From - 09/08/2015 Critical Illness Insurance Sell Less in Order to Sell More

Objections to Buying Critical Illness  Useless Product?  Don’t need it!  Expensive  Difficult to Underwrite  Other Needs come first  Sold as Life Insurance but it is not!!

Industry Sales (a little history…)  Bank is largest seller of CI in Canada – in excess of $300,000,000 in premium  Brokers sell about $80 million  Bank coverage is for debt only, must purchase life insurance first and only covers Cancer, Heart Attack and Stroke  Bank coverage underwritten at time of claim

Let’s Get Critical………..  “Critical” – extremely ill and risk of death  Need for money to provide expensive but necessary medical care  Modern medicine continually eroding the “extreme” aspect of many illnesses  People not only stay healthier longer but when ill, they get healthy earlier and more often

Let’s Get Critical………..  Today’s coverages go further  e.g. – deafness, blindness, loss of speech  Critical Illness / Significant Illness coverage

Let’s Get Critical…..  47% of foreclosures due to owners suffering serious medical problems  Only 3% lose homes due to death  2/3 of costs associated with cancer not covered by health insurance

Let’s Get Critical….  Previous statistics are for United States – likely not applicable to Canada  In Canada, does need for additional monies still exist?

Let’s Get Critical…..  Home care, transportation, drug insurance co-payments, child care, parking, home renovations, lost wages/bonuses (spouse too), health equipment, recuperation away from home, home maintenance  Amounts may be small individually but collectively they add up  Once savings are depleted, it may be difficult to replenish if client is middle-aged

Let’s Get Critical…..  Critical Illness Insurance is a good thing!  But how much of a good thing?  Average face amount $101,000  Average premium - $935  CI calculators include mortgage payoff and long term income needs  If recovery imminent, is the emphasis on significant long term amounts necessary?

Let’s Get Critical…..  Important to understand client’s total financial position e.g.:  2 wage earners mid ‘40s, earning $60k - $90K total, at least one with a drug plan; perhaps both with some disability plan  Mortgage and children to educate  Want to keep retirement savings intact  One-half to one times earnings could be sufficient in this situation; or  2 years of mortgage payments

Extreme Disability Benefit – CI “Booster”  Contractual obligation in most AXA life contracts  Pays one-half the death benefit, to a maximum of $250K, when the life insured cannot perform 5 of the 7 ADL’s  Tax free benefit  Elimination period is 6 months  Benefit paid if disability occurs < age 60

Benefits to your clients – Extreme Disability Benefit  Pays when your client needs money the most  Provides client with: - financial security - options - control - choice

Example…..(40 yr. MNS)  $250,000 T-10 Life Insurance  $100,000 T-10 Critical Illness (enhanced) Company A - $894 Company B - $919

Example…..(40 yr. MNS) AXA - $850 $100,000 Critical Illness $125,000 EDB Potential Payout*: $225,000 $610 $ 50,000 Critical Illness $125,000 EDB Potential Payout*: $175,000 * in the event of an extreme disability

RRSPs or Critical Illness Insurance?!?!  Designed for retirement use but RRSPs often client’s only savings  Taxable upon withdrawal (spousal contributions governed by 3 year rule)  Financial plans based on compounding of interest i.e. time money is growing

RRSPs or Critical Illness Insurance  Contribute less to RRSP and purchase CI with ROP benefit  Ensures that RRSP remains intact in event of Critical Illness  Minimal effect on retirement income

RRSPs or Critical Illness  Husband and wife, aged 40 and 38  Family income of $75,000 annually  2 children, own home  RRSP savings currently of $20,000 and plan to contribute $3,000 per year

RRSPs or Critical Illness  RRSPs grow to 6%  Alternative – Buy $25,000 CI with ROP on 40 year old at $476 annually  RRSP grows to $309,436 and there is a $14,295 ROP  $24,700 difference in first year of RRIF could have generated approx. $100 per month, before age 69

RRSPs or Critical Illness  If illness strikes and RRSP savings used, RRSP only grows to $194,000 at age 69  CI monthly payment results in minimum income drop to ensure retirement income plan stays in place

Underwriting  Amounts under $100,000 do not require additional u/w requirements (under age 50)  Include letter describing any particulars (recent doctor visits, “unusual” family history)  Use Family History Table to pre-screen  Automatic $100,000 offer when Class 1 T-10 issued

Table of Family History

How Much is Enough?  Pay mortgage for 2 years (45 MNS; >$1 per day for $1,000 monthly mtge.)  Salary for ½ year?  Salary for 1 year?  Salary for 2 Years? ……. In after-tax dollars  Appeal to emotion – e.g. fear of Breast Cancer

Objections to Buying Critical Illness  Useless Product?  Don’t need it!  Expensive  Difficult to Underwrite  Other Needs Come First

Make CI Part of Your Plan  Critical Illness insurance promoted to assist client against suffering financial ruin  We insure against catastrophe but most definitions cover “significant” illnesses  Covering costs associated with 1 – 2 years expenses should make coverage affordable to most  Consider Basic CI when cost an issue  Combine CI with EDB and Fracture for maximum protection and best value

From - 09/08/2015 AXA supports advisors who practice needs based selling

AXA’s commitment to advisors  Enhanced compensation on T10, T20 and T70 products: Now 50% FYC + Bonus  Life insurance rates that are competitive in today’s market  Competitive product designs, features & tools Remember…  Extreme Disability Benefit: A powerful and unique feature included in most of AXA’s life insurance contracts

AXA’s commitment to advisors  LifeBeat: Innovative critical Illness protection combined with LTC coverage  All-in-one easy to understand product  22 illnesses and coverages  Enhanced compensation on LifeBeat: T10 45% FYC, T70 55% FYC + Bonus

Thank You Paul Freedman (cell)