Chapter 2 - Critical Illness Insurance Flashcards
1
Q
4 Characteristics of conditions insured under critical illness products
A
- Condition perceived by the public to be serious and occur frequently (the illness if not life threatening, should atleast be lifestyle threatening)
- 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
- Ability to avoid anti-selection
2
Q
Advatages to insurers and reinsurers if they use standardised definitions for CI: (5)
A
- definition is more likely to be free of ambiguity
-insurers will be able to settle claims quicker with fewer disputes. As claimants won’t be able to use other insurer’s case law to support their disputed claims - policies are likely to be easier for prospective PH to understand, sale staff to explain and for comparisons to be made
- result will be more sales in general, leading to increased business for all insurers
- with standardised definitions it will be easier to collect compatible industry wide data. Will mean better information insurers can use to assess risks
3
Q
What is tiered benefits?
A
It is a benefit where the payment of the sum assured is linked to the severity of the disease
4
Q
5 main reasons for offering tiered benefits
A
- The CI product becomes more comprehensive. Benefit is offered at levels of disease progression that would not have triggered payment under a more standard CI insurance contract
- The payments more closely match financial need. Reducing the incentive for anti-selection and for exaggeration of symptroms at claims stage.
- Multiple claims are possible, which enhances PH satisfaction and retention
- It permits the insurer to differentiate itself from its competitors
- It makes comparisons more difficult, and the insurer’s product potentially more profitable
5
Q
4 conditions thst will most likely be included in CI plan if statutory minimum benefits apply
A
- Cancer
- Heart attack
- Stroke
- Coronary artery bypass graft
