. The critical illness insurance plan design for this stage of life may be to consider converting the critical illness insurance term 10 plan design to a permanent plan design with level premium and adding a return-of-premium rider. This locks the premium at a level rate. The retirement market – the need for critical illness insurance remains, but wouldn’t it be nice to have options such as withdrawing a portion of return of premium, or using that return of premium to pay up a base coverage policy? The critical illness insurance plan design is to maintain permanent critical illness insurance plan which acts as a wealth preservation strategy, a paid up option may be a consideration at this point and no longer require payment of premium. 1. Mortgage Risk Years 2. Retirement Risk Years 3. Pension Risk Years Buy term Convert to level Return-of-premium Paid-up Options

Questions? Contact: Garrick MacBride Living Benefits Consultant 416-559-9441 garrick_macbride@canadalife.com criticaluncovered.ca