Chapter 7: Health Insurance products Flashcards
What does healthcare legislation cover
- Provision of healthcare - should be provided
- Nature of the provision of the healthcare - how should be provided
Indemnity cover
Provides benefits related to the loss incurred on the occurence of a health event - may be medical expense or another financial protection
State benefit cover
- The policy document defines the benefit that is payable on the occurenece of a health event, regardless of the actual loss incurred.
- The state will specify the rand amount to give everyone who experiences a specific health event, it doesn’t take into account how much one was earning before the health event.
Key features of short term health insurance contracts
- Usually single year and renewavle
- Can have multiple claims
- Claim amounts unknown and volatile
- May be a delay in reporting and settling claims.
Key features of a long term health insurance contract
- Long term
- Usually one claim
- Claim amount sometimes known with certainty
- Used to cover illness or death due to illness
- Group cover usually 2 years and renewable
What type of underwriting does long-term health insurance usually make use of
Medical underwriting
Name the types of underwriting that short term health insurance usually makes use of
- Medical underwriting
- Moratorium underwriting
- Medical history disregard
- No worse terms
- Continued Personal Medical Exclusion
Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion
Any pre-existing conditions are excluded in the medical cover
Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion
Not cover medical conditions that existed in a prespecified period
Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion
No exclusions of pre-existing conditions - likely for group cover
Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion
The insurer agrees to cover what was covered in the last policy, with no additional underwriting
Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion
- The new insurer promises only to carry forward such cover for medical conditions as existed under the previous insurance policy
Name the main types of healthcare insurance products
- Private medical insurance
- Critical illness
- Long-term care
Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care
Covers expenses or access to healthcare benefits
Medical aid
Use to meet customers’ needs of private medical insurance
Provide all forms pf insurance on an indemnity basis if no state insurance exists:
- Medical attention without waiting
- Higher standard of accomodation
- Doctor of choice
- local (or private) hospital
Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care
Paid on diagnosis with a specified list of conditions:
* Perceived as serious
* Each cover is defined clearly
* There is enough data for pricing
Use to meet customers’ needs of critical illness cover
- Source of income if illness causes inability to work
- Reapying mortage or laon
- Medical costs
- Use to buy out partnership
- Assist with change in lifestyle
- Provide for recuperation after illness
Key requirements for a group scheme for critical illness
- Definition of who is eligible to join
- Benefits clearly defined (size, definition of valid claim, term)
Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care
Provide for custodial care where the policyholder has diminishing capacity, usually measured with reference to the activities of daily living
Use to meet customers’ needs of long term care cover
Financial protection if a person is unable to look after themselves
List some examples of activities of daily living
- Washing
- Dressing
- Feeding
- Toileting
- Mobility
- Transferring
Examples of cash benefits
- Major medical expenses
- Hospital cash plans
- Medical shortfall cover
- Personal accident
Mutuality
A pooled fund is created and premiums are paid into the fund by policyholders
* Premium per policyholder is determined by the underwriting process.
* Losses are paid per an agreement with each policyholder
Solidarity
A pooled fund is created and premiums are paid into the fund by policyholders
* Premium per policyholder is determined based on affordability.
* Losses are paid according to need.
Use of reinsurance in short term health care
- Protection against large claims
- Need to take on larger and more risk with capital constraints
- Reduce impact of accumulations of risks and catastrophes
Use of reinsurance in long term healthcare
- Cope with claim payout fluctuations
- Need to finance new business claim
- Need to obtain technical assistance and data for new contracts
What should the investment strategy for healthcare products consider in terms of liabilities
- Nature
- Currency
- Term
- Level of uncertainty
Who provides cover for healthcare products ?
- State
- Subsidised healthcare
- Mutual organisations
- Insurance companies
What are the key risks in health insurance
- Claim frequency, benefit amount, volatility and settlement delays
- Accumulation of risk, catastrophes, and a large number of large claims
- Investment risks
- Expenses being higher than expected
- Poor persistency
- Poor plan mix
- Underwriting risk
- Credit risk
- Operational risk
- Availability of claims data
Reimbursement mechanisms
- fee-for-service
- Negotiated fee-for-service
- Global fee
- Capitation
