The Marketplace for Critical Illness Coverage Presented by : Jerry Jacobs, CLU 5416 Yale Street Metairie, Louisiana Ph#(504) Fax#(504) Delmar, #2W St. Louis, Missouri Ph# Cell(504)

AGENDA  Introduction  What is Critical Illness Insurance?  U.S. Marketplace Trends  Need for Critical Illness Protection  Product Design  Marketing Applications  Global Perspective  U.S. Critical Illness Marketplace  Q&A/Discussion – Open Forum – Issues/Concerns

 Approximately 1.5 million Americans suffer a heart attack each year. Of these, 1.1 million survive at least three (3) years.  Over 40% of the population will develop breast, prostate, or some form of cancer at some point in their lives.  The probability of surviving a critical illness before age 65 is almost twice as great as dying. Source: 1987 Employee Benefits News And Views Magazine FACTS

What Is Critical Illness Insurance?  Critical illness insurance (C.I.I.) has characteristics of both life insurance and health insurance.  C.I.I. pays a life insurance-type lump sum benefit, upon diagnosis of one of a number of critical illnesses rather than upon death.

C.I.I. Coverage  C.I.I. will pay a lump sum benefit after the insured is diagnosed with a critical illness. Virtually all products cover the “Big Three”:  Heart Attack  Stroke  Life Threatening Cancer  Nearly 70% of all deaths under age 75 are associated with heart disease, stroke and cancer.

The “Big Three”  Heart Attack Death of a portion of the heart muscle(myocardium) from a blockage of one or more coronary arteries.  Stroke Any acute cerebrovascular accident producing permanent neurological impairment resulting in at least thirty (30) days of paralysis or other measurable neurological deficit.

The “Big Three”  Life Threatening Cancer Only those types of cancer shown by the presence of a malignancy identified by the uncontrolled growth and spread of malignant cells and the invasion of tissue that could result in death.

World Growth  Concept developed by Marius Barnard  Introduced South Africa in 1980s United Kingdom Japan Continental Europe Australia Canada Ireland United States

U.S. Marketplace Trends  Medical technology is keeping people alive longer  The concern today is not dying too soon – it’s living long

People Living Longer  65 year old male can expect to live to age 83  65 year old female can expect to live to age 87

Attitudinal Trends  Consumers have greater fears than premature death, such as: The cost of health care Cost of nursing homes Having enough income to retire

LIFE INSURANCE INDUSTRY TRENDS  Demographics favor living benefits over death benefits  THE RESULT: Individual life sales have declined 30% over the past ten (10) years. Source: Marketing Edit LIMRA 1997

Why C.I. Coverage?  Probability of surviving C.I. before age 65 is almost twice that of dying  Costs associated with C.I. are not covered by traditional insurance

Why C.I. Coverage?  EXAMPLE: Two-thirds of all cancer-related costs are indirect, non-medical expenses, such as: Lost income for C.I. Survivor Lost income and work time for spouse or care giver Housekeeping and child care expenses Home health care needs Home or car modifications Non-covered experimental treatments Expenses not covered by insurance (including co-payments and deductibles)

If you survive a critical illness, what will you do?  Disability Insurance – pays a percentage of the sufferer’s monthly income and benefits are dependent upon ability to work.  Long Term Care – limited to a daily benefit available subject to a hospital stay or home nursing requirements.  Accumulation Products – intended to provide supplemental retirement income.

If you survive a critical illness, what will you do?  Disability Insurance – pays a percentage of the sufferer’s monthly income and benefits are dependent upon ability to work.  Long Term Care – limited to a daily benefit available subject to a hospital stay or home nursing requirements.  Accumulation Products – intended to provide supplemental retirement income.

Critical Illness Insurance  Insured has options  The money provided by the C.I.I. empowers the insured to exercise choice.  C.I.I. is a consumerist product

Family/Individual Perspective  Replace reduced earnings  Pay off personal debts  Cash for medical treatment or associated expenses  Education or Retirement

Business Perspective  Buy/Sell Agreements Provide ill shareholder with benefit Enable working shareholders to buy out ill shareholder  Key Person Pay off creditors Executive perquisite Recruit replacement with similar talent

C.I.I. Product Critical Illness Insurance is Flexible  Life  Health  Disability  Other products

Open Forum – Issues/Concerns