Chapter 7 - Healthcare products Flashcards
What are the main types of healthcare products?
- Private medical insurance
- Critical illness
- Long-term care
- Other products and cash benefits
What is indemnity cover?
Provides benefits related to the loss incurred on the occurrence of a health event.
e.g. it provides for the cost of going to see a GP
What is stated benefit cover?
the policy document defines the benefit payable on the occurrence of a defined health event, regardless of the actual loss incured
What are the key features of short-term healthcare products?
- Cover is typically provided for a year and then can be renewed
- There can be multiple claims
- Claim amounts are generally unknown and can be volatile
- There can be delays in reporting and settling claims
What are the key features of long-term contracts
- Cover usually ceases on claim
- The claim amount may be known with certainty
- They are used for protection against ill-health or death, as well as savings
Types of underwriting for short-term contracts
- Full medical underwriting
- Any pre-existing conditions will be excluded - Moratorium underwriting
- Instead of medical underwriting at the time of application, the insurer states the cover will not cover any medical conditions that existed during a pre-specified period prior to the policy commencing - Medical history disregard
- There are no exclusions for pre-existing conditions - No worse terms
- The new insurer agrees to cover at least as comprehensive as the policyholder’s current policy, with no additional underwriting conditions - Continued personal medial exclusion
- The new insurer promises only to carry forward such cover for medical conditions as existed under the previous insurance policy
List 6 typical activities of daily living
WTF DMT
- Washing
- Toileting
- Feeding
- Dressing
- Mobility
- Transferring
What customer needs does PMI meet?
If no state-funded care exists, then PMI will usually provide for all forms of healthcare needs on an indemnity basis.
If the State provides some level of healthcare to all, then PMI is usually bought when an individual requires care such as:
- medical attention without waiting
- medical attention in a higher standard of accommodation
- medical attention with a doctor of choice
- medical attention in a local or private hospital
Define long-term care insurance
LTCI can be defined as all forms of continuing personal or nursing care and associated domestic services for people who are unable to look after themselves without some degree of support, whether provided in their own homes, at a day center, or in a state-sponsored care-home setting.
List the key risks under healthcare products
- Claim frequency, benefit amount, volatility and settlement delays
- Accumulations of risk, catastrophes, and a large number of large risks
- Investment risk
- Expenses being higher than expected
- Poor persistency, i.e. high lapses and low renewals
- Poor plan mix due to upgrades, downgrades and anti-selection
- Underwriting risk
- Credit risk
- Operational risk
- Availability of claims data
Describe ‘negotiated fee for service’
The tariff or remuneration rate for each type of service is defined through negotiations or being defined in advance.
This may lead to policyholders having to cover part of the costs through out of pocket payments.
Describe ‘Global fee’
There is a fixed tariff/fee per episode of care with the service provider assuming some risk for the level of services required per patient.
Describe ‘Capitation’
A fixed amount is paid per policyholder / beneficiary who has the option to use the service.
The fee is paid regardless of whether the service is used or not.
This transfers the risk from the insurer to the provider of services
What customer need does CI cover meet?
NOTE: This product is not designed to indemnify the policyholder.
The needs met include:
1. To provide a source of income if unable to work
- Can assist with repaying a loan or mortgage
- Medical costs can be funded when surgery or expensive treatment is required
- Could be used by business partners to buy out a partnership stake in a business when CI arises
- Can be used to fund a change in lifestyle that is required
- Can provide for recuperation after illness
Difference between indemnity cover and stated benefit cover
Indemnity cover provides benefits related to the loss incurred on the occurrence of the health event.
For stated benefit cover, the policy document defines the benefit that is payable on the occurrence of a defined health event, regardless of the actual loss incurred.
