CH 28 (Pricing Health and Care Contracts)

Question 1

Claim Inception and Disability Annuity

Answer 1

• Probability of eligibility
• Claim inception rate
  (prob of getting sick and then staying sick until end of deferred)
• Value of annuity payable for duration
  (allowance for amount escalation, interest, death and recovery between deferred period and expiry)
• Discount factor
• Annual benefit amount

Question 2

Critical Illness

Answer 2

Accelerated:
(i) + (1-k)*q

Standalone:
(i)*(probability of surviving the survival period)

…can break it up by different CI components

Question 3

Two Tables in Double Decrement Approach

Answer 3

1. Healthy table
   (for falling sick and dying)
2. Disabled table
   (for recovery and death)

Question 4

Rates in Orange Book for IP

Answer 4

> Claim Inception rates
(tabulated by claim inception age + deferred period)
...Three Defs:
1. initial "i" 
2. central "ia"
3. central "ib"

> Current claim sickness annuities
(used in reserving
– use with claim inception rates)

> Annuities during sickness for lives currently health
(used in ricing)