The Risk and Consequence of Disability: Awareness, Need, Planning, Responsibility and Opportunity

1. Twin Cities DI DayOctober 22, 2009 Barry Lundquist, CLU – President The Risk and Consequence of Disability:Awareness, Need, Planning, Responsibility and Opportunity “Raising Public Awareness About Disability” www.disabilitycanhappen.org

2. Today’s Discussion • Environment • Disability Facts, Perceptions, Misconceptions • CDA Refresher: Background, History, Overview • CDA tools (What’s in it for you?) • What’s New at CDA? (What’s in it for you?) • Monica’s Story • Call to Action: How can you help?

3. Environment www.disabilitycanhappen.org

4. The Disability Insurance Environment… …is evolving…lots going on: • Health care costs… Health care debate • Shift to consumer driven benefits • Decision making shifting • Costs shifting • Demographics • Increasing incidence of disability • Depleted savings and retirement accounts • Workers embracing security • Can government fulfill its promises? • Let alone take on more?

5. Disability: Facts, Perceptions, Misconceptions • 54.4 millionAmericans reported some level of disability in 2005; roughly 1 of every 5 • Three out of 10workers between 25 and 65 will experience a Disability of 3 months or longer • One in 7workers will be disabled for five years or morebefore retirement • The average long-term disability absence lasts 2.5 years • The chances of a 32 year old becoming disabled prior to retirement are 3.45 times greaterthan the chance of dying. • Over 80% of physicianshave disability insurance protection;what do they know that others don’t? Sources: U.S. Census Bureau, Commissioners Disability Table, 1998; Commissioners Individual Table A; Journal of the American Society of Chartered Life Underwriters; Social Security Administration Fact Sheet January 2007, UNUM

6. Disability: Facts, Perceptions, Misconceptions From CDA’s 2007 Disability Awareness Study: • 90% of workers grossly underestimate chances of becoming disabled & potential length of disability • 85% express little/no concern about becoming disabled • 64% unaware of disability impact on 401(k) contributions • Women are more aware of the risks, but less prepared than men • 80% of workers who have planned financially for disability are confident about their ability to maintain their current lifestyle if a disability strikes. Source: CDA’s 2007 Disability Awareness Study

7. Disability: Facts, Perceptions, Misconceptions • 58% of adults say that they are covered by disability insurance; only around 35% actually are covered • 71% of workers say it would be very or somewhat difficult tomeet their financial obligations if next paycheck were delayedfor one week • 70% of the private sector workforce has no long-term disability insurance • 66% of agents say because clients don’t ask = why they don’tsell disability insurance Sources: JHA, National Payroll Week 2008 Getting Paid In America Survey, Social Security Administration, LIMRA

8. Disability: Facts, Perceptions, Misconceptions From CDA’s 2008 Worker Disability Planning and Preparedness Study: • 53%: ability to earn a living is most important contributor to financial security • 86%: say workers should plan in their 20s and 30s for incomelimiting disability • 82%: express concern about how they would pay bills if disabled • 62%: don’t mention earnings as part of financial planning • 54%: never discussed disability planning, how they would pay bills, etc. • 57%: have not discussed how to manage loss of income and have no plan Source: CDA’s 2008 Worker Disability Planning and Preparedness Study

9. Disability: Facts, Perceptions, Misconceptions “Cash is nice, but…”Employees value these benefits even more than cash. Dental22.0 Long-Term Care Cash Short-Term Disability Long-Term Disability Vision14.5 401(k)21.9 Life Insurance12.9 Source: Sun Life Financial Voluntary Products Survey, 2009http://www.sunliferesearch.com/

10. Disability Facts, Perceptions, Misconceptions www.disabilitycanhappen.org

11. CDA was established by Disability Insurance leaders concerned about lack of public awareness and understanding • Disability - a neglected risk… …overshadowed by health, longevity, pre-mature death risks • Lack of public awareness & dialogue about disability… …trends, financial impact, resources, healthy lifestyles • Slow response to a new era of personal responsibility… ...workers are increasingly in the risk business …trend toward consumer driven benefits…choice and cost …most not adequately informed or preparing • The need for a credible information resource… …help the public understand disability risks and consequences and and the value of prevention, planning and protection --- CDA was chartered as a non-profit corporation in 2005 ---

12. What is The Council for Disability Awareness? • A disability insurance industry “public service” dedicated to raising public awareness about… 1) the growing likelihood of disability occurring among the working population 2) the financial hardship that disability can cause wage earners and their families 3) the value of prevention, planning responsibly and being prepared in case a disability prevents one from earning a paycheck

13. What is The Council for Disability Awareness? • CDA is about: • Educating, communicating and raising awareness • Helping workers, employers, advisors, family members, media and any interested others understand the risk and impact of disability • Helping workers avoid disability where possible • Helping workers plan appropriately for the possibility of an income limiting disability • CDA is not about: • Selling • Product • Lobbying A rising tide lifts all boats…~ John F. Kennedy

14. What is CDA Trying To Achieve? Conduct a public awareness campaign that: • Informs wage earners about the realities and financial consequences of becoming disabled and the need to plan accordingly • Gets the media’s attention about growing risks of disability • Encourages more advisors & employers to educate employees about disability risk management and planning • Establishes CDA as “ the credible resource” for information about disability awareness and preparedness • Institutionalizes “disability financial planning” - equal status with estate, medical, investment and retirement security planning

15. Thanks To Our CDA Member Companies…

16. CDA Refresher:Background, History, Overview www.disabilitycanhappen.org

17. CDA Resources and Tools CDA Develops and Distributes Tools for: • Employees • Employers • Advisors • Media members CDA is looking to carry out its mission of raising disability awarenessamong working Americans by communicating directly with workers,but also by leveraging channels such as advisors, employers,the media, and insurance companies.

18. CDA Resources and Tools Available at www.disabilitycanhappen.org: • Disability Facts and Statistics • 5 Questions Every Worker Should Ask • Disability Awareness “Quick Quiz” • Disability Planner • Financial Security Plan • Income Replacement Benefits Inventory • Healthy Lifestyle Tips

19. CDA Resources and Tools (cont.) Available at www.disabilitycanhappen.org: • Disability Studies and Surveys • Long Term Disability Claim Studies: 2005, 2006, 2007, 2008 • Worker Disability – A Growing Risk to Retirement Security • 2008 Worker Disability Planning and Preparedness Study • 2007 Disability Awareness Study • Real Life Stories

20. CDA Resources and Tools (cont.) What’s new at CDA? • PDQ – Personal Disability Quotient (March 2009) • Advisor Tool Kit (July 2009) • 2008 Disability Claim Study (September 2009) • CDA in the News (Ongoing)

21. What’s New? The PDQ Estimator http://www.whatsmypdq.org

22. Designed to… 1. Engage 2. Educate 3. Empower http://www.whatsmypdq.org

23. Engage: Turn them on by leading in with a different question http://www.whatsmypdq.org

24. Educate: Use the PDQ estimator to raise awareness of the risk PDQ Results Page http://www.whatsmypdq.org

25. Educate:Use the EIQ estimator to show how much is at risk EIQ Results Page http://www.whatsmypdq.org

26. Empower: Turn awareness into action by integrating other tools Action Plans Page http://www.whatsmypdq.org

27. What’s New?PDQ Advisor Toolkit - Marketing Materials Personalize the PDQ Flyer; use the PDQ Graphics http://www.pdqtoolkit.org

28. PDQ Advisor Toolkit - Web Buttons ADD PDQ to Your Web Site http://www.pdqtoolkit.org

29. PDQ Advisor Toolkit - Flyer http://www.pdqtoolkit.org

30. CDA Tools (What’s in it for you?) www.disabilitycanhappen.org

31. CDA 2008 Disability Claim Study CDA Member Company 2008 Claim Results 2008 CDA Long Term Disability Claims Review 76% LTD & IDI market share

32. Rate of worker disability… …continues to rise at an increasing rate… SS Disability Trends: 1998 - 2008 • 154,000,000 covered workers: + 15% • 7,430,000total disabled workers: + 58%(plus 1.8 million spouses and children) • 890,000new disabled workers in 2008: + 46% • 2,320,000 applications: + 98% • 38.4% approval rate in 2008 • Average current backlog: 17 months • Average age: 51 • Average monthly benefit: $1064 • 37% increase in rate of disability – 50% increase for female workers Source: SSA 2007/8 Annual Statistical Supplement.

33. SSDI Claim Approval Rate Declining Percent of SSDI Claim Applications Approved 1994-2008 Source: www.socialsecurity.gov

34. Number of SSDI Claim Applications Compared to Approvals – 1994-2009 (est.) Source: www.socialsecurity.gov

35. What’s New at CDA?(What’s in it for you?) www.disabilitycanhappen.org

36. What’s New? Advisor Tool Kit – New Additions Advisor Homepage 36

37. What’s New? CDA 2008 Disability Claim Study 2008 CDA Long Term Disability Claims Review 76% LTD & IDI market share CDA Member Company 2008 Claim Results: • 156,000 new LTD/DI claims approved in 2008 • 574,000 existing LTD/DI claimants • $7.9 Billion in paid claims (7% increase) 37

38. Advisor Toolkit – Graphs and Charts Library Graphs and Charts from the 2008 Claim Study have been added to the toolkit. Visitors may download the Graphs and Charts and add them to presentations and marketing materials. More to follow!

39. What’s New?Media Outreach: CDA in the News

40. Monica’s Story www.disabilitycanhappen.org

41. Monica’s Story Monica had it all by the ageof 37 — a successful career inthe financial field, a wonderful son,and big dreams for the future.She never dreamt that a disabilitywould change her life forever…

42. Monica’s Story My Boy’s Haven

43. Monica’s Story A Canadian’s Dream Abode

44. Monica’s Story Our Prime Minister’s Manor

45. Monica’s Story California Dreamin’

46. Monica’s Story The Million Dollar Bracelet

47. Monica’s Story Humpty Dumpty Falls

48. Monica’s Story Think Safety First

49. Monica’s Story Life Happens

50. Monica’s Story The Penthouse Suite