Chapter 1 - PMI And Other Health Related Products

Question 1

Why are there minimum prescribed benefits in some legislations?

Answer 1

Need to ensure that PMI is suffcient and provide enough cover

Question 2

What is selective lapsing?

Answer 2

Healthier lives reduce cover whilst those with high claims or poor health lives remain

Question 3

What is community rating?

Answer 3

Community rating system does not use individual information such as age, gender or medical history. It will only use group- or community level information. All those individuals that belong to a group, having the same values of these community rating factors will be charged the same premium

Question 4

6 ways to manage claims costs

Answer 4

1. Limitations and exclusions in benefits
2. Co-payments and levies
3. Medical savings account
4. Approved provider networks
5. Preventative meicine and wellness programmes
6. Introducing managed care systems

Question 5

Characteristics of major medical expense product

Answer 5

1. Provides lump sum…
2. When PH undergoes surgery
3. Size of lump sum varies with severity of procedure
4. Product does not cover out-patient treatment…
5. Seen as serious marketing disadvantage…
6. Compensation is lower premium
7. Simplicity of fixed benefit shedule, that limits work to be performed at claims stage

Question 6

What is a Waiting list plan

Answer 6

Provide standard medical insurance benefits in circumstances where public health service is not in a position to provide treatment within a specified period
If PH can find free public HC for condition in certain period and within reasonable radius of residence, insurance will not reimbursement private expenses

Question 7

3 main types of definitions of disability

Answer 7

1. Occupation based
2. Related to activities of daily living
3. Definitions using working activities or functional activities

Question 8

Under occupation based disability, What is the 3 occupation classifications used:

Answer 8

Inability to perform:
1. Own occupation
2. All occupations to which suited by training, education or experience
3. Any occupation

Question 9

Examples of activities of daily living

Answer 9

Feeding
Dressing
Washing
Toileting
Mobility
Transferring

Question 10

Advantages of ADL definition over occupation based definition:

Answer 10

• can be applied to wider range of lives (eg housewives)
• can be applied beyond retirement
• offers simplicity of only using one definition throughout term of policy
• less subjective

Question 11

Measures of exposure definition

Answer 11

Measures that give an indication of how much risk there is within a policy

Question 12

Claim characteristics of accident claims

Answer 12

1. Claim cost is known, so settlement delays are reduced
2. Incidence of an event is usually very clear so reducing reporting delays
3. Claim frequency tends to be reasonbly stable

Question 13

Risk factor definition

Answer 13

Thise characteristics of the insured event that are known/suspected to influence the claim cost

Question 14

Rating factor definition

Answer 14

It is a factor actually used to determine the premium.

Rating factors are often proxies to risk factors and may be used becauae risk factors are hard to measure

Question 15

What is investigative surgery?

Answer 15

Surgery that is undergone in order to advance the diagnosis in order to determine the nature and extent of the complaint.

Generally covered under PMI products bumay not be so under MME

Question 16

What is medical gap cover? Amd describe needs met by such a product:

Answer 16

It is designed to cover difference between the cost of medical treatment and the amount covered by conventional PMI products. These differences can arise due to benefit limits or HV professionals charging higher fees than covered by PMI benefits. Usually focusses on providing cover for high cost events (chemo)

Meet customer need of peace of mind in the case that medical cover cost will be more than covered by their PMI products