U.S. Update News September 2004

We plan to post the September 2004 Internet monthly update to our six monthly update web sites on September 30th.

The September disk update will be processed Wednesday, September 29th and the disks will be shipped on Thursday, September 30th. You should have the disk update by October 4th.

IMPORTANT NOTE: Subscribers who are still receiving disks can save up to $100 per year by switching to updates by Internet. Please read the last section of this bulletin for complete details. Don’t wait for your next invoice to make the change. Compulife will bonus your subscription renewal deadline for switching from disks to internet.

Change in Monthly Update Release DatesAs we discussed last month, those receiving disk updates can expect those updates to be shipped a little later in the preceding month which means you may find the update is routinely coming in after the first of the month. We are no longer targeting the 1st of the month as the date for the shipment to arrive in your office. The target is to have the update on our websites a day or two before the 1st of the month.

The downside for our disk update customers is that the system will squawk after the first of the month, complaining that it needs the new monthly update. Click OK and move forward to do quotes.

This change is important because a number of companies typically introduce first of the month changes at the end of the preceding month. Frequently we are put in a squeeze at the end of the month and some times important first of the month changes end up having to appear in our first midmonth update.

Outlook E-Mails – The Beast Has Been TamedWe have had an annoying problems trying to resolve a problem our windows program had talking to the Outlook e-mail system. Those who subscribe to the full version of Compulife (NOT the less expensive Term4Sale – Agent Edition), know that Compulife has a feature which allows quotes to be e-mailed as attached PDF files. If you use the e- mail option, the system automatically pops up a new e-mail in a standard form. Incidentally, the content of the standard e-mail can be changed by going to “Options” on the Red Master Menu. The choice is “PDF / Email Options”.

The only problem was that some systems that used Outlook (NOT Outlook Express gave an error. The problem with that is that NOT all systems using Outlook did that and none of the systems in our office were doing that. However, a tip from one of our subscribers got one of our machines to replicate the bug, and so after much fussing with it, our programmer was able to get to the bottom of the problem and get it working. Those who took midmonth updates in August have confirmed that the fix works.

If you are one of those unfortunate soles who was using Outlook and could not use Compulife’s e-mail option, you can now do so. The only thing you need to do is go to “Options” on the Red Master Menu and select “PDF / Email Options”. On the right hand side of the window there is a menu of e-mail systems which now includes a third option for “Outlook”. Please select that option and you should be all set.

Universal Life – Term to 100 Minimum PremiumCompulife has completed work with a new category which we have added called:

“U/L T100 – minimum premium“Our first edition of this new category included the products for 3 companies: AIG, Maritime and National Life. We have requested the information from a number of other life companies, but to date we have not yet received the data. If you have a favourite U/L T100 product you like to quote and sell, please give Bob Barney a call at 800-798- 3488.

We Needed A New DisclaimerWe have done something different in adding this new category. To explain it we have added some additional information at the “Frequently Asked Questions” page at our website. Here is what it now says:

[we start with the original paragraph]

Why Doesn’t Compulife Quote Universal Life?

Compulife’s computer comparison system works well when there is great similarity in products and the most significant difference is price. For example, most companies offering 10 year level term have the same primary product functions: the death benefit and premium are level for 10 years. The most significant difference between products is cost. Other factors come into play but the cost is the fundamental difference. That is not the case for Universal Life (U/L). Other factors that come into play with U/L include rates of return, investment options, etc. Cost is a much less important consideration and comparing those other factors is not a simple analysis. Such analysis becomes much more subjective and opinions vary greatly from agent to agent.

[and then we add some new paragraphs]

There is an exception to the fact that Compulife does not quote U/L…

In Canada a number of life insurance companies offer “Term to 100” (T100) as the “Cost of Insurance” (COI) for their U/L policies. Most policies specify a “minimum premium” for such policies. Providing the insured pays the minimum premium each year, the company guarantees the insurance coverage. In many of the policies offered the minimum premium can be altered if the “premium tax” (incorporated into the policy premium) is changed. Apart from that exception, and providing the minimum premium is paid each year, the company guarantees that the policy will provide coverage that does not lapse. Compulife does NOT quote values other than the minimum premium. As such these comparisons are no substitute for the illustrations provided by the life companies for these policies. There is more to compare than premium, and the Compulife comparison should be viewed as a beginning point only.

In Canada there is an added complication in that life insurance companies offer other COI than just T100. For that reason Compulife has added the following warning to the “U/L T100 – Minimum Premium” comparisons:

“IMPORTANT: The minimum premiums in this Universal Life (U/L) comparison are based upon a “Term to 100 (T100)” Cost of Insurance (COI). Most life insurance companies offering T100 as the COI in their U/L also offer other types of COI such as Yearly Renewable Term.

WARNING: YRT increases in cost each year while T100 is a level cost to age 100. If you purchase a U/L policy based upon this comparison, MAKE ABSOLUTELY CERTAIN that the U/L policy has T100 and NOT YRT as the type of COI in your policy. If in doubt, ask your agent to write you a letter certifying that the COI is T100, and keep that letter with your policy.

[end of new paragraphs]

The Reason for the DisclaimersAs you can see from the preceding information, there is a risk when quoting minimum premiums, that a consumer could think they are buying one thing, and ending up with another. We hope you appreciate the need for clarification.

Provincial DesignationA number of the U/L products require a calculation which takes into account a premium tax. The amount of this tax varies from province to province.

You will note that the Enter Client Information has a province selection which will inform the system which tax rate to use. If you do not select a province, the U/L products that require the tax calculation will not quote.

One wrinkle for these products is that if the provincial tax increases, the minimum premium can be increased which means those minimum premiums have a non-guaranteed element. Product premiums that could be impacted by the possibility of a tax change will appear in yellow on the comparison screen and in printouts an asterisk will appear next to the premium. Once again, the ONLY element of the premium that is NOT guaranteed is the tax rate. For the product to get into the category the T100 base premium must be guaranteed.

Basic ComparisonThe purpose of this comparison is to give you a way to compare the underlying T100 costs for those U/L policies which offer T100 as a mortality option. In effect these are T100 products which offer the consumer the opportunity to invest additional cash and earn a tax deferred return.

Because these U/L policies require the payment of a “minimum premium” which may be greater than the T100 cost itself, the comparison will be based upon the minimum premium (the least you can pay).

Comparisons will not examine cash values or accumulations and will not permit you to enter additional funds into the quote. We have no interest in going down that road. The complexity of calculating U/L values makes the job of exactly matching life company U/L values almost impossible. If you wish to show a product beyond the basic minimum premium, we strongly recommend that you use the company’s own illustration software. We intend to stick to the minimum and level lifetime costs as the basis of comparison for this new category.

Term4Sale – Agent EditionWe are adding the new U/L T100 category to the Term4Sale – Agent Edition version of our software. Joint Life variations of these products, once they become available, will not be offered in the Term4Sale – Agent Edition.

On-Line Quote SystemsWhile we do not plan to add this category to our Term4Sale website, we expect there will be Canadian subscribers, who use our Internet engine, who will want to add the new category to their on-line quotes.

In that regard we would caution:

DO NOT ADD the category to on-line quotes yetThe Internet Engine will need to be updated to include the premium tax calculation and if you use the new category in your on-line quotes, with the existing engine, the premium quotes will be TOO LOW!

If you need an updated engine, please e-mail barneyrl@compulife.com with that request.

DOS Software – Will Be Updated by Internet OnlyAs part of our ongoing efforts to move customers from our DOS software to our Windows software, we will be removing DOS software from our DISK UPDATES effective December 1, 2004. The exception will be the install program which your computer uses to update from disks.

Currently disk updates contain BOTH Windows and DOS software. This means that the disk updates contain more files than we would need to ship if we were only providing Windows software. Further, because the majority of our customers now update by Internet, and because disk capacity is not an issue for monthly updates by internet, and because we prefer you to get updates by Internet, we will be removing the DOS program from our disk updates effective December 1, 2004.

If You Still Use DOS SoftwareWhat does that mean and what do you need to do if you are getting disk updates? You have two options:

First, switch to getting updates by Internet. Monthly updates by internet will continue to receive the DOS and Windows program until the 3rd quarter of 2005. We expect the early part of 2006 to be a very busy time for us, and we intend to move everyone who still uses DOS software, to our Windows software, by the end of 2005.

Second, learn to use the Windows software.

Actually, we recommend both because as we noted, we will not be supporting DOS software after the 3rd quarter of 2005. By that point all Compulife subscribers will need to be using the Windows program.

Warning: The December 1, 2004 monthly disk update (NOT INTERNET UPDATE) will have a GO.EXE file that will not run the DOS software, it will simply start the Windows software. Effectively the DOS software will be removed from your computer on December 1, 2004. Once again, this only applies to those who get monthly updates by disk.

Windows Program – Structural ChangesDuring September you should not expect any new improvement in our Windows software. We are making some changes to the Canadian options in the software to address joint life products. During August we discontinued our DOS joint life software and now require customers to use the Windows program for those quotes. Now that we do not have to include those options in both DOS and Windows, the Windows program can be changed to make joint life maintenance easier. Further, we have some improvements to introduce to the joint life software which we will begin adding at the same time. Until that work is completed, you can expect we will only make changes to solve bugs during the month of September.

Dueling Web SitesFor those who update by Internet, Compulife has gone to great lengths to provide you with redundancy in our web sites. Our main web site is:

www.compulife.comHowever, we keep two completely separate websites, on two completely different servers, at:

www.compulife.us     or     www.compulife.ccWhatever we update to compulife.com, we are also updating to compulife.us and to compulife.cc. If one web site goes down, for whatever reason, either of the other two are ready to serve you. That includes both monthly and mid-month updates.

For those doing monthly updates by Internet, we rely on three other web sites to supply monthly updates. These are automatically checked and used by our automatic Internet update software.

Returning Monthly Disk UpdatesFor those receiving updates by disks, you are responsible to return those disks each month. Not returning disks can lead to the termination of your update service. For those not wanting to return disks there are two ways to eliminate the problem.

1. Switch to obtaining monthly updates by Internet.

Not only will you eliminate the expense and hassle of returning disks, you will save $100 per year in subscription fees.

To switch to Internet monthly updates, go to our web page www.compulife.com and select the last menu choice “Forms, applications, instruction tutorials, etc.” Under the section “License Agreements” you will need to select and complete a new License Agreement for the type of license you have. After you have printed the new agreement, please read it, especially the part where you agree that you have successfully downloaded and processed our “mid-month updates”. If you haven’t done that before, call us and we’ll be happy to step you through the procedure. It’s easy.

2. Disk Purchase Program

The other way to avoid returning the disks and the disk box each month is to pre-purchase them for $21 per year ($1.75 per month). Once you do that you can keep them for future reference, throw them away or return them for a credit (once each year) when you are invoiced for the following year. $21 costs you less than mailing back disks each month.