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For professional use only. Not for use with consumers
The Next Generation of Sales A New Declaration from John Hancock: Products designed to be the best JH & Industry Background, Custom Care Overview and Introduction LTC-CCECII 09-03 Long-Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117 For professional use only. Not for use with consumers
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John Hancock LTCI Strategy
Develop LTCI products for the long-term Leverage brand Differentiate through innovation Meet specific needs for our diverse consumer and distribution population Responsible pricing Proactive management Smart investment strategies Expeditious response to trends and experience Careful monitoring of experience both internal and external
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Competition in 2001-2003 Driving the “Flight to Quality”
Rate Increases Blocks of business for sale Some exits from the market Financial troubles exposed Termination of contracts with some producer groups New products with higher rates Some entrants into brokerage, some out
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Custom Care I Portfolio: Leveraging the Hancock LTCI Experience
JH LTCI “Success Story” Significant sales increases from all distribution channels Responsible pricing and strong expense management Successful investment strategy Favorable claims experience Prudent and evolving underwriting
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John Hancock Success Story: Big is Better
Strong Sales Growth 1998: $ 56 m 2000: $ 102 m 2002: $130 m Q2 ’03 $ 95 m Large In-Force Base * 446k Policyholders $794 m in-force Dedicated and Experienced LTCI Team Commitment to Core Growth Product * John Hancock Q2, 2003 Reports. Includes John Hancock, Fortis and American Republic Insurance Company sales.
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Hancock Tradition of Evolving Product to Address: Market Conditions, Consumer Trends, Product Experience Market Conditions Low interest rate environment Higher than expected persistency Industry Concerns with unlimited benefits Regulatory impact HIPAA Frequent changes in state regulation Higher statutory reserving For some, worse than expected morbidity and profitability
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Hancock Tradition of Evolving Product to Address: Market Conditions, Consumer Trends and Product Experience Consumer trends Flight to quality and brand Younger buyers have different needs Addressing immediate needs with appropriate benefit selections Affordability remains a key factor
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Hancock Tradition of Evolving Product to Address: Market Conditions, Consumer Trends and Product Experience Product Experience Price emphasis targeting more consumer appropriate and affordable benefits More likely-to-use benefits and benefit periods
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Custom Care II Portfolio Continuing the tradition
Custom Care II, Essential Care II and Family Care II Evolution of popular & pacesetting products Product innovation new built-in and optional features Expanding markets by meeting diverse consumer needs Sets the product standard for today’s changing LTC environment Reaffirms John Hancock’s leadership position Broadens younger market appeal Continues to expand on the broad, multi-generational appeal Similar look and feel
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Custom Care II Highlights* New features and benefits
Special benefits for the growing younger consumer market Protection for today, Price sensitive, competing demands, adequate/appropriate benefits Double Accident Benefit prior to age 65 (built in) 100% Reimbursement up to two times the maximum daily or monthly benefit For the entire duration of the claim Lifestyle U/W and ability to issue without benefit to preserve case Not available with ECII Return of Premium prior to age 65 (built in) Total premiums paid less policy benefits paid when death occurs prior to age 65 *Options may not be available in all states
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Custom Care II Highlights* New features and benefits
More Inflation Options** Address competing financial demands and offer customers greater flexibility Enhanced Guaranteed Purchase Option** 5%, 10%, or 15% every 3 years without evidence of insurability One time conversion option to Compound at age 65 without evidence of insurability 5/3% Compound Inflation** Benefit amount compounds annually at 5% while benefit pool compounds at 3%. This differentiation in rates impacts the total # of years benefit is paid if accessed at 100% of daily/monthly benefit maximum *Options may not be available in all states ** Applies to ECII
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Enhanced GPO Inflation Example GPO with 5/5% or 5/3% Conversion at 65 Daily Benefit, Policy Limits and Premiums Daily GPO 5/5% GPO 5/3% Age Benefit Limit 55 $100 $182,500 56 57 58 59 60 61 62 63 64 65 $105 $191,625 $187,975 66 $110 $200,750 $193,614 67 $116 $211,700 $199,423 68 $122 $222,650 $205,405 69 $128 $233,600 $211,568 70 $134 $244,550 $217,915 71 $141 $257,325 $224,452 72 $148 $270,100 $231,186 73 $155 $282,875 $238,121 74 $163 $297,475 $245,265 Policyholder, age 55 with college expenses wishes to limit premiums in early policy years Premium for compound 5/5% at age 55 = $1,522 Premium for GPO age 55 = $649 Wants GPO for savings and choice with inflation protection Does not elect any GPO offers prior to age 65 GPO “voluntary” conversion to compound inflation at age 65 Premium for GPO w/ 5/5% conversion = $1,730 at 65 Premium for GPO w/ 5/3% conversion = $1,438 at 65
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Custom Care II Highlights* New features and benefits
New Premium Discounts Partner Discount** 15%, 30% if both partners apply & are approved Combined reduction for Partner and Preferred capped at 40% Loyalty Credit 5%** Loyalty Credit applied to purchase of CCII or ECII if replacing an existing Hancock LTCI individual policy of a previous policy series Sponsored Group and Family Discount are multiplicative, not added** *Options may not be available in all states ** Applies to ECII
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Custom Care II Highlights* New features and benefits
Addition of Enhanced Return of Premium Rider Total premiums paid less policy benefits paid when death occurs at age 65 or above Not available with ECII and Shared Care Additional Cash Benefit Cap Removed Monthly cash payment = to 15% MB or 4.5x DB If receive at least 1 day of qualified HHC during month And no facility confinement during that month Not available with ECII *Options may not be available in all states
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Custom Care II Highlights* New features and benefits
Expanded Shared Care Rider to 10/10 years** International Coverage 100% of the LTCI Benefit for 1 year** Replaced Upgrade Privilege with Loyalty Credit ** *Options may not be available in all states ** Applies to ECII
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Custom Care II Highlights* New features and benefits
Eliminated Partner Home Care Rider Restoration of Benefits Rider Available with 3, 4, 5, and 6yr BP’s Hancock selects Doctor to certify recovery Restoration limited to one time Not available with ECII *Options may not be available in all states
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Features and Benefits Maintained & Unchanged*
CCII Issue Ages 18 – 84 Benefit Amounts $1,500 - $15,000/mth $50 – 500/day $7,500/mth & $250/ Max ages 80 – 84 Benefit Periods 2,3, 4, 5, 6, 10, LT Elimination Periods 30, 60, 90, 180, 365 =/>1 – 7 days =7 for HHC 100% HHC and ALF ECII Issue Ages 18 – 84 Benefit Amounts $50 – 500/day $250/ Max ages 80 – 84 Benefit Periods 2,3, 4, 5, 6, 10, LT Elimination Periods 30, 60, 90, 180, 365 1 day =1 day toward EP 50%, 80%, 100% for HHC ALF max is 80% of NHDB *Options may not be available in all states
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Features and Benefits Maintained & Unchanged*
CCII Respite Care = 21 days Not subject to nor satisfies EP Reduces policy limit Bed Hold Benefit 60 days/cal. Yr. for any reason Subject to EP, Reduces Policy limit Care Advisory Services 1/3 MDB per calendar year 10x DB per calendar year Not subject to, nor satisfies EP Does not reduce policy limit ECII Respite Care = 21 days Subject to EP Reduces policy limit Bed Hold Benefit 21 days/cal. Yr. for hospitalization Reduces Policy limit Care Advisory Services Not Available *Options may not be available in all states
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Features and Benefits Maintained & Unchanged*
CCII Stay at Home Reimbursement for home modifications… Separate Lifetime pool = 1x MB or 30 x DB Limited Pay 10yr, PU65 Noncan “following” limited payment period Waiver of EP for HHC ECII Stay at Home not available Limited Pay 10yr, PU65 Noncan “following” limited payment period Waiver of EP for HHC Not available Options may not be available in all states
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Features and Benefits Maintained & Unchanged*
CCII Risk Classifications Preferred -15%, Substandard I +25%, Substandard II +50% Traditional 5% Simple and 5% Compound inflation Group Discounts Sponsored Group 5% Family 5% ECII Risk Classifications Preferred -15%, Substandard I +25%, Substandard II +50% Traditional 5% Simple and 5% Compound inflation Group Discounts Sponsored Group 5% Family 5% Options may not be available in all states
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LTCI Decision Process: Points for Consideration
Am I covered for today, as well as tomorrow? Many times, producers and prospects think and plan too far forward when building a Long-Term Insurance policy Consider the impact of needing care today: “Today Benefits” “How would you and your family cope if you needed care 2 days or years from now; not 20 years from now?” Accidents happen: 40% of all LTC services are provided to individuals ages * * “Where Does the Population Live and Who Cares for Them? LTC: Diverse, Growing Population Includes Millions of Americans of all Ages.” U.S. General Accounting Office, January2001
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Are the effects of inflation covered
Are the effects of inflation covered? How does the inflation option affect premium? 5 Year Benefit Period, 90 Day Elimination Period, Daily Benefits: Fixed Benefits – Variable Premium Policy Year Age 5/5% Cmpd LTCI $ Pool $ 5/3% 5% Simple LTCI$ 1 55 200 365,000 5 59 244 445,300 410,811 240 438,000 10 64 311 567,575 476,242 290 529,250 15 69 397 724,525 552,095 340 620,500 20 73 507 925,275 640,030 390 711,750 25 79 647 1,180,775 741,970 440 803,000 30 84 825 1,505,625 860,146 490 894,250 5/5% Premium = $3, /3% Premium = $2, % Premium = $2,256 Premiums and benefits may vary and not be available in all states
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Are the effects of inflation covered
Are the effects of inflation covered? Fixed Premium ($3,000) – Variable Daily Benefit Amount LT 5/5% Inflation vs. 10 Year 5/3%, 5% Simple and GPO w/out conversion Policy Year Age 5/5% Cmpd LTCI Pool 5/3% Pool $ 5% Simple GPO w/out Conv. LT 10 Yr 1 55 115 Unlimited 195 711,750 205 748,250 370 1,350,500 5 59 140 237 801,081 246 897,900 10 64 179 302 928,672 297 1,084,963 15 69 228 386 1,076,586 349 1,272,025 20 73 291 491 1,248,058 400 1,459,088 25 79 372 627 1,446,841 451 1,646,150 90 Day Elimination Period, Daily Benefits Premiums and benefits may vary and not be available in all states
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Are the effects of inflation covered
Are the effects of inflation covered? Fixed Premium ($3,000) Variable Daily Benefit: 10 Year 5/5% Inflation vs. 5/3%, 5% Simple and GPO w/out conversion Variable Policy Year Age 5/5% Cmpd LTCI Pool 5/3% Pool $ 5% Simple GPO w/out Conv. 10 Yr 1 55 150 547,500 195 711,750 205 748,250 370 1,350,500 5 59 183 667,950 237 801,081 246 897,900 10 64 234 854,100 302 928,672 297 1,084,963 15 69 299 1,091,350 386 1,076,586 349 1,272,025 20 73 382 1,394,300 491 1,248,058 400 1,459,088 25 79 487 1,777,550 627 1,446,841 451 1,646,150 90 Day Elimination Period, Daily Benefits Premiums and benefits may vary and not be available in all states
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Making the right benefit choices “and” keep it under $4,000*
Partners age 55, Select rates Individual $100/day, L.T. BP, 5% compound $3,672 Shared Care 10yr, 5/3% Compound $160/day $3,648 Shared Care 6yr. 5% Simple, $205/day $3,758 Shared Care 6yr GPO, $360/day $3,684 Note: Under age 65 benefits - Double Accident and Return of Premium ** *CCII rates and options shown may not be available in all states ** Built-in Return of Premium Benefit
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Making the right benefit choices “and” Keep it affordable*
Partners age 55, Select rates 2 policies $100/day, LT, 5% compound $3,672 2 policies $100/day,10 yr, 5/3% compound – save $1,501 10 year Shared Care, 5/3% compound – save $754 6 year Shared Care, 5/3% compound – save $1,106 6 year Shared Care, 5/3% inflation – annual save $1,668 *CCII rates and options shown may not be available in all states
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For professional use only. Not for use with consumers
The Next Generation of Sales A New Declaration from John Hancock: Products designed to be the best LTC-CCECII 09-03 Long-Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117 For professional use only. Not for use with consumers
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