2008 Annual Meeting ● Assemblée annuelle 2008 Québec 2008 Annual Meeting ● Assemblée annuelle 2008 Québec Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

2008 Annual Meeting Assemblée annuelle 2008 Living Benefits – Combo Products Tangible 1. 1.Need for product 2. 2.Tangible – Description of the product 3. 3.Pricing challenge and consistency 4. 4.Required Surplus 5. 5.Taxation

2008 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2008 Environment Demography – Age pyramid Canada vs USA 1. Need for Product

2008 Annual Meeting Assemblée annuelle 2008 Product development Customer versus Need relationship Insurance need 1. Need for Product

2008 Annual Meeting Assemblée annuelle 2008 Product development Critical illness – Coverage versus Need CI does not respond well the an insurance need BenignSevere Covered under Critical Illness policy The amount is payable even if there is very little consequence (like winning the lottery) The amount is payable (in relationship with a needy situation) Not covered under Critical Illness policy The amount is NOT payable (there is no need anyway) The amount is NOT payable (even if there is a need) 1. Need for Product

Tangible Peace of mind… today and tomorrow

Duration of premium payment Whole life option The premium is payable until the Insured’s 100th birthday. Paid-up at age 65 option The premium is payable until the Insured’s 65th birthday. 20 payments option The premium is payable for the first 20 years option The premium is payable until the Insured’s 65th birthday, subject to a minimum of twenty years of insurance.

Four categories of coverage which can protect all generations … Tangible Life 100 Critical illness Long-term care Hybrid coverage coverage Assistance

Four categories of coverage which can protect all generations … Tangible Life 100 Criticall illness Long-term care Hybrid coverage Assistance

Tangible Hybrid coverage Two benefits Two benefits in one: Hybrid coverage, protection that adapts to you…

Hybrid coverage Insurance that ages with you …

HYBRID COVERAGE – GENERAL INFORMATION Eligibility Amount insured Assistance Premium refund 30 days to 60 years of age inclusive 16 to 60 years of age inclusive 14 days to 60 years of age inclusive 16 to 55 years of age inclusive $ to $ (in $1 000 increments) $5 000 to $ (in $1 000 increments) $500 to (in $100 increments) $ (in $100 increments) Coverage included Eligibility: Less than 56 years of age when the application is signed 25% of the premiums paid At age 65, the Insurer undertakes to refund 25% of the premiums paid for the benefit if the Insured decides not to take advantage of the Facility care benefit and accordingly cancels the benefit.

Facility care Basic benefit selected Age when the application is signed Premiums paid 65 years of age Insured's decision HYBRID COVERAGE – GENERAL INFORMATION 25%

HYBRID COVERAGE – GENERAL INFORMATION Enrolment without proof of insurability – Hospitalization and Loss of autonomy Premium waiver Premium determination physically dependent No premiums are payable if the Insured is physically dependent and for as long as this physical dependence lasts   Provided the Insured is not physically dependent at age 65   Lifetime maximum of $ Level premium The premium is guaranteed from the Insured's 65th birthday, provided the benefit has been in effect for at least 20 years

Amounts payable table Conversion table Age of the Insured at onset of illness % of initial amount insured 30 days to 55 years of age 100% 56 years of age90% 57 years of age80% 58 years of age70% 59 years of age60% 60 years of age50% 61 years of age40% 62 years of age30% 63 years of age20% 64 years of age10% 65 years of age and over0% Age of the Insured Percentage conversion selected 2.0%5.0% Under 56 years of age0% 56 years of age0.2%0.5% 57 years of age0.4%1.0% 58 years of age0.6%1.5% 59 years of age0.8%2.0% 60 years of age1.0%2.5% 61 years of age1.2%3.0% 62 years of age1.4%3.5% 63 years of age1.6%4.0% 64 years of age1.8%4.5% 65 years of age and over2.0%5.0%

Lifetime benefit Age of the Insured Percentage conversion selected 2.0%5.0% Under 56 years of age0% 56 years of age0.2%0.5% 57 years of age0.4%1.0% 58 years of age0.6%1.5% 59 years of age0.8%2.0% 60 years of age1.0%2.5% 61 years of age1.2%3.0% 62 years of age1.4%3.5% 63 years of age1.6%4.0% 64 years of age1.8%4.5% 65 years of age and over2.0%5.0% Conversion table Amounts payable table Age of the Insured at the time of death % of the initial amount insured 14 days to 55 years of age100% 56 years of age90% 57 years of age80% 58 years of age70% 59 years of age60% 60 years of age50% 61 years of age40% 62 years of age30% 63 years of age and over25%

Waiting period Indemnity period Indexation of monthly indemnity Cost-of-living increase (Optional clause) Payment of a monthly indemnity for Facility care if the Insured is physically dependent 0 days Lifetime If the monthly indemnity is paid for more than 12 months, then maximum indexation is 3% per year FACILITY CARE After the first 12 months following the effective date of this benefit, the monthly indemnity shall be increased by 3% on January 1 of each year, subject to a maximum indemnity of $

Basic benefits The enrolment must be made at the same moment as the basic benefit selected HOME CARE – HYBRID COVERAGE

Eligibility Percentage conversion Waiting period Indemnity period Premium waiver Waiver of premiums in case of disability Same as under the basic benefit selected 60 days 2 years of lifetime physically dependent No premiums are payable if the Insured is physically dependent and for as long as this physical dependence lasts optional This clause is optional for the following basic benefits:   Critical illness – Hybrid coverage   Loss of autonomy – Hybrid coverage   Life – Hybrid coverage included This clause is included for the Disability – Hybrid coverage

Indexation of monthly indemnity Cost-of-living increase (Optional clause) End of coverage Duration of premium payment Premium determination If the monthly indemnity is paid for more than 12 months, then maximum indexation is 3% per year After the first 12 months following the effective date of this benefit, the monthly indemnity shall be increased on January 1 of each year by 3% subject to a maximum indemnity of $ Lifetime benefit Must be the same as under the basic benefit selected Level premium The premium is guaranteed from the Insured's 65th birthday, provided the benefit has been in effect for at least 20 years

Duration of premium payment Available if the Insured selects 5% conversion   Whole life option   option The Insured can select the 2% or 5% conversion N/A HYBRID COVERAGE – GENERAL INFORMATION Available if the Insured selects 5% conversion

2008 Annual Meeting Assemblée annuelle Pricing challenge and consistency

2008 Annual Meeting Assemblée annuelle 2008 The cost of insurance drops suddenly. Impossible to have a level premium without generating possible adverse selection. 3. Pricing challenge and consistency

2008 Annual Meeting Assemblée annuelle Pricing challenge and consistency

2008 Annual Meeting Assemblée annuelle Pricing challenge and consistency

2008 Annual Meeting Assemblée annuelle Pricing challenge and consistency

2008 Annual Meeting Assemblée annuelle Required Surplus a)All Hybrid coverages except Life Hybrid are Accident and Sickness coverages – Follow normal rules b)Life Hybrid - Split the Life and LTC components

2008 Annual Meeting Assemblée annuelle Taxation a)All Hybrid coverages except Life Hybrid are Accident and Sickness coverages – Follow normal rules b)Life Hybrid a)Difficult to support that it is a A&S policy at the time of issue b)Unclear if the policy will remain a life policy at the time of conversion or if it will be reclassified as A&S