The document provides an analysis of disability needs and risks. It discusses (1) the probability of occurrence of disability, with statistics showing nearly 1 in 5 people will become disabled before age 65; (2) assessing one's most valuable asset as their ability to earn an income; and (3) the magnitude of financial risks if disability prevents earning an income to cover monthly expenses. It outlines options to plan for potential problems from death, disability or retirement through insurance or savings.

1. D ISABILITY N EEDS A NALYSIS

2. The objective of Disability Needs Analysis is to help you answer three basic questions… Will your income stop or be reduced? How much money will your family need to maintain your current lifestyle? Where will you get that money and is that source guaranteed ? If you get sick or hurt and can’t work:

3. Today we will review… The probability of occurrence What is your most valuable asset? The magnitude of risk Where would the money come from? What are your options? Risk Tolerance Assessment

4. 1. The Probability of Occurrence

5. Disabled people are one of the largest single minority groups in the United States... Approximately 19% of the American population ages 21 – 64 have a disability. About 43% of this group are not employed. Source: U.S. Census Bureau, Census 2000 Not Disabled Disabled

6. Roughly half (48%) of all home foreclosures are due to serious medical problems, whereas only 2-3% are death related Source: Source: National Underwriter, May 2002. Disability does not discriminate! Disability 48% Premature Death 2% Other 50%

7. The risk of disability is great... Consider the chance of disability. Out of 1,000 people, the number of people who may be disabled for at least 90 days before age 65 is: 1 out of 5 205 55 1 out of 4 262 50 3 out of 10 305 45 1 out of 3 340 40 3 out of 8 365 35 3 out of 8 385 30 2 out of 5 403 25 Probability of Disability Number Disabled At age

8. When a disability does strike, it can take a long time to recover... Average duration of a long term disability (disabilities lasting 90 days or more)… 4 years, 5 months 55 4 years, 2 months 50 3 years, 11 months 45 3 years, 6 months 40 3 years, 1 month 35 2 years, 8 months 30 2 years, 2 months 25 Duration Age at beginning of disability

9. The good news is people are living longer… Hypertension Heart Disease Cerebrovascular Diabetes All Four Diseases Percent Change in Death Rates

10. The bad news is the diseases that caused death are now leaving people disabled... The result…The potential for loss of earnings due to a disability can be staggering. -100 -75 -50 -25 0 25 50 75 100 Men Women Hypertension Heart Disease Cerebrovascular Diabetes All Four Diseases Percent Change in Disability Rates Percent Change in Death Rates

11. 2. What is your most valuable asset?

12. The fact is your health is your wealth... Your most valuable asset is lost when you can least afford it. Based on current income, these are your potential earnings to age 65. $____________

13. Your car is probably insured. Odds are your home is also insured. In all likelihood, your belongings are insured too. Doesn’t it make sense to have your ability to earn an income insured as well? Your cars are worth Your automobile insurance premium $______________ $____________________________ Your home is worth Your homeowner’s insurance premium $______________ $____________________________ Your other assets (Business, Your multi-peril insurance premium, etc, vacation home, boat, etc.) are worth $________________ $_____________________________ Think for a moment…

14. You spend a lot of money protecting these assets - the fruits of your labor. But, what about protecting what makes this all possible - your ability to generate income? Your annual earning power Amount you are now spending to protect your income $__________________ $_____________________________ Why keep your earning power at risk when so much depends on it?

15. 3. The Magnitude of Risk

16. Let’s take a closer look at your monthly expenses... Monthly Expenses Current Rent or mortgage (Include taxes and insurance) $_______________ Food $_______________ Utilities (Water, heat, electricity, telephone) $______________ Transportation (car, payments, maintenance, repairs, insurance, gasoline) $_______________ Education $_______________ Insurance Premiums $_______________ Clothing $_______________ Household items (appliances, furnishings, tools) $_______________ Recreation (dues, hobbies, entertainment) $_______________ Medical and dental expenses $_______________ Installment payments $_______________ Discretionary expenses $_______________ Savings $_______________ TOTAL $_____________ When you are disabled, where will you get the money to meet these obligations?

17. When disability strikes, your expenses are very likely to increase… The problem is how to meet the cost of disability. DEBT Falling income plus ongoing expenses equals trouble NORMAL INCOME NORMAL EXPENSES SAVINGS Healthy - Working Disabled - not working

18. Have You Insured Your Golden Eggs. . . Car Home Property . . . But not the Goose?

19. 4. Where will the money come from?

20. Where will you get the money to take care of your needs?

21. 5. What are your options?

22. Potential planning problems…  Death  Disability  Retirement The difference between a problem and a tragedy is planning! Self-completing in the event of death or disability Insure You may not have time Save/invest Not to decide is to decide Do nothing Comments: Options:

23. A disabled person has a lot to lose... Loss of health. Loss of future earnings -- As your health is impaired, so is your future financial growth potential. Loss of insurability -- Serious disabilities can make insurance tough to get. Loss of assets -- First your savings account is likely to be depleted, then your other equity is eroded. Loss of prestige with associates -- Instead of being an asset, you may become a liability. Loss of peace of mind -- You may fear that you may be unable to pay present and future obligations. Loss of credit ratings -- Creditors like to see a steady source of income. These potential losses add up to loss of dignity -- and all of these losses can be minimized. Don’t you feel that it makes sense to take the necessary action now?

24. T he only logical answer... Your coverage can be coordinated with other sources of your eligible income. Using this comprehensive approach to protecting your income, a small dollar amount will provide you with additional benefits when you need the money most. An adequate amount of disability income insurance protection.

25. Can you qualify for this outstanding coverage? If you are currently healthy, chances are good you’ll qualify for our non-cancellable coverage. Waiting until a health problem develops may result in limited coverage, lower benefits or higher premiums. Or you may not qualify for coverage at all. This outstanding coverage can’t be bought with money alone. Why not see if you can qualify for coverage now?

26. Putting the premium in perspective... When you put the premium in perspective, the premium is the solution, not the problem.

27. Your financial foundation... 97% Why not let 3% protect 97%?

28. The cost of waiting to buy disability insurance... Age 35 Age 45 Initial outlay for $5,000 base monthly disability benefit, to age 65 benefit duration, 90-day elimination period, Extended Partial Disability Benefits Rider (for Residual and Recovery benefits).

29. Why buy now? Your health may change. You may become disabled. Cost goes up. Potential benefits decrease. Peace of mind.

30. Which job would you prefer? $5,000 monthly benefit Based on male, 45, 5A, non-tobacco 90-day waiting period Benefits payable to age 65 (includes residual and recovery) *Tax-free under current federal tax law if premiums paid with after-tax dollars.

31. What questions may I assist you with at this point?

32. Risk Tolerence Assessment: Disability Income Exposure

33. Questions for Single People with No Dependents… If all of a sudden you were unable to support yourself, would you want to ask your family or friends to take care of you?” What do you think would happen to your independence if an accident left you disabled or unable to work?

34. Questions for Single Parents… If you didn’t bring home a paycheck next week, would you and your family notice? What about the week after that? What about every week for the next year? How would this situation impact your children’s lives? Who would take care of you and your children if you suddenly became disabled and needed care?”

35. If one of you could not work for the next year, could you still pay all of your bills?” Would either of you be able to provide the care needed for the disabled spouse, keep up with all the household and family responsibilities, and still keep up with work responsibilities? What would be the financial effect of a long-term sickness on your retirement plans? Questions for Two-Income Families…

36. If the sole source of income for your household suddenly stopped for the next year, could you still pay all of your bills?” If the non-working spouse has been out of the workforce for a long time and suddenly had to go back to work, would gainful employment be easy or difficult to find? Is it likely this income would be enough to replace the lost income of the disabled spouse? Would it be enough to cover your household expenses and additional medical expenses ? Would the non-disabled spouse be able to return to the workforce and provide the care needed for the disabled spouse, keep up with all the household and family responsibilities, and still keep up with new work responsibilities? Questions for One-Income Families…