21. Mortality and Morbidity

Question 1

Risk classification in life insurance

Answer 1

• Heterogeneity
• Selection
• Risk grouping

Question 2

Variation in mortality and morbidity rates

Answer 2

• Variation by age and sex
• Between geographical areas
• By social class
• Over time

Question 3

Proxies for risk factors

Answer 3

• Occupation
• Nutrition
• Housing
• Climate/geography
• Education
• Genetics
• HIV status
• Political unrest
• Dangerous activities
• Religious attitudes
• Marital status

Question 4

Examples of things that vary with geographical location

Answer 4

• Access to medical care and support
• Road accidents
• Natural disasters

Question 5

Effect of education

Answer 5

• Increased income
• Better dietary choices
• Exercising
• Personal health care
• Moderate alcohol consumption and smoking
• Awareness of dangers of drug abuse
• Awareness of a safe sexual lifestyle

Question 6

Types of selection

Answer 6

• Temporary initial selection
• Class selection
• Time selection
• Adverse selection
• Spurious selection

Question 7

Selection

Answer 7

Taking advantage of inefficiencies in a provider’s pricing basis to secure better terms than might have otherwise justified, normally at the expense of provider

Question 8

Reasons for the difference in the occupation recorded for deaths and ETR

Answer 8

• Entries on census returns may not be specific enough, leading to the wrong occupation being recorded.
• Families may elevate a person’s occupation.
• Estimates may be unreliable.

Question 9

Causes of unreliable occupation mortality estimates

Answer 9

• Previous occupations
• Classification
• Lack of statistics.

Question 10

Factors through which climate and geographical location can affect mortality and morbidity rates

Answer 10

• Levels and patterns of rainfall + temperature affect the susceptibility to some diseases.
• Rural vs Urban areas
• Natural disasters
• Access to medical care + transport
• Road accidents

Question 11

Reasons for higher mortality rates in areas with high political unrest

Answer 11

• Conscription
• Increased risk of injury
• Restricted food, clean H2O and hospitals in war zones.

Question 12

Underwriting

Answer 12

• Process of consideration of an insurance risk.
• Includes assessing whether the risk is acceptable and, if so, the appropriate premium, together with terms and conditions of the cover.
• May also include assessing the risk in the context of the other risks in the portfolio.