GSI The New Face of Benefits Guaranteed Standard Issue Solutions For Your Clients August 2007

Introduction

Agenda I. Employee Benefits – Trends II. GSI Defined – The New Face of Benefits III. Prospects – Who is it relevant to? IV. Market Solutions – CI, LTD, Life, LTC V. Critical Illness Case Study

“The Old Face” Traditional Benefit Plans “Paternalistic” Model One Size Fits All  Insured  Renewable  Limited and non-guaranteed contracts.  Limited benefit maximums  Participation in group required to maintain benefits

Demographics Baby Boomer impact  Aging workforce Inter-generational workforce  Semi-Retired: Ages 62 - ? (8-17% of workforce)  Boomers: Ages (36-40% of the workforce)  X: Ages ( 30-33% of the workforce)  Y: Ages ( 8% of the workforce) Women in the workforce Incidence of Illness

Healthcare

Cost Sustainability  14% increase in prescription drug costs in 2006  LTD premiums have almost doubled in the last 5 years Benefits represent 8%-10% of employer payroll in 2007 Canadian corporations considering radical steps to manage cost in the next 12 to 24 months:  Increased employee contribution  Decreased benefits Dilemma: Health benefits are increasing in importance, but costs are burdensome to both employer and employees

GSI Defined Guaranteed Standard Issue The integration of traditional group and individual protection

GSI Defined Guaranteed Standard Issue The capacity to: Deliver the contractual strength of individual policies that have been integrated with traditional group coverage Avoid full underwriting requirements Contain costs with level rates  Discount opportunities available on some solutions  Funding flexibility

GSI Defined Guaranteed Standard Issue The capacity to: Implement contracts with coverage guarantees Manage diverse demographic requirements  fill coverage gaps Create a portable benefit

GSI Implemented Offer Letter One page enrollment Issue of individual policies  Ownership Employee Sessions  Education is critical Administrative Management  Billings  Hires  Terminations  Employee Changes

Administrative Considerations Carrier Billing systems Aligning with Human Resources processes. Mergers and Acquisitions Turn-Over  Enrollment  Preservation of contracts (time sensitive)

Who is it relevant to? Leaders & innovators Attraction/Retention focused organizations “Greying” workforces Premium sensitive companies Executive Groups

GSI Solutions Available in the Market Integrated Long Term Disability Critical Illness Life Long Term Care

Integrated Long Term Disability Plans “The Brakes” Combining Individual and Group Benefits (non-medically) Advantages: Lock in up to 50% of LTD premium to age 65 Increase Non-Evidence maximums (reverse discrimination) Improve contract  Residual Benefits  80% Income rules

Integrated LTD

GSI Integrated Long Term Disability “Reverse Combo” INCOMEINCOME Group Coverage $7000 LTD ($4,000 Non Evidence) Individual Coverage $3,000. Monthly Maximum (Guaranteed Standard Issue) Wage Continuation or STD Group LTDIndividual GSI

Integrated Long Term Disability Plans “The Brakes” Caution: Not available to all occupations Could be an initial price increase  Sometimes cost stays the same or goes down

Critical Illness Insurance “The Air Bag” Focus on providing coverage for serious illness Advantages: Reduce cost with locked in premium platform Not tied to ability to work – Disability Management Second opinion program Manages rising incidence in the workforce Fastest growing benefit in Canada  30% of Canadian employers intend to add Critical Illness in the next 24 months

Critical Illness – Case Study Joint Case 75 person company Traditional benefits plan with employer paid LTD. After evaluation of plan, LTD became employee paid. This freed up employer sponsored dollars that allowed the implementation of $50,000 GSI CI without an additional cost.

Critical Illness Quoting Requirements Date of Birth Smoking Status Gender Occupation Salary Date of Hire

Critical Illness – Case Study Monthly Premium for GR65: $4, for 72 lives Core benefit Employer paid Employer owned Ownership transferred at termination

Critical Illness – Case Study Compensation: Ran business through MGA FYC + Bonus was approximately $35,000 in commission Renewal approx: 17.5% Power of turn over

Other GSI Solutions New to the market: Optional GSI Critical Illness Top-up Good will offering GSI Life T-20 (minimum 10 lives) Executive, Professional or Management Classes Key Man Long Term Care

Connectivity Ensuring efficient utilization of benefit plans STD LTD EAP Wellness Health & Dental

Melanie Jeannotte Senior Advisor Vital Benefits Inc