Insurance Products That Boomers Want: Can The Industry Deliver?

Insurance Products That Boomers Want: Can The Industry Deliver?

Today s Discussion Major Health Issues Eroding access to health care Critical Illness Insurance/Long Term Care Insurance Industry s Role Future Products

Major Health Issues Mental & Emotional Health Cancer Heart Attack Stroke Osteoporosis Knee/Hip Replacements

Mental Health Affects 1 in 5 Canadians Leading cause of disability in Canada Linked to serious physical problems Cardiovascular disease, respiratory, diabetes, colorectal cancer, back pain, repetitive strain injuries 2006 Senate Commission Report Out of the Shadows, M. Kirby World Health Organization, 2001, Employee Benefits News Canada, November 2006, Mood Disorder Society of Canada, September 2007 Health Canada, 2001

Cancer 171,000 projected new cases in Canada during 2009 3,288 new cancer cases in Canada every week National Cancer Institute of Canada; Canadian Cancer Statistics 2009

Heart Attack and Stroke 70,000 Canadians suffer heart attacks every year 40,000 to 50,000 Canadians suffer a stroke each year 75-80% survive Heart & Stroke Foundation, 2004

Osteoporosis 1 in 4 women / 1 in 8 men over 50 suffers from osteoporosis Affects 1.4 million Canadians Related to 70% of all hip fractures Canadian Multi-centre Osteoporosis Study, September 2009

Hip & Knee Replacements 25,000 hip replacements/year 33,000 knee replacements/year 65% of all hip & knee replacements occur after age 65 Average age is 68 Canadian Joint Replacement Registry (CJRR), 2006 Report

Living Longer and the New Reality 1 in 2 men, and 1 in 3 women are predicted to develop heart disease in their lifetime 45% men and 40% women living in Canada will develop cancer in their lifetime Source: Heart & Stroke Foundation, 2004 Source: National Cancer Institute of Canada: Canadian Cancer Statistics 2009

Canadians are Concerned about Health Issues Source: LIMRA 2009 Tracking the Opinions of the Public in Canada

Government Expenditure Health Care per Person - 2006 $9,967 $1,832 $7,891 65 and older ages 1-64 Infants <1 $0 $5,000 $10,000 $15,000 Canadian Institute for Health Information November 2008

Retirees vs. Newcomers 3,000 2,500 2,000 Newcomers (20-24) 1,500 1,000 Retiring (60-64) 500 0 1968 2003 2015 2028 Actuarial Report, Canada Student Loans Program, July 2003

Eroding Access to Essential Acute Care The greatest concern Canadians have about the existing publicly funded health care system is the perceived waiting times for diagnostic services, hospital care, and access to specialist. Kirby Report 2005

Wait Times Median waiting time is 16.1 weeks (between referral by GP and treatment) Ontario - 12.5 weeks Quebec - 16.6 weeks B.C - 17.0 weeks Canadian dollar (assumed Can/US exchange rate of $1.30) Nova Scotia - 23.1 weeks Saskatchewan - 25.2 weeks Fraser Institute, Waiting Your Turn, 2009

Eroding Access to Health Care Nurses CNA projects shortage of 78,000 registered nurses in 2011 Physicians OMA reports over 100 underserviced communities in the province

Out of Country Treatment Radiation cancer therapy (for 6 weeks) at the Mayo Clinic cost $55,000 -$75,000 Coronary Artery By-Pass Surgery can cost over $200,000 Estimating Services / Mayo Rochester 2009

Home Care Costs Can Be Devastating In Ontario, rates range from $21 - $69/hr Home Care provided by an agency can cost over $24,000 annually ($21/hr) $60,000 for the average duration Bayshore Health Group, January 2004

Most Canadians Will Borrow Sell Assets Withdraw from RRSPs

Other Options for Canadians Critical Illness Insurance Long Term Care Insurance Others?

Critical Illness Insurance (C.I.) A lump sum benefit payable if you are diagnosed with a critical condition as defined in your policy, and you satisfy the survival period. You decide how you use your benefit

Typical Critical Illness Plan Lump sum payment paid upon diagnosis of: Alzheimer s Disease Amyotrophic Lateral Sclerosis Aplastic Anemia Aorta Surgery Bacterial Meningitis Benign Brain Tumour Blindness Bypass Surgery (CABS) Cancer Coma Deafness Heart Valve Replacement Heart Attack Loss of Limbs Loss of Speech Loss of Independence Major Organ Failure Major Organ Transplant Occupational HIV Motor Neuron Disease Multiple Sclerosis Paralysis Parkinson s Disease Severe Burns Stroke

Benefit Conditions 30 day survival period after the date of written diagnosis The diagnosis must satisfy the policy definition of the critical condition 90 day waiting period for Cancer

Other Benefits 2 nd Event Coverage (full payment) Return of Premium (ROP) ROP on Death ROP on Surrender Partial Payments Ductal Carcinoma In Situ (DCIS) Loss of Independence

Loss of Independence Provides a benefit for significant impairments that do not trigger any other covered condition. Osteoporosis Arthritis Respiratory Diseases Injuries A catch-all

C.I. Claims Experience Heart Attack 13% Stroke 5% Coronary Artery Bypass Surgery 4% Cancer 67% Other 11% 2007 Canadian Survey, Munich Re-Insurance

Long Term Care Insurance (LTC) What is Long Term Care? Assistance and care for people who can t care for themselves Help with personal care (Activities of Daily Living) Needed due to physical problem or cognitive impairment Focuses on caring versus curing

Where LTC is provided Home Adult day care centres Long-Term Care facilities Nursing Homes Personal Care Homes Assisted Living Facilities Chronic Care Facilities 87% of Canadians prefer to be cared for in their own home

Long Term Care Insurance (LTC) Lifetime Benefit benefits last until care is no longer required most expensive the long tail Pool of Money benefits last until the pool is exhausted generally designed to last 2 5 years capped benefit amount Defined Benefit Period generally 2 5 years capped benefit amount

Type of Policy Reimbursement reimburses out of pocket expenses up to a daily, weekly or monthly maximum least expensive most efficient use of pool of money least flexible

Income (cash) Type of Policy provides a fixed dollar amount for each day/week/month regardless of whether services are received most expensive most flexible (benefits are automatically paid once eligibility is established) most prone to rate increases most susceptible to elder abuse Canadian market - predominantly cash

Other Benefits Respite Care provides a break for the primary unpaid caregiver Care coordinator develop the Plan of Care coordinate with the provincial coverage locate providers and arrange for care

Qualifying for Benefits 1. Require help with 2 of 6 activities of daily living (ADLs) OR have a cognitive impairment 2. Satisfy the deductible period

LTC Claims United States Canada Facility Alzheimer s/dementia Stroke Musculoskeletal Cancer Parkinson s Musculoskeletal Cancer Alzheimer s/dementia Cardiovascular Home and Community Stroke Musculoskeletal Alzheimer s Dementia

Things to Consider Will C.I. and LTC Insurance be in force when Boomers need them the most?

Yes!! C.I. and LTC policies offer permanent coverage (usually to age 100)

Challenges Very few people today have C.I. or LTC Less than 2% of Canadians have an individual C.I. policy Less than 1% have LTC insurance Many Canadians not interested in buying coverage or mistakenly think they already have it Many people cannot afford C.I./LTC or cannot qualify medically to buy it C.I. & LTC much less expensive & usually easier to qualify for medically when younger (i.e. ages 35 to 55) Canadian Life & Health Insurance Facts, 2009 Edition LIMRA Canadian Individual Critical Illness 2009 Annual Review

Consumer interest Concerned, but not interested in action. Help in case of disability or critical illness Pay for long-term care insurance for self/spouse Provide long-term care insurance for parents Very Interested Somewhat Interested 11% 65% 9 64 4 67 LIMRA 2009 Tracking the Opinions of the Public in Canada

Ownership People think they already are covered. 2004 2009 Disability insurance 67% 52% Critical illness insurance 29 39 Long-term care insurance 48 34 LIMRA 2009 Tracking the Opinions of the Public in Canada

More People Buying Permanent Coverage (C.I. New Sales 2009) 20% 19% 15% % Change 10% 5% 5% 2% 9% 2% 11% 2% 0% -5% Annualized Premiums -1% Number of Policies Renewable Limited Period Level Permanent Total LIMRA Canadian Individual Critical Illness Insurance Survey

Less People Buying LTC 12% 8% 4% 0% -4% -8% -12% Annualized Premium Growth 6% 6% 7% -1% -4%-3% -7% -6% -9% 3% 9% LTC Disability Critical Illness Annual 2007 Annual 2008 First 1/2 2009 Annual 2009 LIMRA Canadian Quarterly Sales Surveys

Cause for Concern? One out of every two Canadians 65+ will develop some type of disability At age 85+, the disability rate is 70% 40% of all people 65+ will eventually need some form of long term care Females outnumber males by more than 2:1 in the 85+ age group Canadian Seniors Years, Long Term Care Insurance in Canada, 2002

Canadians Want Asset Protection Affordability Reduced Family Burdens Advice on Care options Access to Quality Providers

Insurance Industry s Role Increase consumer awareness, understanding & interest in C.I. & LTC Help us better understand why they are not the same as life, health & disability insurance Offer simpler insurance solutions Fewer conditions, options, choices Make it easier to qualify for medically Guaranteed Issue / Simplified Issue Offer services/health information to help you access health care more effectively

Insurance Industry s Role Offer products through employers/unions Offer conversions on existing insurance Individual Life insurance to Critical Illness Insurance Individual Investments products & annuities to Long Term Care Insurance Individual Disability / Group Long-Term Disability Insurance to C.I. and/or LTC Lobby for preferred tax treatment on C.I./LTC Provide medical insurance, designed to meet actual health care needs

Medical Insurance - Today U.S. Health Care Coverage area: North America Benefit Amount: up to $5 million U.S. Deductible: $1,500 to $10,000 U.S. per occurrence Coverage: medical diagnostic testing and treatment for injury/illness (i.e. hip/knee replacements, other non-critical illnesses) Issues ages: up to age 74 Coverage: up to age 75

Medical Insurance - Tomorrow Medical/Surgical Tourism Insurance Health Care outside North America (i.e. India, Germany, Mexico, UAE) Cover all diagnostic testing, treatments, medical second opinions & physician consultations Medical services provided by premier medical centers (i.e. Apollo Hospitals Group) Services much less expensive than in U.S.

Medical Insurance - Tomorrow Medical/Surgical Insurance in Canada Made possible by Chaoulli Decision, Supreme Court of Canada, 2005 Provide health care coverage in your Province or another Province (i.e. British Columbia, Quebec) Provide more timely access to diagnostic testing, treatments, medical second opinions & physician consultations in Canada Medical service providers already exist in Canada to facilitate more timely care Insurance will allow people to stay at home, in Canada

Exercise Your Rights Boomers are most powerful segment of population Canadian Charter of Rights and Freedoms, Section 7: Life, Liberty And Security Of Person Supreme Court of Canada ruled prohibiting private medical insurance in the face of long wait times violated Charter of Human Rights and Freedoms You have the right to health care products you need Exercise your Rights be the voice of change

Help Insurance Industry Deliver Don t expect insurance industry to deliver the products you want Insurance industry needs your help Let them know what you need to address your health care concerns -- today and tomorrow Don t become an extinct policy holder Make sure the policies are there when you need them most!

Questions & Contact Information Don Thomson SOS Resource 130 King Street West, Suite 1800 Toronto, Ontario, M5X 1E3 Tel: 905.465.4036 dthomson@sosresource.ca www.sosresource.ca