AEGJ-127966764

Rate Filing Summary

Over all proposed average rate change 20%

When a Long Term Care insurance policy is purchased, the company makes a decades-long promise to
provide valuable benefits under the contract whenever they may come due, in-full.  The company makes
every effort to provide the coverage at premium rates that are not only reasonable and affordable, but
stable and adequate over the entire time the policy remains in force.  Sometimes actual claims exceed
the amount anticipated beyond what current premium rates can support, and unfortunately, this is the
case for the company’s Long Term Care insurance block of business.  This in turn makes it necessary to
increase premium rates to strengthen the company’s ability to provide the same valuable coverage. 
While the company understands that a premium rate increase is unpleasant, the company’s primary
responsibility is to ensure the contractual obligations to its policyholders are fully honored and must act
accordingly. 

The company has filed for a 20% increase in premiums with the Vermont Department of Insurance.  This
filing is subject to a formal and comprehensive review process and includes a demonstration of
compliance with the requirements pursuant to applicable Vermont law.  The company will implement the
requested premium rate increase only after approval by the Department and satisfaction of all regulatory
and contractual requirements.

Once the rate increase becomes effective for a given policyholder, payment of the increased premium will
be necessary to maintain the benefit levels existing in the policy prior to the rate increase.  Affected
policyholders that do not want to pay the rate increase will be afforded the option to either offset or
mitigate the increase by modifying the benefits in the policy.  For policyholders that choose not to pay
their premium at all within 120 days of the effective date of the rate increase, the company will provide a
Contingent Nonforfeiture Benefit (“CNF”).  The CNF benefit will allow the insurance coverage to continue
with all the same policy specifications as before except that the total dollar amount of benefit available will
be reduced to an amount equal to the sum of premiums paid-to-date.  All policyholders subject to the rate
increase will be eligible to elect the CNF benefit. 

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