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“ You need insurance, not only because you’re going to die, but because you’re going to live.”

Dr. Marius Barnard Creator of Critical Illness Insurance.

Critical Illness Insurance:

Pays a Lump Sum, Tax Free Benefit upon the

first diagnosis of any covered condition.

Usually must survive 30 days, after diagnosis.

Benefit is paid based upon diagnosis, regardless of severity, degree of disability or ability to work.

Chances in any given yearbefore age 65:

3.5% Death

34.7% Critical Illness

CANADA

Every day

DID YOU KNOW?

- 200 Heart Attacks

- 340 Cancer (new cases)

- 137 Strokes

- 8 Kidney Failures

- 3 Multiple Sclerosis

Age Bands ►

Source: Munich Re 2007

Individual Group

Cancer 70% 66%

Heart Attack 14% 16%

Stroke 5% 4%

Other 5% 2%

CABS 4% 6%

MS 2% 5%

Paralysis 1%

Source: Individual – Munich re Survey 2006 since inception. Group – ACE INA Canada – since 1998.

GCI Inc. 07/9 E.& O.E.

REASON FOR DENIED GROUP CLAIMS:

-About 80% are due to pre-existing conditions.- About 20% are due to failure to satisfy the definition.

Critical Illness Insurance Comparative Claims Analysis

PERCEPTION

REALITY

HR NIGHTMARE

What Employeethinks is covered? What Plan actually

covers!

Exclusions & Restrictions To Avoid

BAKER’S DOZEN

+ 12

PLAN STRUCTURE

BUNDLED

STAND ALONE

vs

AN AVOIDABLE TRAP

X

BUNDLED VS. STAND ALONE

► SUBSIDIZED RATES

► UNPREDICTABLE RATE INCREASES

► LOSS RATIO AFFECT (Life, A.D.& D., LTD, C.I.)

► LIMITS SHOPPING

► JEOPARDIZE PRE-EX

TRANSPARENT PRICING

PRICING STABILITY

MINIMIZE LOSS RATIO AFFECT

MARKET ACCESS

PRE-EX GRANDFATHERED

CRITICAL ILLNESS INSURANCE

“DEFINITIONS”

MOST IMPORTANT CONSIDERATION

DETERMINE IF AND WHEN YOU WILL BE PAID

NOT ALL PLANS ARE THE SAME!

Types of Exclusions & Restrictions To Avoid

► Obvious ► Subtle

► Omission ► Severity

► Restrictive ► Unreasonable

► Uncertainty ► Unilateral Changes

► Retroactive ► Not Legally Sound

► Subjective ► Denial & Termination

PARALYSIS

Good Definition vs. Poor Definition

“the paralysis has persisted for 90 consecutive days, following the precipitating event, during which time there has been no sign of improvement.”

“ the paralysis has persisted for

180 consecutive days, following the precipitating event, during which time there has been no sign of improvement.”

Obvious

CANCER


“Means a malignant tumor characterized by the uncontrolledgrowth and spread of malignantcells and the invasion of tissue.This includes Leukemia, Hodgkin’sDisease and invasive Melanoma.”

“a definite diagnosis of a tumorcharacterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue. The diagnosis of Cancer must be made by a Specialist.”

Omission

HEART ATTACK


“an elevation in cardiac biochemicalmarkers, or the elevation of cardiacenzyme levels, consistent with a heartattack.”

“ rise and fall of biochemical markersconsidered diagnostic of myocardialInfarction (heart attack).”

Restrictive

PARKINSON’S DISEASE


“by two or more of the following:

▪ muscle rigidity

▪ tremor, or

▪ bradykinesis”

“ by two or more of the following: ▪ muscle rigidity ▪ tremor, or ▪ bradykinesis

and the insured person requiressubstantial physical assistance from another adult to perform two or moreactivities of bathing, dressing, toileting,transferring, bladder and bowel continence and eating.”

Uncertainty

CANCER


“The following cancers are excluded from coverage:▪ Carcinoma in situ;▪ Stage 1A malignant melanoma (melanoma less than or equal to 1.0 mmin thickness, not ulcerated and withoutlevel IV or V invasion);▪ Stage A (T1a or T1b) prostate cancer,▪ Any non-melanoma skin cancer thathas not become metastatic (spreadto distant organs.”

“The following forms of cancer areexcluded:▪ Cancer in situ; and▪ Any skin cancer, other than malignantmelanoma into the dermis or deeper;▪ Early prostate cancer (stage A or equivalent staging);▪ Any tumor in the presence of any humanImmunodeficiency virus (HIV).”

Retroactive

Sports Exclusion


“ You are engaged in any hazardous sport including but not limited to sky or scuba diving; ballooning; hang gliding; bungee cord jumping; racing in any form (other than on foot) and all professional sports. This does not include normal vacation sports such as skiing or snorkeling. We will deny claims when we determine that undue risk or negligence was a factor. Other sports will also be excluded where they involve a higher risk due to inexperience, lack of care or adequate knowledge of conditions.”

( A good policy doesn’t list

this exclusion.)

Subjective

KIDNEY (RENAL) FAILURE


Means end stage renal disease dueto chronic irreversible kidney failure,requiring the Insured Person to undergo regular hemodialysis,peritoneal dialysis, or require renaltransplantation

Kidney failure means a definite diagnosisof chronic irreversible failure of bothkidneys to function, as a result of whichregular haemodialysis, peritoneal dialysisor renal transplantation is initiated

Subtle

STROKE


Evidence of permanent neurologicaldeficit persisting for 30 consecutivedays

► New objective neurological deficits on clinical examination persisting continuously for at least sixty (60) days following the diagnosis of the stroke.

Severity

MULTIPLE SCLEROSIS


Means the definitive written diagnosis by a Physician who is certified as a neurologist confirmingat least moderate persisting neurological abnormalities, withimpairment of function, but notnecessarily confining the insured toa wheelchair or bed

Multiple Sclerosis means a definite diagnosis of at least one of the following:

▪ two or more separate clinical attacks, confirmed by MRI showing multiple lesions of demyelination

▪ well-defined neurological abnormalitieslasting more than 6 months, confirmed byMRI, showing multiple lesions of demyelination; or

▪ a single attack, confirmed by repeated MRI, which shows multiple lesions of Demyelination which have developed at intervals at least one month apart

Severity

BENIGN BRAIN TUMOR


The histologic nature of the tumormust be confirmed by examination of tissue (biopsy or surgical excision)

The tumor must require surgical orradiation treatment or cause irreversibleobjective neurological deficits.

No benefit will be payable under thiscondition if within the first 90 days following the later of: the date the application was signed the policy date, or the most recent date of reinstatement The Insured person has any of the following: signs, symptoms or investigations that lead to a diagnosis of benign brain tumor

Unreasonable

CHANGE DEFINITIONS


( A good policy doesn’t list this restriction.)

“ Company reserves the right to change the contract definitions for Conditions covered under any given plan. All claims under this Policy shall be adjudicated using the definition of any Condition(s) that is in effect at the time the claim is incurred. Accordingly, the Plan Member must ensure that he has the most current version of this Appendix at the time he submits a claim under this Policy.”

Unilateral

MAJOR ORGAN TRANSPLANT


Means being either the recipient ofa transplanted heart, lung, liver,kidney, pancreas or bone marrowperformed by a Physician who is certified to conduct such transplant,or enrolled in a recognized organ orbone marrow transplant program inCanada or the United States

Major organ transplant means a definitediagnosis of the irreversible failure of theheart, both lungs, liver, both kidneys orbone marrow and transplantation mustbe medically necessary

Not Legally Sound

CANCER


The cancer exclusion period is90 days from the later of: 1) theEffective Date, or 2) the date ofThe last reinstatement of the policy.

In the event of such diagnosisthe policy will remain in forcebut cancer will no longer beconsidered an Insured Condition,except for a subsequent diagnosisof unrelated cancer.

no benefits of any kind are payable for any condition under this policy and this policy will automatically terminate, if within 90 days following the later of the Issue date and the date of the last reinstatement of the policy:1. You are diagnosed with Life Threatening Cancer; or2. any sign or symptom of any type of cancer becomes first Manifested; or3. any medical testing or investigation was initiated which subsequently leads to a diagnosis of any type of cancer.”

Denial & Termination

Life Insurance Co.Group C.I.I.

CompanyEmployees

Critically IllEmployeeClaimant

Premium is aTax Deductiblebusiness expensefor Company.

Pays Premium Insures Employees Pays Claims

Premium is NOT a Taxable Employee Benefit

to the Employee

Claim benefit is received Tax-Free, in a Lump Sum payment, by Employee

‘Based on a CRA ruling in 2003 involving an Alberta Group C.I.I. Case, Arthur Drache Q.C. (F.P. 2003/5/13)“Benefits “ provided by an employer are taxable as a benefit unless there is a statutory exemption.There is such an exemption for Group Sickness & Accident insurance - based on Provincial Insurance Act.’

GROUP PLAN EVALUATION CHECKLIST

1. Approval -Guaranteed Issue

2. Plan Structure -Stand Alone

3. Pre-existing -Reduce or Eliminate

4. General Exclusions -Few As Possible

5. Level of Benefits -No Restrictions Based On

Income

6. Scope of Coverage -Most Comprehensive /

Optional

7. Covered Conditions -Most Available /

Occupational HIV

GROUP PLAN EVALUATION CHECKLIST (Cont’d)

8. Definitions -Legally & Medically Sound/ No Disability

- Few Exclusions & Exceptions

9. Qualifying Period -Shortest Possible if Over 30 Days

10. Moratorium Period -Plan Shouldn’t Be Cancelled

11. Claim Assessment -Reasonable Criteria / Not Limited

12. Portability -Should Be Portable / Convertible

13. Premium -Employer Paid / Non-Taxable

14. Underwriter -Insurance Company / Tax Status

OVER THE PAST 5 YEARS

WHO DO YOU KNOW . . .

?

. . THAT WAS DIAGNOSED WITH:

CANCER?

HEART ATTACK?

STROKE?

. . . . AND IS STILL ALIVE TODAY!

GROUP CRITICAL ILLNESS INSURANCE

Need?

Significant gaps in traditional Benefit plans.

Medical & pharmacological advances have drastically changed patients’ medical treatments.

Today’ fast paced stress inducing lifestyles are causing an alarming increase in acute illnesses.

Critical Illness Insurance

Summary

Dr. Marius Barnard recognized that LTD (Disability) wasn’t adequately addressing person’s needs.

He realized that acute and life altering illnesses necessitate a large infusion of cash, usually immediately.

He observed that without the stress of financial worry, recuperation is frequently more successful and rapid.

Thank You.Download the latest"Critical Illness InsuranceConsumers’ Guide for Canadians©“

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