Note: This FAQ summarizes the terms of the settlement to help Missouri class members making their decisions. Although the summary was developed based upon review of the settlement documents by department staff, the department cannot guarantee the accuracy or completeness of the summary because it was not a party to the settlement. The actual terms of the settlement are ultimately controlled by the stipulation of settlement documents entered into by the parties and the notice documents received by the class members.

More than 27,000 Missouri current and former policyholders of Conseco Senior Health Insurance Co. and its subsidiaries received notices in early January of a possible class-action lawsuit settlement on long-term care insurance coverage.

Filed initially in mid-2000, the litigation alleges Conseco improperly handled rate increases or concealed the likelihood of those hikes on about 750,000 such policies nationwide, many of them originally written by American Travellers Life or J.C. Penney Life before that business was purchased by Conseco.

The case has not gone to trial, but the Philadelphia judge presiding over the case has allowed the plaintiffs and Conseco to circulate a proposed settlement offer. The proposed settlement agreement is still subject to judge's approval.

If current and former policyholders do not want to participate — and reserve their rights to pursue independent legal action — they must postmark requests to opt out of the class-action case by Jan. 22.

Those who do not opt out then have until Feb. 4 to select from several options offered in the proposed settlement. Some of these options are subject to Conseco's medical underwriting, which could disqualify class members based on their health history. However, if you are disqualified from the policy you prefer, you can keep your current policy

In no case does the proposed settlement reduce the Missouri Department of Insurance s authority to take action in the future against Conseco in response to any violations of state law or failure to comply with the terms of insurance contracts.

Below are answers to "frequently asked questions" about the settlement offer.

Policyholders are divided into four groups:

• Those who are currently insured.
• Those who discontinued their coverage within 60 days of a rate increase.
• Those who discontinued their policies more than 60 days after a rate increase.
• Those who are currently receiving benefits.

What options are available to current policyholders who are not being paid benefits?

Missourians currently insured under a long-term care or home health care policy have the following options with respect to each policy:

• You may replace your policy with a new long-term care/home health care policy (Conseco Senior LTC/HHC 5000 series) if you qualify under Conseco's medical underwriting guidelines. If you qualify, the company will discount the policy by 5 percent for the life of the policy. (This option may not be available to those who have serious medical conditions). In case you do not qualify, you must also choose option 2 or 3.
• You may exchange your policy for a "non-forfeiture benefit" that consists of all the premiums you have paid minus any claims paid by the company. This non-forfeiture benefit can only be used to pay future long-term care or home health care benefits. If the money is not used for those purposes the monies revert to the company. (Note: If you choose this option, you can have this money available for your long term care. In addition, just as you can now, if you qualify medically for a long term care or home health care policy, you could apply for any of Conseco's or its competitors LTC/HHC policies and pay the premiums for those policies.)
• You may retain your current policy. If rate increases exceed certain levels, you will receive a second notice of your right to a non-forfeiture benefit described above. (Note: Conseco has stated that they are no longer enrolling individuals into these policies. As healthy policyholders choose other options, persons who remain in this group — most likely ill individuals — may experience significant rate increases.) This is the default option if you do not respond at all.
• You may opt out of the class action settlement and keep your current policy. You will not have the ability to switch the policy to the non-forfeiture option. However, you will preserve your legal rights in case you wish to bring about a separate legal action. Again, you may see significant future rate increases if you choose this option. (Note: If you fail to respond in writing requesting to "opt out" by Jan. 22, 2002, you will be included in this class action lawsuit.)
• You may file a written objection to the plan with the court and exercise one of the options 1, 2, and 3 above. If you wish to file an objection to the terms of the proposed settlement, you must file your objection with the court and send copies to the attorneys for the parties by January 22, 2002. You may only file a written objection if you have not opted out.

In addition to these benefits under Option 1, 2 or 3, you can purchase an annuity issued by Conseco and the company will match 5 percent of the initial premium paid by you or the company will match 50 percent of the first year premiums paid by you on a Conseco Universal life insurance policy (up to a maximum of $500). If you elect to opt out, or if you do not respond at all, this option is not available.

With regard to the annuity or life insurance policy, you may transfer the discounts to a family member rather than use them yourself.

What options are available to former policyholders who discontinued their policies within 60 days of a rate increase?

• You may choose a "non-forfeiture benefit" that consists of all the premiums you paid minus any claims paid by the company. This non-forfeiture benefit can only be used to pay future long term care or home health care benefits. If the money is not used for those purposes the monies revert to the company. (This choice is not available if the policyholder is deceased.)
• You can choose to purchase an annuity issued by Conseco and the company will match 5 percent of the initial premium paid by you or you may choose to purchase a universal life insurance policy and the company will match 50 percent of the first year premiums paid by you (up to a maximum of $500) on this Conseco universal life insurance policy. If you choose the annuity or life insurance policy, you may transfer the discounts to a family member rather than use them yourself.
• You may opt out of the class action settlement. You will not have the ability to choose the non-forfeiture option, the life insurance or the annuity. You will preserve your legal rights in case you wish to bring about a separate legal action. (Note: If you fail to respond in writing requesting to "opt out" by Jan. 22, 2002, you will be included in this class action lawsuit.)
• You may file a written objection to the plan with the court and exercise options 1 or 2 above. If you wish to file an objection to the terms of the proposed settlement, you must file your objection with the court and send copies to the attorneys for the parties by Jan. 22, 2002. You may only file a written objection if you have not opted out.
• If you are in this category and you do not respond at all, you will not be entitled to receive anything in the settlement.

What options are available to persons who cancelled their policy more than 60 days after a rate the increase? Or to deceased persons' estates?

• You can purchase an annuity issued by Conseco and the company will match 5 percent of the initial premium paid by you or the company will match 50 percent of the first year premiums paid by you (to a maximum of $500) on a Conseco universal life insurance policy. If you choose the annuity or life insurance policy, you may transfer the discounts to a family member, rather than use them yourself.
• You may opt out of the class action settlement. You will not have the ability to choose the non-forfeiture option, the annuity nor the life insurance policy. However, you will preserve your legal rights in case you wish to bring about a separate legal action. (Note: If you fail to respond in writing requesting to "opt out" by Jan. 22, 2002, you will be included in this class action lawsuit.)
• You may file a written objection to the plan with the court and exercise option 1 above. If you wish to file an objection to the terms of the proposed settlement, you must file your objection with the court and send copies to the attorneys for the parties by Jan. 22, 2002. You may only file a written objection if you have not opted out.
• If you are in this category and you do not respond at all, you will not be entitled to receive anything in the settlement.

What options are available to persons currently receiving benefits?

• You can purchase an annuity issued by Conseco and the company will match 5 percent of the initial premium paid by you or the company will match 50 percent of the first-year premiums (to a maximum of $500) paid on a Conseco universal life insurance policy. If you choose the annuity or life insurance policy, you may transfer the discounts to a family member, rather than use them yourself.
• You may opt out of the class action settlement and keep your current policy. You will not have the ability to switch the policy to the non-forfeiture option. However you will preserve your legal rights in case you wish to bring about a separate legal action. (Note: If you fail to respond in writing requesting to "opt out" by Jan; 22, 2002, you will be included in this class action lawsuit.)
• You may file a written objection to the plan with the court and exercise options 1 above. If you wish to file an objection to the terms of the proposed settlement, you must file your objection with the court and send copies to the attorneys for the parties by Jan. 22, 2002. You may only file a written objection if you have not opted out.
• If you are in this category and you do not respond at all, you will not be entitled to receive anything in the settlement.

Who do I contact with questions?

Call the Class Action Settlement Administrator at: 1-877-229-3830 or see the Conseco Settlement web site.

Why did I get this mailing from Conseco? I don't have a Conseco policy.

This class-action lawsuit against Conseco concerns all persons who bought long-term care and/or home health-care policies since 1975 from Conseco or any companies or lines of long-term care policies that the company bought during that period. Included are:

Conseco Senior Health Insurance Co. (except for Preference and FQ series)
American Travelers Life Insurance co.
Great Republic Life Insurance Co.
Transport Life Insurance Co.
Universal Fidelity Life Insurance Co.
Pioneer Life Insurance Co.
Conseco Life Insurance Co. of New York (except for Preference, FQ, and Solutions series)
J.C. Penney Life Insurance Co.
Continental Life Insurance Co.
National Group Life Insurance Co.
Health and Life Insurance Co. of America.

If you received this mailing, you should have a long-term care policy with one of these companies or allowed such a policy to end through cancellation or discontinuing payments.

How do I opt out of the class action lawsuit?

If you choose to opt out of the class action, you must send a written request for exclusion postmarked by Jan. 22, 2002. The request must include your name and address, and, if you are requesting exclusion on behalf of someone else, the capacity in which such person is acting.

The request must be sent to:

LTC/HHC Settlement
P.O. Box 455
Excelsior, MN 55331-0455.

Web Address: http://www.ltchhcsettlementagreement.com/index.htm

Where do I file objections about the settlement, if I act by Jan. 22?

If you choose to opt out of the class action, you must send a written request for exclusion postmarked by January 22, 2002. The request must include your name and address, and, if you are requesting exclusion on behalf of someone else, the capacity in which such person is acting.

The request must be sent to these four parties:

LTC/HHC Settlement
P.O. Box 455
Excelsior, MN 55331-0455.

Clerk of Court,
516 City Hall
Philadelphia, PA 19107

Allan Kanner, Esq.
Allan Kanner & Associates, P.C.
701 Camp Street
New Orleans, LA 70130

Mindy J. Spector, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Ave.
New York, NY 10153

In your objection, note that you are referring to the following:

Case No. 03775
Irene Milkman, plaintiffs
v.
American Travellers Life Insurance Co., a Pennsylvania corporation, ATL Life Insurance Co., and Conseco Senior Health Insurance Co., a Pennsylvania corporation.