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LTC-CCECII 09-03

The Next Generation of Sales A New Declaration from John Hancock: Products designed to be the best JH & Industry Background, Custom Care Overview and Introduction. Long-Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117

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LTC-CCECII 09-03

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  1. The Next Generation of SalesA New Declaration from John Hancock:Products designed to be the bestJH & Industry Background, Custom Care Overview and Introduction Long-Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117 For professional use only. Not for use with consumers LTC-CCECII 09-03

  2. John Hancock LTCI Strategy Develop LTCI products for the long-term • Leverage brand • Differentiate through innovation • Meet specific needs for our diverse consumer and distribution population • Responsible pricing • Proactive management • Smart investment strategies • Expeditious response to trends and experience • Careful monitoring of experience both internal and external

  3. Competition in 2001-2003Driving the “Flight to Quality” • Rate Increases • Blocks of business for sale • Some exits from the market • Financial troubles exposed • Termination of contracts with some producer groups • New products with higher rates • Some entrants into brokerage, some out

  4. Custom Care I Portfolio:Leveraging the Hancock LTCI Experience • JH LTCI “Success Story” • Significant sales increases from all distribution channels • Responsible pricing and strong expense management • Successful investment strategy • Favorable claims experience • Prudent and evolving underwriting

  5. John Hancock Success Story:Big is Better • Strong Sales Growth • 1998: $ 56 m • 2000: $ 102 m • 2002: $130 m • Q2 ’03 $ 95 m • Large In-Force Base * • 446k Policyholders • $794 m in-force • Dedicated and Experienced LTCI Team • Commitment to Core Growth Product * John Hancock Q2, 2003 Reports. Includes John Hancock, Fortis and American Republic Insurance Company sales.

  6. Hancock Tradition of Evolving Product to Address:Market Conditions, Consumer Trends, Product Experience • Market Conditions • Low interest rate environment • Higher than expected persistency • Industry Concerns with unlimited benefits • Regulatory impact • HIPAA • Frequent changes in state regulation • Higher statutory reserving • For some, worse than expected morbidity and profitability

  7. Hancock Tradition of Evolving Product to Address: Market Conditions, Consumer Trends and Product Experience • Consumer trends • Flight to quality and brand • Younger buyers have different needs • Addressing immediate needs with appropriate benefit selections • Affordability remains a key factor

  8. Hancock Tradition of Evolving Product to Address: Market Conditions, Consumer Trends and Product Experience • Product Experience • Price emphasis targeting more consumer appropriate and affordable benefits • More likely-to-use benefits and benefit periods

  9. Custom Care II PortfolioContinuing the tradition • Custom Care II, Essential Care II and Family Care II • Evolution of popular & pacesetting products • Product innovation • new built-in and optional features • Expanding markets by meeting diverse consumer needs • Sets the product standard for today’s changing LTC environment • Reaffirms John Hancock’s leadership position • Broadens younger market appeal • Continues to expand on the broad, multi-generational appeal • Similar look and feel

  10. Custom Care II Highlights*New features and benefits • Special benefits for the growing younger consumer market • Protection for today, Price sensitive, competing demands, adequate/appropriate benefits • Double Accident Benefit prior to age 65 (built in) • 100% Reimbursement up to two times the maximum daily or monthly benefit • For the entire duration of the claim • Lifestyle U/W and ability to issue without benefit to preserve case • Not available with ECII • Return of Premium prior to age 65 (built in) • Total premiums paid less policy benefits paid when death occurs prior to age 65 • Not available with ECII *Options may not be available in all states

  11. Custom Care II Highlights*New features and benefits • More Inflation Options** • Address competing financial demands and offer customers greater flexibility • Enhanced Guaranteed Purchase Option** • 5%, 10%, or 15% every 3 years without evidence of insurability • One time conversion option to Compound at age 65 without evidence of insurability • 5/3% Compound Inflation** • Benefit amount compounds annually at 5% while benefit pool compounds at 3%. This differentiation in rates impacts the total # of years benefit is paid if accessed at 100% of daily/monthly benefit maximum *Options may not be available in all states ** Applies to ECII

  12. Enhanced GPO Inflation ExampleGPO with 5/5% or 5/3% Conversion at 65Daily Benefit, Policy Limits and Premiums • Policyholder, age 55 with college expenses wishes to limit premiums in early policy years • Premium for compound 5/5% at age 55 = $1,522 • Premium for GPO age55 = $649 • Wants GPO for savings and choice with inflation protection • Does not elect any GPO offers prior to age 65 • GPO “voluntary” conversion to compound inflation at age 65 • Premium for GPO w/ 5/5% conversion = $1,730 at 65 • Premium for GPO w/ 5/3% conversion = $1,438 at 65

  13. Custom Care II Highlights*New features and benefits • New Premium Discounts • Partner Discount** • 15%, 30% if both partners apply & are approved • Combined reduction for Partner and Preferred capped at 40% • Loyalty Credit 5%** • Loyalty Credit applied to purchase of CCII or ECII if replacing an existing Hancock LTCI individual policy of a previous policy series • Sponsored Group and Family Discount are multiplicative, not added** *Options may not be available in all states ** Applies to ECII

  14. Custom Care II Highlights*New features and benefits • Addition of Enhanced Return of Premium Rider • Total premiums paid less policy benefits paid when death occurs at age 65 or above • Not available with ECII and Shared Care • Additional Cash Benefit Cap Removed • Monthly cash payment = to 15% MB or 4.5x DB • If receive at least 1 day of qualified HHC during month • And no facility confinement during that month • Not available with ECII *Options may not be available in all states

  15. Custom Care II Highlights*New features and benefits • Expanded Shared Care Rider to 10/10 years** • International Coverage 100% of the LTCI Benefit for 1 year** • Replaced Upgrade Privilege with Loyalty Credit ** *Options may not be available in all states ** Applies to ECII

  16. Custom Care II Highlights*New features and benefits • Eliminated Partner Home Care Rider • Restoration of Benefits Rider • Available with 3, 4, 5, and 6yr BP’s • Hancock selects Doctor to certify recovery • Restoration limited to one time • Not available with ECII *Options may not be available in all states

  17. CCII Issue Ages 18 – 84 Benefit Amounts $1,500 - $15,000/mth $50 – 500/day $7,500/mth & $250/ Max ages 80 – 84 Benefit Periods 2,3, 4, 5, 6, 10, LT Elimination Periods 30, 60, 90, 180, 365 =/>1 – 7 days =7 for HHC 100% HHC and ALF ECII Issue Ages 18 – 84 Benefit Amounts $50 – 500/day $250/ Max ages 80 – 84 Benefit Periods 2,3, 4, 5, 6, 10, LT Elimination Periods 30, 60, 90, 180, 365 1 day =1 day toward EP 50%, 80%, 100% for HHC ALF max is 80% of NHDB Features and Benefits Maintained & Unchanged* *Options may not be available in all states

  18. CCII Respite Care = 21 days Not subject to nor satisfies EP Reduces policy limit Bed Hold Benefit 60 days/cal. Yr. for any reason Subject to EP, Reduces Policy limit Care Advisory Services 1/3 MDB per calendar year 10x DB per calendar year Not subject to, nor satisfies EP Does not reduce policy limit ECII Respite Care = 21 days Subject to EP Reduces policy limit Bed Hold Benefit 21 days/cal. Yr. for hospitalization Subject to EP Reduces Policy limit Care Advisory Services Not Available Features and Benefits Maintained & Unchanged* *Options may not be available in all states

  19. CCII Stay at Home Reimbursement for home modifications… Separate Lifetime pool = 1x MB or 30 x DB Limited Pay 10yr, PU65 Noncan “following” limited payment period Waiver of EP for HHC ECII Stay at Home not available Limited Pay 10yr, PU65 Noncan “following” limited payment period Waiver of EP for HHC Not available Features and Benefits Maintained & Unchanged* Options may not be available in all states

  20. CCII Risk Classifications Preferred -15%, Substandard I +25%, Substandard II +50% Traditional 5% Simple and 5% Compound inflation Group Discounts Sponsored Group 5% Family 5% ECII Risk Classifications Preferred -15%, Substandard I +25%, Substandard II +50% Traditional 5% Simple and 5% Compound inflation Group Discounts Sponsored Group 5% Family 5% Features and Benefits Maintained & Unchanged* Options may not be available in all states

  21. LTCI Decision Process:Points for Consideration Am I covered for today, as well as tomorrow? • Many times, producers and prospects think and plan too far forward when building a Long-Term Insurance policy • Consider the impact of needing care today: “Today Benefits” • “How would you and your family cope if you needed care 2 days or years from now; not 20 years from now?” • Accidents happen: 40% of all LTC services are provided to individuals ages 18-65 * * “Where Does the Population Live and Who Cares for Them? LTC: Diverse, Growing Population Includes Millions of Americans of all Ages.” U.S. General Accounting Office, January2001

  22. Are the effects of inflation covered?How does the inflation option affect premium? 5 Year Benefit Period, 90 Day Elimination Period, Daily Benefits: Fixed Benefits – Variable Premium 5/5% Premium = $3,104 5/3% Premium = $2,425 5% Premium = $2,256 Premiums and benefits may vary and not be available in all states

  23. Are the effects of inflation covered?Fixed Premium ($3,000) – Variable Daily Benefit AmountLT 5/5% Inflation vs. 10 Year 5/3%, 5% Simple and GPO w/out conversion 90 Day Elimination Period, Daily Benefits Premiums and benefits may vary and not be available in all states

  24. Are the effects of inflation covered?Fixed Premium ($3,000)Variable Daily Benefit:10 Year 5/5% Inflation vs. 5/3%, 5% Simple and GPO w/out conversion Variable 90 Day Elimination Period, Daily Benefits Premiums and benefits may vary and not be available in all states

  25. Making the right benefit choices“and” keep it under $4,000* • Partners age 55, Select rates • Individual $100/day, L.T. BP, 5% compound ($338 @80) $3,672 • Shared Care 10yr, 5/3% Compound $160/day ($360 @80) $3,648 • Shared Care 6yr. 5% Simple, $205/day ($451 @80) $3,758 • Shared Care 6yr GPO, $360/day $3,684 Note: Under age 65 benefits - Double Accident and Return of Premium ** *CCII rates and options shown may not be available in all states ** Built-in Return of Premium Benefit

  26. Making the right benefit choices “and” Keep it affordable* • Partners age 55, Select rates • 2 policies $100/day, LT, 5% compound $3,672 • 2 policies $100/day,10 yr, 5/3% compound – save $1,501 • 10 year Shared Care, 5/3% compound – save$754 • 6 year Shared Care, 5/3% compound – save $1,106 • 6 year Shared Care, 5/3% inflation – annual save $1,668 *CCII rates and options shown may not be available in all states

  27. The Next Generation of SalesA New Declaration from John Hancock:Products designed to be the best Long-Term Care Insurance is underwritten by John Hancock Life Insurance Company, Boston, MA 02117 For professional use only. Not for use with consumers LTC-CCECII 09-03

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