Can HDF improve opportunities for sales for you in 2005? Absolutely! It’s a cost-effective way for more Seniors to get high quality protection at more affordable premiums. You can offer your Senior customers the outstanding benefits and value you always have, but at a substantially lower premium. The deductible amount, set annually by the Federal government, is $1,730 for 2005. Once your policyholder meets this calendar-year deductible, UA’s High Deductible Plan F pays the same benefits as a regular Plan F – but at a substantially reduced premium.

Why HDF? Perhaps a better question is ‘Why Not HDF?’ From 2000 to 2003, the average rate increase for all individual Medicare Supplement insurers nationwide was 7.5 percent annually. In 2005, at least 35 states again plan to approve increases for companies’ Medicare Supplement rates. According to a recent article in the New York Times, employer-provided retiree healthcare premiums even shot up a whopping 25 percent in 2004 alone. Modest Social Security Cost of Living Adjustments (COLA) coupled with substantial insurance premium increases, prescription drug cost increases and a 17.5 percent Medicare Part B Premium increase, are a recipe for worry and concern for many in our Senior population. Medical expenses are rising faster than Senior incomes, and the result of these repetitive cost increases is the inability of some Seniors to pay for Medicare Supplement coverage in addition to other increases in their basic living costs.

On a positive note, Seniors’ mentality and lifestyles are changing too. According to an article in the April 19, 2004 issue of National Underwriter, “Today’s Seniors are not only living significantly longer than previous generations, but also living significantly better. They are healthier, more active and more interested in what is happening in the world.

HDF s a practical response to both the need for lower premiums and the fact that many Seniors are living more vital lifestyles. After all, why should they pay for claims they may never have?

Specifically, when UA reviewed 2003 policyholder claims under our traditional Med-Supp Plan F, we found that 84 percent of our young Seniors experienced an average claim amount far below the high deductible amount (closely examine the graph on page 8). It only makes sense to offer them a substantially lower premium – 50 to 75 percent lower – if they’re willing and able to assume the risk required by the high deductible.

Here’s the easiest part to understand: If a Senior pays $1,800 in annual premium to another company but has no claims, all of that money is lost! If a Senior pays $708 in HDF premiums annually to UA, but has no claims, he or she keeps all of the $1,092 premium difference! In fact, based on the company’s policy claim averages, most seniors in this circumstance will have a truly unique opportunity to save big with HDF, and they will also have the opportunity for HDF savings to continue growing with interest through their Reserve Fund Annuity (RFA). Understanding a Senior’s financial pain helps tremendously. With living costs rising faster than their income, many Seniors will easily see the logic in the opportunity to self-insure for the deductible and save their premium difference as a deposit into the Reserve Fund Annuity — rather than pay extra premiums to another company that might not be fully utilized for claims!

The Reserve Fund Annuity sets us apart from other insurers and makes our HDF product an especially attractive offering. Other companies offer HDF, but none deliver it in conjunction with the long-term value of the RFA, at a minimum of 2% interest paid on deposits. With the low returns Seniors now see in CDs, along with requirements to leave the money in CDs for an extended time period, Seniors will love UA’s 2% minimum interest rate — with no time requirement for deposits. It’s their money to get any time they want it! See pages 10 and 11 for details.

In the pages that follow, you’ll find an extensive introduction to the basic questions you’ll have about HDF. Talk to your Senior customers about the features and benefits HDF can offer. It gives them the protection they need at a cost they can afford and provides them a method to save in the process. HDF’s a winner for everyone!