6. Critical Illness Flashcards
1
Q
Definition of critical illness insurance
A
- Pure protection product with sum assured payable if ph suffers one of insured conditions during term of policy
- Usually level regular premiums paid until
insured event occurs, insured dies
2
Q
Definition of critical illness insurance
A
- Pure protection product with sum assured payable if ph suffers one of insured conditions during term of policy
- Usually level regular premiums paid until
- insured event occurs,
- insured dies or
- policy term ends (whichever occurs first) - Usually LS, may be regular income
3
Q
Three forms of CI
A
- Standalone
- Rider
- Accelerated
4
Q
Standalone CI
A
- Sum insured is only paid on diagnosis of insured condition
- No payment on death
- May have survival period
5
Q
Survival period
A
- Benefit not paid if ph dies within x days of critical illness event
- Usually 28/30 days
6
Q
Rider CI to life policy
A
- CI sum assured paid on diagnosis of CI and …
- … death SA paid on death
7
Q
Accelerated CI
A
- SA paid on diagnosis of CI or death, whichever occurs first
8
Q
Needs met by CI policy
A
- Income can be provided from LS via annuity if unable to work as result of CI
- Benefit can be used to repay mortgage or other loan
- Medical costs can be funded when CI requires surgery/treatment
- Business partners can purchase CI policies on lives of each other, s.t. benefits will fund buyout of stake in partnership
- Can fund change of lifestyle to improve claimant’s health (e.g. moving to less stressful {and lower-paid} job after heart attavk)
- Other needs suggested incl. recuperation after illness, taxation planning, medical aids (e.g. installing specialist equipment in home)
9
Q
Benefit payable in following ways
A
- Upon happening of a CI event
- On reaching defined degree of impairment
- On undergoing surgical procedure
10
Q
Criteria for inclusion of illness
A
- It is a condition perceived by the public to be serious and to occur frequently
- Each condition covered can be defined clearly so that there is no ambiguity at time of claim
- Sufficient data are available to price the benefit
11
Q
Terminal illness
A
- Expect to result in death within 12 months.
- Acceleration product - main effect of terminal illness is to bring forward the payment of the death benefit - cost of benefit is very small.
- Diagnosed more than 12 months before end of policy term - not big cost.
- Diagnosed less than 12 months before end of policy term - big cost.
12
Q
Children’s benefit
A
- Rider for similar cover for insured’s children
- Claim for child wouldn’t terminate policy
- SA may be restricted
13
Q
Tiered benefit product
A
- Payment of benefits linked to severity of diseases
- May be multiple claims under policy until full sum insured has been reached
- More comprehensive than standard CI product
14
Q
Customer needs met by tiered CI
A
- Benefit closer fit possible to medical distress and financial needs
- May be deemed more comprehensive and more fair
15
Q
Disadvantages of tiered CI
A
- More complex than standard CI, so harder yo compare
- Potential for more claims disputes
