Combination Products Flashcards
1
Q
Combination Products
What drove the demand for this product?
A
- Challenges in standalone LTC market (rising premiums)
- Consumers don’t like the “use it or lose it” nature of standalone products
- Consumers underestimate need for LTC
2
Q
Combination Products
Benefits (List and Describe)
A
- Reimbursement Model = Reimburse PH for LTC costs (and reduce DB accordingly)
- Accelerated Benefit Rider = Advance part of DB for illness
- Restoration of Benefits
- Extension of Benefit = Extend health benefit beyond acceleration/restoration to longer benefit periods
3
Q
Combination Products
NAIC Accelerated Benefits Model Regulation
A
- Guidance on actuarial standards, disclosures, and reserves
- Requirements
- Payment criteria
- Signed acknowledgement of concurrence for payout
4
Q
Combination Products
Financing Methods for Accelerated Benefits (List and Define)
A
- Explicit Premium = PH gets 100% of accelerated benefit and DB reduces by same amount
- Actuarial PV Method = Discount accelerated benefit payment instead of charging explicit premium
- Lien Method = Assess loan on policy at time of claim and PH pays interest over time
5
Q
Combination Products
Explicit Assumptions for Mortality Considerations
A
- Conservation of mortality
- Adjustment to mortality
- Disabled life mortality
- Mix of active and disabled lives
6
Q
Combination Products
Types of Reserves
A
- Active Life Reserves = depends on if benefit is prefunded or not
- Claim Reserves = needed once PH goes on claim
