Ch 8 Morbidity Risks Flashcards
mortality
number of deaths that occur at a given time, in a given group, or from a given cause
morbidity
prevalence of disease or disability w/in a population
mortality risk
risk of a particular individual dying, at any given time, when compared to other individuals of same age and sex
morbidity risk
risk of a particular individual contracting a disease, or other disabling condition, at any given time, when compared to other individuals of the same age or sex
base policy
benefits are paid under terms of the policy if the insurable event occur
-payable after defined benefit period of time, for defined length of time
conditionally renewable (non-traditional, cancelable)
company can change the premium, policy provisions, or cancel the policy as long as it does so for all insureds w/in a specific class who own the contract
-non-traditional, cancelable, most flexibility
-does not provide for guarantees or continuation of policy
-can include provisions for cancellation or adjustment under certain circumstances
-class defined by age, gender, specific waiting period, benefit period, occupation or policy type
guaranteed renewable (traditional)
insurance company cannot cancel policy, change any provisions, or add any restrictions as long as premiums are paid. Premiums cannot be changed for an individual but can be changed for all policies of that type or in that specific class
-less restrictive UW
-can include limited benefit period, longer elimination period, reduced benefit amount for certain conditions, some impairments excluded
Non-cancelable (traditional)
as long as premiums are paid on time, the company cannot cancel the policy, increase premiums, add restrictive riders, change policy provisions or make any changes to the policy w/o agreement of policy owner
-strict UW, greatest risk
-time limit, usually 65, unless working full time
-after 65: premiums not guaranteed, benefit period reduced, definition of disability is total, benefit riders are terminated
Own Occupation
definition of total disability, which defines total disability as insured’s inability, due to injury or sickness, to perform the important duties of his own occupation. Must be under regular care & attendance of medical practitioner
-disabled from own occupation, but can work in another job while receiving benefits
-restricted to certain occupations
-limited period
Regular Occupation
defines total disability as insured’s inability, due to injury or sickness, to perform the important duties of his own occupation. Must be under regular care & attendance of medical practitioner.
-not working any other reasonable occupation
-ineligible if able to work in occupation for which has been educated, trained or has experience w/ respect to duties required under that specific job
Any Occupation
defines total disability as insured’s inability, due to injury or sickness, to perform the important duties of any gainful occupation for which he is reasonably qualified. Must be under regular care & attendance of medical practitioner.
-adjudicator determines ability to work using relevant info in support of claim
loss of income policies
amt paid based on loss of income rather than loss of ability to perform duties
-must be directly attributable to injury or sickness, under appropriate care
-considers amount of income being earned in comparison to income prior to disability, does not consider if working full-time
benefit payment
payable on mo. basis for duration of disability and upon recovery and continued premium payment, policy remains in force
waiting period
amount of time that must elapse between the onset of a disability or loss of the ability to perform 2 or more ADLs, when proceeds become payable
benefit period
max length of time insured is eligible to collect benefits while on a disability claim
contractual exclusion riders
riders included in wording of every policy of a particular type and outline situations where benefits would not be payable. examples:
1. act or accident of war, military conflict
2. committing/attempting felony or engaging in illegal occupation
3. normal pregnancy/childbirth
4. transplant surgery, donor, during first 6 mos of policy in force
5. cosmetic surgery, during first 6 mos policy in force
key person insurance
designed to protect a business and replace lost profits in the event of the loss of key employee
key person
employee whose unique skill sets are considered so essential to a company that the employee would be difficult to replace if he was unable to work
Office Overhead Expense Insurance
disability business insurance in which monthly benefit payable contingent on covered business expenses incurred by business during each month of disability of insured owner. covered expenses:
1. rent
2. property taxes
3. utilities
4. depreciation
5. leased/rented equipment
6. business liability insurance
7. dues for professional associations
8. interest on debt
9. accounting fees
10. certain employee wages
11. other fixed expenses
Disability Buy/Sell
legally enforceable contract between 2 or more partners or shareholders that states who or what entity will be paid in the event a partner or shareholder leaves the business voluntarily, dies or becomes permanently disabled.
Underwriting considerations for DI
- Medical: more restrictive, many impairments that increase chance of disability w/o affecting mortality
- Avocation: Some avocations or hazardous sports warrant modifications to disability policies
- Occupation: 5 classes. Occupation/duties important to determine if eligible, type of product available, amt of coverage, rates to be charged.
- Financial: Consider earned income, insurable income, unearned income
Class 5 occupations
high level of education/training - includes most professional & white collar executives
-actuaries, engineers, lawyers, accountants
Class 4 occupations
white collar workers
-managers, clerical workers
Class 3 occupations
non-hazardous occupations, not working full-time at desk, spending time outside of office environment to perform duties
-plant managers, supervisors, superintendents w/ supervisory duties, newspaper reporters, insurance adjusters, auctioneers
Class 2 occupations
skilled or semi-skilled light manual work for established businesses in non-hazardous industries
-qualified/experienced tradesman, certified mechanics, electricians, plumbers, chefs, tailors, RN assistants
Class 1 occupations
moderate to heavy physical work, unusual hazards, skilled or unskilled workers w/ light duties in stable companies and industries
-drywallers, caretakers, transport drivers, ambulance drivers, heavy equipment operators, factory employees
motivation for purposes of disability
desire of individual to work, essential to determine insurability risk
factors: work ethic, type of occupation, personal situation, work environment, income level
-assessment tools: stability of employment, education, financial worth, criminal record, stress levels for job tasks
earned income
salary, commissions, fees or other income earned as a direct result of work activities in the occupation
-bonuses, OT, contributions to pension & profit-sharing plans
insurable income
earned income that would cease during a period of disability
-if self-employed, consists of share of business’ net income
drawings
advance or loan to owner from company based on anticipated future profits, not always reflection of actual net earnings. unearned income
unearned income
income that would continue in the event of an inability to work
-investment income, alimony, rental income, dividends, royalties, pension income, trust income, capital gains
-net worth can impact benefit amt
purpose of DI
to provide sufficient funds to provide for necessities in event of disability
-replace 75-80% of income for lower income and 35-50% for higher income
counteroffers
options available in situations w/ increased morbidity risk for either medical or non-medical reason.
1. premium ratings: extra premium to cover excess morbidity associated w/ impairment
2. change of policy type
3. benefit adjustments: increasing waiting period, decreasing benefit period, decreasing benefit amt or deleting benefit riders
4. exclusion riders: rider attached to policy that excludes losses from certain conditions or avocations
contra proferentum
language in exclusion rider that can have more than 1 meaning or is unclear
In Canada: principle is applied and ambiguity will be resolved in favor of insured
In US: interpretation of contract based on principle of reasonable expectations, ambiguities resolved in favor of insured to satisfy reasonable expectation
Long Term Care
provides payment for ongoing care of individual who is unable to live independently, typically manifested by inability to perform 2 or more ADLs and/or presence of cognitive impairment
base policy LTC
guaranteed renewable, company cannot make adjustments once in force other than premium
facility care beneft
payable if insured confined in long term care facility and receiving care based upon loss of 2 or more ADLs and/or cognitive impairment
facility care
health or personal care services required on a long term basis in a facility, such as a nursing home, determined by physician to be medically necessary
long-term care facility
institution licensed as a convalescent skilled nursing facility, a convalescent hospital or unit, custodial care facility, retirement home, home for the aged or lodge
home care benefit
payable if insured is receiving home care based on loss of 2 or more ADLs and/or cognitive impairment
home care
services provided in insured’s home by skilled caregivers
-some contracts allow care by family members
indemnity method
set dollar amount, not based on specific services received or expenses incurred
-if insured eligible, services covered
expense incurred method
paid if insured eligible and if claim for eligible services
disability method
insured meets eligibility criteria, full daily benefit paid even if not receiving any long-term care services
contractual exclusion riders for LTC
- participation in war or hostile action, unless terrorism victim
- while in military or naval service
- intentionally self-inflicted injury or illness, while sane or insane
- committing/attempting felony or illegal occupation
- chronic alcoholism or chemical dependency, unless dependency results from dr tx
- being legally intoxicated or under influence of narcotic unless narcotic is dr prescribed
- nervous or mental disorders w/o demonstratable organic cause, does not exclude Alzheimers or senile dementia
- any tx paid for by govt
Activities of Daily Living - ADLs - 6
activities that people do independently every day
1. bathing
2. eating
3. dressing
4. transferring location
5. continence
6. toileting
Instrumental Activities of Daily Living - 7
social survival skills that must be performed either on a household or individual basis
1. managing finances
2. using the telephone
3. doing housework
4. preparing meals
5. shopping
6. using transportation
7. taking medication
Med hx affecting ADLs and IADLs
-osteoporosis
-cardiac disease
-emphysema or COPD w/ continued smoking
-chronic illness
-comorbid conditions: diabetes, heart disease etc
-polypharmacy or use of multiple meds
-tx protocols: physical therapy
-chronological age vs physiological age
cognitive impairment
problems w/ attention, affect, memory or other loss of intellectual capacity
Delayed Word Recall - DWR
memory exercise designed to be used as screening tool for short-term or primary memory loss
-recall as many as possible of 10 common nouns after specific interval
-typical 5 out of 10
Enhanced Mental Skills Test EMST
tests human memory processing by focusing on the encoding and retrieval of info
-can distinguish between cognitive impairment and lapses in attention due to depression
Short Portable Mental Status Questionnaire SPMSQ
used to asses cognitive status, long-term memory, practical survival skills and mathematical ability
-typical 7 out of 10
Telephone or Personal Interview
personal interview w/ PI conducted by nurse or trained professional. medical or lifestyle questions along w/ assessment of cognitive status
UW LTC
med hx
cognitive status
app w/ APS
supplemental questionnaires
phone/face to face interview
family hx based on age of PI
avocation/occupation
financial: premiums should be affordable
Critical Illness
designed to help insured recover financially from burdens that could present themselves while suffering from critical illness
- once benefits paid, policy terminates, unless only partial benefits
10 commonly covered conditions by CI
heart attack
stroke
MS
kidney failure
blindness
deafness
coronary artery bypass surgery
life-threatening cancer
loss of limbs
paralysis
base policy CI
non-cancelable or guaranteed renewable
-proceeds payable after 30 day survival period from date of dx
-90 days for cancer
-general exclusion riders
CI business products
key employee
loan insurance
buy sell
UW for CI
-medical: APS very important; consider special risk factors; family hx of cardiovascular disease, diabetes, certain cancers
-avocation/occupation
-financial: consider income/age/outstanding mortgage
counteroffers for CI
extra rating or exclusion rider
-exclusion riders can be specific to types of conditions and to include secondary dx from excluded condition
Accelerated Death Benefit
advance cash payment of death benefit paid to an insured who is terminally ill
-death expected w/in 12-24 mos
-amt based on face value, paid up additions, amt payable under rider
viatication
purchasing insurance policies for cash from terminally ill policyholders
collateral assignment
legal transfer of one person’s interest in a policy to a creditor as security for a debt
irrevocable beneficiary
beneficiary whose interest in an insurance policy cannot be revoked w/o individual’s written consent
legally competent
person of legal age and sound mind who is recognized by law as being able to contract w/ others
UW for ADB
-exclusions apply to ADB ex. avocation
-must be terminally ill w/ life expectancy as defined in policy
-APS required
-owner must be legally competent, if not, benefit paid to legal rep
