Federal Advisory Committee on Insurance

1. Federal Advisory Committee on Insurance Robert A. Kerzner President and CEO LIMRA, LOMA, LL Global June 12, 2013

2. Americans Households Owning Individual Life Insurance Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

3. Among households with children under 18, 4 in 10say they would immediately have trouble meeting everyday living expenses if a primary wage earner died today. Another 3 in 10would have trouble keeping up with expenses after several months. That’s 70% of households that would be in jeopardy within a few months. Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

4. American Households That Say They Need More Life Insurance 2004 44% 2010 50% Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

5. 58 Million # of U.S. households that believe they need more life insurance Source: LIMRA Household Trends in U.S. Life Insurance Ownership, 2010

6. Changing Demographics in the United States

7. History: US Growth in Numbers 2000-2010 (all numbers in millions) Source: U.S. Census Bureau

8. Projected Growth Over the Next 20 years … *non-Hispanic Source: U.S. Census Bureau

9. Younger Generations Are Increasingly Diverse… Percent of Americans Who Are Hispanic and/or Non-white

10. Individual life insurance ownership by ethnicity Household income of $25,000 or greater

11. One Parent Households Have More than Doubled Since 1970

12. 6 in 10 insured single mothers need more life insurance Insured Single Mothers “I need more life insurance.” 59% “I am likely to buy more life insurance.” 27% Source: 2010 U.S. Life Ownership study – Single Mothers

13. Fewer Americans are getting married… 41% decline Source: Pew Research, 2011

14. Fewer US Households Have Children Percent of U. S. Households with Children Under 18 Source: US Census Bureau

15. Wives earning more than husbands 625% increase Source: Pew Research Center

16. Household financial decisions When Husband Earns More When Wife Earns More Source: Pew Research Center

17. Retirees Are Here to Stay… Total: 72 Million Boomers Total: 81 Million Gen Next Source: U.S. Census Bureau, 2012

18. Retirement income opportunity will double to nearly $22 trillion by 2020 Kids in College Age 45-54 Investable Assets Pre-retiree Age 55-64 Investable Assets Retired Age 65+ Investable Assets Early Career Age 25 -34 Investable Assets Mid Career with Kids Age 35 -44 Investable Assets 2010 $0.4 trillion 0.6 trillion $1.7 trillion $2.5 trillion $4.3 trillion $5.6 trillion $6.1 trillion $10.2 trillion $5.9 trillion $11.4 trillion 2020 65% of assets 56% of assets Asset Gathering Retirement Assets The Retirement Income Opportunity Source: LIMRA, Based on 2001, 2007 and 2010 Survey of Consumer Finances, Federal Reserve Board and U.S. Census Bureau’s Current Population Survey, March 2011 Supplement. All estimates and calculations reflect consumer segments of age 25 or more, and households with assets between $50K and $4.9M. Household HH by age group growth has been estimated by using Census projections by age and assuming that the proportion of HHs that have between $50,000 and <$5 million is constant within age group over time and the proportion in equities remains constant within each age group over time

19. American’s Top Financial Concerns Source: 2013 Insurance Barometer Study, LIFE and LIMRA

20. Gen X and Y Americans’ Top Concern: Having Enough Money For A Comfortable Retirement 75%

21. But What Do They Really Save For? Source: LIMRA Retirement Study—Consumer Phase, 2012. Note: Based on 854 consumers aged 32 to 47 (Gen X) and 698 consumers aged 20 to 31 (Gen Y) currently working for pay. Top 10 based on the percent of consumers that ranked each reason as one of their household’s three most important reasons for saving (besides emergencies and unemployment).

22. Two Issues Undermining Retirement Security Insufficient Funds • Longevity

23. Viewing Priorities Differently 1 Health Care Longevity 2 Inflation Volatility 3 Volatility Health Care 4 Longevity Inflation Source: LIMRA, The Retirement Income Reference Book, 2009 Retireesvs. Advisors

24. Couples Need to Plan Source: LIMRA’s 2012 Retirement Income Reference Book

25. Pre-Retirees (55-70, non-retired) Are Not Prepared… 62% Pre-retirees who have less than $100,000 in financial assets Source: LIMRA analysis of 2010 Survey of Consumer Finances, Federal Reserve Board,

26. Less than half of pre-retirees are confident that they will be able to live their desired retirement lifestyle Source: The Pre-Retiree Market: Surveying the Landscape, LIMRA (2012)

27. workers who think they need to save more to be on track for retirement 80%

28. Half of Americans Not Saving for Retirement not contributing to a retirement plan or individual IRA. 49% Source: eNation survey, April, 2012, LIMRA

29. It’s worse with younger Americans… 56% of younger Americans, (ages 18-34) are not contributing to a retirement plan. This is particularly troubling because younger people are less likely to have a defined benefit plan. Source: eNation survey, April, 2012, LIMRA

30. Younger Generations Unlikely to Have Pensions Fewer than one in five Gen X and Y Americans will have a pension. Source: LIMRA Analysis of Survey of Consumer Finances, 2010

31. People Won’t Act Without Help Employer-matching is the single most significant factor in determining whether employees contribute to a 401K plan or not. In fact, the presence of an employer match nearly triples the odds of employees contributing to their DC plan. Source: The Plan Participation Puzzle: Comparison of Not-for-Profit Employees and For-Profit Employees , LIMRA (2010)

32. Why Don’t People Buy

33. Americans’ Disposable Income Has Been Dropping for 30 Years

34. Every day expenses limit achieving financial goals 61% energy costs (oil, gas, electric) 58% every day living expenses (food, clothing, transportation) 50% debt payment (credit card balances, loans, equity lines of credit) 46% housing costs 43% taxes (income, sales, property) What limits your ability to save for goals or for discretionary items. Source: 2008 Middle Market Study

35. Families Have Other Priorities

36. Preference for Buying in the Future Preference for Buying Future Life Insurance Policy

38. Advisors Make a Difference Contribute to a Retirement Plan With Advisor Without Advisor Source: Use of and Impact of Advisors, LIMRA, 2012

39. Behavioral Economics Helping us understand the seemingly irrational decisions of consumers about investments, savings and insurance.

40. Which Would You Choose? 70% Consumers who chose chocolate Source: Presentation by Dr. Barbara Fasolo, Senior Lecturer in Behavioral Sciences, London School of Economics

42. Addendum

43. Japan’s Population Skews Older Japan’s Japan - 2050

44. While Indonesia Has a Relatively Young Population

45. Latin America’s Population is Younger Latin America - 2050

46. Population by Age Groups in Latin America 2010 2020 60+ 57 mil 83 mil 25-59 255 mil 296 mil 15-24 104 mil 105 mil 0-14 160 mil 149 mil Source: Americas Market Intelligence

47. Life Insurance Growth in China

48. Two-thirds of Middle-Income U.S. Households Save Less than 5% of their Income for Retirement 10% or more Nothing 5% to less than 10% Less than 3% 3% to less than 5% Source: LIMRA, Consumers’ Retirement Perspectives, Fourth Quarter 2012

49. U.S. Households Have Few Investable Assets* $500,000 + 10% 70% of households have less than $100K in investible assets $250,000 to$499,999 9% 35% $100,000 to$249,999 11% <$10,000 11% 24% $50,000 to $99,999 $10,000 to $49,999 All U.S. Households *Investable assets include retirement savings plans, and exclude homes and businesses. Source: 2010 U.S. Life Ownership Study, LIMRA

50. The Lure of Now – Present Bias 244 mortgaged U.S homeowners 120 underwater 124 with positive equity Source: Presentation by Dr. Barbara Fasolo, Senior Lecturer in Behavioral Sciences, London School of Economics