Discover DI | from Ameritas Life/Ameritas Life of New York For Producer use only. Not for use with clients. DI /13 DI 101 The Basics of Disability Income (DI) Insurance

Discover DI | from Ameritas Life/Ameritas Life of New York For Producer use only. Not for use with clients. In approved states, Disability Income insurance (Forms 4501NC, 4502GR and 4503BOE) is issued by Ameritas Life Insurance Corp. located at 5900 "O" Street, Lincoln, NE In New York, Disability Income insurance (Forms 5501-NC, GR and 5503-BOE) is issued by Ameritas Life Insurance Corp. of New York located at 1350 Broadway, Suite 2201, New York, NY Policy and riders may vary and may not be available in all states. This information is provided by Ameritas ®, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including: Ameritas Life Insurance Corp., Ameritas Life Insurance Corp. of New York, Acacia Life Insurance Company, The Union Central Life Insurance Company, and Ameritas Investment Corp., member FINRA/SIPC. Ameritas Life Insurance Corp. and Acacia Life Insurance Company are not licensed in New York. Each company is solely responsible for its own financial condition and contractual obligations. For more information about Ameritas®, visit ameritas.com. ameritas.com Ameritas ® and the bison are registered service marks of the Ameritas Life Insurance Corp. © 2013 Ameritas Mutual Holding Company Disclosures

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – What is Disability Income Insurance? It is an insurance policy designed to replace a major portion of income when sickness or injury prevents a person from earning a living. It can help pay regular monthly bills while a person is recovering, but is still unable to do his/her job.

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – What Might Disability Mean for a Person? It can take away the main source of income and be devastating to a worker and his/her family. It can reduce income while causing large expenses It can prevent one from saving for future purchases It can prevent one from building for retirement

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Three Main Forms of DI Insurance Government-Sponsored Plans Social Security DI, Worker’s Compensation, etc. Employer-Sponsored Group DI Insurance Plans Short-term and Long-term Privately Owned Individual DI Insurance Plans Paid for by individuals Supplement Government- and Employer-Sponsored Plans

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Individual DI Insurance Things to Consider: Noncancelable vs. Guaranteed Renewable Definition of Total Disability Elimination Period Maximum Benefit Period Monthly Benefit Amount

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Noncancelable vs. Guaranteed Renewable These represent the renewal options for a DI insurance policy Noncancelable & Guaranteed Renewable Once policy is in force and premiums are being paid, the policy cannot be altered and the premiums cannot be changed, except to the benefit of the client. Policy can only be canceled due to nonpayment of premium. Guaranteed Renewable Insurance company reserves the right to increase premiums among a class of individuals. Rate increases must be actuarially substantiated, apply to all individuals among the specified class and be filed and are subject to state approval. Ameritas Life has not increased rates on its existing block of GR business, but there is no guarantee that we won’t in the future. This policy can only be canceled due to nonpayment premium as well Conditionally Renewable Ameritas Life’s DI insurance policies become conditionally renewable at Age 65, and at that time the rates will increase, additional benefit riders drop off and the maximum benefit period becomes two years.

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Definition of Total Disability This defines when an insured is eligible for benefits under the policy. Several options within the industry: Own Occupation Own Occupation and Not Working Reasonable Occupation Any Occupation

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Own Occupation Total disability benefits are payable if a disability prevents the insured from working in his/her occupation, even if able to work in another occupation Best definition available in the industry Most expensive Often desired by more specialized occupations – physicians, attorneys, etc. Example: A surgeon suffers from hand tremors and is unable to perform surgery. An Own Occupation definition allows benefits to be paid as the disability prevents her from doing surgery, even if she is still able to consult with patients and do other duties of a physician.

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Own Occupation & Not Working Total disability benefits are payable if a disability prevents the insured from working in his/her occupation AND he/she is not working in any other occupation. Often decision to work in another occupation (if able to) is left up to the insured If not working in another occupation – total disability benefits payable If working in another occupation – NOT a total disability claim, could potentially be a residual/partial disability claim. Typically sufficient for those in less specialized occupations or those requiring basic skills – i.e. typing, writing, talking on phone, etc. Example: An office manager suffers a stroke and becomes disabled from her job. She cannot talk on the phone, paralysis on one side, etc. If she cannot be an office manager, what occupations will she be able to do, given the circumstances of her disability?

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Reasonable Occupation Total disability benefits are payable if a disability prevents the insured from working in a reasonable occupation, based on his/her education, training and experience. Generally can be expected to earn at least 50% of previous earnings as well Often combined with previous two definitions of total disability Example:Own Occupation for five years, then any reasonable occupation thereafter An anesthesiologist suffers a disabling illness that prevents him from working in his field. For five years, benefits are payable if he is disabled in his occupation, even if he is able to work in another occupation. After five years, he must still be disabled in his own occupation and also be unable to work in any occupation that is reasonable based on his education, training and experience. If this is true, total disability benefits continue. If not, he is no longer totally disabled and benefits cease.

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Any Occupation Total disability benefits are payable if a disability prevents the insured from working in any occupation Most restrictive definition in the industry - least expensive Also most often used in combination with other definitions Example: Own Occupation for two years then any occupation thereafter: A factory workers suffers an injury preventing him from doing his job as a forklift operator. For two years, benefits are payable as long as he cannot do his job. After that, benefits continue if he is still disabled as a forklift operator and is unable to work in any occupation for wage or profit. This means, if he can work at McDonald’s or Wal-Mart or any other place and earn an income, he would no longer be considered disabled – regardless of the income he was making.

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Elimination Period (ep) Often referred to as a waiting period Similar to a deductible on a health or auto insurance policy Represents the number of days one must be disabled before benefits become payable Most common is 90 days – 3 months Choices ranging between 30 and 730 days Shorter ep – Quicker benefits = More expensive Longer ep – Later benefits = Less expensive First payment generally received 30 days after the ep has been satisfied

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Maximum Benefit Period (bp) Represents the length of time that benefits are payable during a period of qualifying disability Most common is To Age 65 – linked to retirement Other options include 1-, 2-, 5-, 10-Years, To Age 65, To Age 67 and To Age 70 Shorter bp = shorter duration = Less expensive Longer bp = longer duration = More expensive

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Monthly Benefit Amount Generally calculated based on a percentage of earned income at the time policy is purchased Typical replacement is 60% of earned income Total of all DI insurance benefits generally cannot exceed 100% of pre-disability earnings Some benefits of a DI insurance policy may be offset by government benefits so as not to exceed pre-disability earnings

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Individual DI Insurance Things to Consider (cont.): Residual/Partial Disability Benefits Presumptive Total Disability Benefits Inflation/Cost of Living Adjustments Waiver of Premium Provisions Future Increase Options

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Residual/Partial Disability Benefits Generally available by rider at an additional cost Residual benefits are payable during a period of partial disability, ex. Back injury. Not totally disabled, but due to injury, suffer a loss of time or duties and also a loss of earnings. Benefits based on loss of earnings Designed to help make up for difference in income Some companies do not require a period of total disability before paying residual benefits, others do. Most companies offer some sort of return to work (recovery) benefit – either built-in or by rider. Example

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Presumptive Total Disability Benefits Many policies include this provision that presumes you to be totally disabled if you suffer a total loss of: Sight in both eyes Hearing in both ears Speech Use of both hands Use of both feet Use of one hand and one foot Most will waive the elimination period so that benefits start as of the date of loss These benefits are payable even if you are not totally disabled Some carriers require the loss to be permanent and irrecoverable (Ameritas Life does not) Example

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Inflation/Cost of Living Adjustments Generally available by rider at an additional cost Helps to keep benefits in line with inflation Kicks in after one full year of disability Increases range by carrier, usually 4-10% Some offer compounded and others offer simple increases Especially important during long lasting disability Some carriers offer clients ability to purchase increases that have occurred once they return to work Example

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Waiver of Premium Provision Most policies have this provision built into them Waives premiums that come due after being disabled for 90 days or the length of the elimination period Many also refund premiums paid during the elimination period Waives premiums until the end of disability

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Future Increase Option A “must have” benefit available by rider for an additional cost Allows insured to purchase additional benefit at a later date with only financial proof of insurability No medical underwriting performed at time of increase Usually can exercise every one, two or three years, depending on the carrier Many guarantee the rate structure, policy language and definitions of the original policy

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Individual DI Insurance Things to Consider (cont.): Social Insurance Substitute Benefits Catastrophic Disability Benefits Automatic Increase Benefits Value-Added Built-In Policy Provisions Exceptions/Limitations

Discover DI | from Ameritas Life/Ameritas Life of New York DI Social Insurance Substitute Benefits Generally available by rider at an additional cost Payable in full if an insured receives no governmental disability benefits Benefits are offset from any governmental benefits that are received Carriers may require this benefit for certain occupations in order to provide the maximum benefit available Can also be used as a low cost alternative for obtaining maximum benefits without the high cost of going with all base benefits Example

Discover DI | from Ameritas Life/Ameritas Life of New York DI Catastrophic Disability Benefits Generally available by rider at an additional cost Pays benefits in addition to the base (and SIS) benefits if the insured is severely cognitively impaired or unable to do two or more of the Activities of Daily Living In combination with all other DI benefits, this rider can insure up to 100% of gross income, net of business expenses, up to specified limits – often $6,000-10,000 per month (depending on carrier)

Discover DI | from Ameritas Life/Ameritas Life of New York DI Automatic Increase Benefits Some carriers build this into the base policy, others offer it by rider for an additional cost Provides “automatic” benefit increases on each policy anniversary for a specified number of years (usually for 5 years) Benefit increases generally range from 2-10% Can be simple or compounded increases, depending on carrier Only financial underwriting required at time of increase

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Value-Added Built-In Policy Provisions Nondisabling Injury Good Health Surgical Transplant Cosmetic Surgery Survivor Rehabilitation Successive Periods of Total Disability COBRA Premium *Subject to state variations

Discover DI | from Ameritas Life/Ameritas Life of New York DI 101 – Exceptions/Limitations War Self-inflicted injury Incarceration Loss or Suspension of License Foreign Residency Pregnancy Mental/Nervous Disorders Drug/Alcohol Abuse Pre-Existing Conditions

Discover DI | from Ameritas Life/Ameritas Life of New York Questions?

Discover DI | from Ameritas Life/Ameritas Life of New York For Producer use only. Not for use with clients. Key Contacts Your Agency or Brokerage Manager Your Regional DI Wholesale Office Your Ameritas Sales Development team The DI Product Management team