Super-Simplified Life Insurance

1. Super-Simplified Life Insurance Slides from Hank George’s presentation at the 2015 LOMA/LIMRA Life Conference

2. Industry’s 1st Simplified Life SeminarSeptember 2-3 at the PfisterHotel, Milwaukee Nine in-depth presentations on the most important simplified life topics, including Best Practices for managing risk Abundant opportunities for open discussion and networking Cosponsors: RGA Re, Hannover Re, LexisNexis, Milliman IntelliScript, MIB, Inc. and Transunion Receptions hosted by ExamOne and SCOR Re Registration is only $595 and $495 each for 2 or more from same company; continental breakfasts and lunch included More detailed information at www.hankgeorgeinc.com

3. Why Simplified? A new generation of simplified products – which I call “super-simplified” – is the only practical and cost-effective way to deliver sizable amounts of life insurance to the “Middle Market.” We need to make decisions on ≥ 85% of apps within ≤ 24 hours. This is impossible with fully-underwritten coverage.

4. Traditional Simplified Just 3 to 5 knockout (yes/no) questions High premiums; not competitive with individual fully-underwritten products Super Simplified More questions, plus use of additional underwriting assets Lower premiums; potentially quite competitive with fully-underwritten coverage

5. At What Ages? 18-45 = no brainer 45-60 = more challenging but doable within reasonable limits ≥ 60 = not feasible absent credible unforeseen developments

6. Why Didn’t We Do This Years Ago? We didn’t have the underwriting assets needed to make it happen. The advent of affordable and credible rapid-access underwriting resources has enabled us to move forward now.

7. How Do Things Change WithSuper-Simplified? Fewer risk questions Rapid access requirements only Necessary pricing adjustments to offset the limitations inherent in A & B Expedited underwriting process Immediate issue and delivery Prudent surveillance of underwriting outcomes with paradigm adjustments Adequate contestable period claim reviews

8. Antiselection! Incidence will skyrocket in simplified because of limitations on extent of underwriting assessment Do not be mislead by those who understate the magnitude of this concern Make sure you price for it conservatively until you gauge the nature and extent of its impact You have now been warned!

9. Viable Risk Assessment Tools Tele- or online interview with drilldown questions Pharmacy records Motor vehicle records (MVRs) MIB Electronic database records

10. Contraindicated in Simplified Paramedicals Lab tests ECGs Conventional inspection reports APS (98% of the time) Anything else that cannot be accomplished with results in hand in < 24 hours

11. Tele- vs. Online Interview Online = Greater Antiselection Teleinterview recording is priceless Fewer drilldown questions Warm transfer readily available Tele-underwriter combining interviewing with immediate assessment of risk?

12. Pharmacy Records Essential component 3-5 year histories accessible Extremely cost-effective 75%+ “hit rates” Facilitates triage to full underwriting option

13. MIB, MVR and Databases MIB is essential (potentially with additional MIB resources) MVR addresses #1 cause of trauma-related death Trauma #1 cause of death ages 18-40 Careful guidelines optimize impact of MVR data Databases for identity verification, criminal records, etc.

14. Predictive Analytics (“Big Data”) Steer clear of hype from those who know little or nothing about life underwriting! Nothing that compromises perception or integrity of our industry is acceptable Personal purchase records are anathematic for many reasons Must bring unquestionable mortality risk value, not redundant to that obtained via conventional assets Choose carefully…with full input from underwriting experts, in-house or otherwise

15. Underwriting Engines Most efficient use = simplified underwriting! Variable % actionable depending on ages offered, marketplace dynamics Allows “human underwriters” to focus skills where needed most = cases that kick out from engine processing Considerable investment in honing rule sets; investigate options carefully

16. Baseline Risk History Questions Between 7 and 15 Prioritized by relative risk impact Tobacco and HIV questions obligate Catch-all “safety valve” question such as “have you seen a healthcare provider for any other reason within the last 12 months” (?) Few lay underwriting questions; priority to aviation/avocation to minimize antiselection

17. History Issues Height and weight to calculate BMI Substance abuse/dependency (alcohol, drugs) Drug use (excluding marijuana) HIV positive Diabetes Major events/diagnoses (adjusted for market): MI, stroke, cancer, COPD Hepatitis – looking for all the “C’s” as many are untreated and will not show up on Rx records Inpatient care Emergency department trauma visits Tobacco…

18. Tobacco Use Potential Achilles’ heel sans cotinine! Do not skimp on tobacco/nicotine use questions – ask what you need to know Assume 10-15% nondisclosure; higher in lower socioeconomic market segments Leverage “pack years” at ages 40+?

19. Preferred? ABSOLUTELY! Capitalize on this marketing gimmick Carefully consider components; think outside the box What factors impact 10-year prospective mortality in 18-45 year olds? Should criteria differ > age 45 if you write older-age simplified?

20. Distribution Modes Conventional producers Telemarketing Online Banks Worksite Direct mail Retailers

21. Critical Illness (CI) Rider CI is a more logical product in the US than in any other Western country! Despite this, we sell far less CI than any of them CI stand-alone products with broad coverage are too costly (akin to LTC) Limited coverage (MI, cancer) CI rider should be a big hit...if you craft it correctly and know how to sell it

22. Super-simplified life should be the dawn of a new era, bringing coverage to a wider market segment Join us on September 2-3 in Milwaukee to learn how to design, underwrite and manage simplified life, while minimizing antiselection and maximizing your success in this exciting new life insurance domain!