Chapter 5 Flashcards
(23 cards)
Locum protection insurance
Professionals who may rely on each other to conduct business, can take out income protection on each other.
Think of a doctor and say the radiologist.
Complexities of IP (5)
• Defn of incapacity • Payouts not linked to salary • May need benf limits • UW may be complex - Occupation - Past medical history • May be exclusions
Policy conditions should aim to: (3)
- Reflect true intentions of the office
- Cushion against adverse events the office has no control over
- Be simple and unambiguous
Conditions that need to be defined for IP: (5)
- Replacement ratios
- Over-insurance
- Escalating benfs
- Proportionate benfs
- Waiver of premium benfs
Replacement ratio
(Post claim income)/(Pre claim income)
Over insurance may arise due to (4)
- Over-ins from outset
- Subsequent over-ins – salary not keeping up with benf increase
- Reduction in tax on IP claims – existing PH’s
- Multiple policies or non-disclosed sources of income
Addressing over-insurance (4)
- Appropriate max benf formula at point of sale
- Quality training of salespeople – reduce incentive to over-insure
- Regular benefit vs salaries reviews
- Clear policy conditions on likely actions in event of over-ins.
Financial underwriting
Checking the potential PH’s income and other financial circumstances to prevent over insurance
Methods of benefit escalation for IP (3)
- escalation at same rate in and out of claim
- some escalation out of claim, none in claim (incentivise return to work)
- Some in claim, none outside
4 Important periods for IP
- Waiting period
- Deferred period
- Linked claims period
- Expiry age/term
Waiting period
Period following commencement of policy during which no benfs will be paid.
Deferred period
Period after submitting a claim during which no benefits would be paid.
Split deferred policy
One during which there are different benefits payable after different “deferral periods”
Linked claims period
Waive deferred period if sickness recurs within say 26 weeks.
Avoids delay of waiting for deferred period to finish before receiving benfs.
Occupational claims definitions (4)
- Inability to perform own occupation
- Inability to perform own/other occupation by education, status or training (reasonable occupation) – has potential for dispute
- Inab to perform own occupation for initial period then any
- Inab to perform any occupation
Activities of daily living (6)
Feeding dressing washing toileting mobility transfer
IP claim criteria (5)
- occupational
- ADL
- ADW
- PCA - personal capability assessment
- FAT - functional assessment tests
PCA - personal capability assessment
rising standing walking bending lifting transport manual dexterity fits/blackouts
Policy modifications that can be made:
- change deferred period
- Change defintion
- Guaranteed and reviewable premium rates
- Guaranteed insurability options (GIOs)
- No claims discount (NCD)
Note on premium reviews
May NOT be used to make right past adverse experience
Main risk to insurer with IP
Misestimating the transfer probabilities in the underlying multiple state model.
Reasons for differences in rates of inception observed by diff offices: (5)
- Different mix of business
- Level of benfs/T&C’s offered (class of lives) differ
- Claim definitions differ
- Strength of initial UW
- Claims UW and management
3 Reasons why standard tables go out of date
- Changes over time in opinions on sickness and ability to work
- Advances in medicine
- Changes in nature of work
