DB Claims 2 - risk, rates & Admin Flashcards
2
Risk Characteristics
Factors that assist an insurance company in defining the amount of risk associated with groups of people. Common risk characteristics include age and occupation. Risk may be defined as likelihood of filing a claim, whether life or disability.
Actuary
An accredited business professional who deals with the financial impact of risk and uncertainty. They are professionally trained in insurance mathematics, who have well defined analytical skills, business knowledge and an understanding of human behavior. Actuaries develop manual rate calculations, develop reserves, set dividends calculations, other valuations methods, and develops statistical studies and reports.
Rates
The amount charged per unit or per amount of volume for our coverages.
Rate Guarantee
A time period for which rates are guaranteed not to change.
Composite Rate
Means one rate for everyone.
Age Brackets
Our Voluntary Life and Disability coverage premiums are based on an insured’s age. They are in 5-year brackets. Example: 50-54 & 55-59.
Age-Banded Rates
Means rates are based on person’s age. Usually in 5 year increments. A.k.a. age banded rates.
Renewal Dates
The dates at which a coverage is reviewed to see if the rate they are charged should be adjusted.
Adverse Selection
The tendency of persons with poor health expectations to seek or continue insurance to a greater extent than persons with average or better health expectations. It is when individuals with substandard risks select coverage when they know they need it, versus an individual who selects coverage because they may need it in the future.
Prudent Person
This is a standard marketed option, and affects the Pre-Existing Condition provision. The definition of a Pre-Existing Condition with prudent Person language included:
i. Any condition for which an ordinarily prudent Person would have done any of the following at any time during the [30 days][3, 6, 12 months] immediately prior to a Person’s Individual Effective Date of Insurance, whether or not that condition was diagnosed at all or was misdiagnosed:
1. received medical treatment or consultation;
2. taken or were prescribed drugs or medicine; or
3. received care or services including diagnostic measures
Function of Salary
This is when a plan design is based on an employee’s salary.
Annual Base Salary
The employee’s yearly gross wages received from their employer. This provision is defined in the groups’ policy and could differ slightly from group to group. Our standard provision excludes bonuses, commissions, and overtime pays, however some circumstances warrant the inclusion of bonuses and commissions (AUL standard method it to average these over a 36 month period).
Covered Earnings
Means the salary that a coverage is based on; could be a base salary or include commissions and/or bonuses.
Reduction Schedule
A schedule indicating when an employee’s coverage will reduce and by/to how much.
Administrative Services Only (ASO)
A contractual agreement between an Employer Group and an insurance company, where the insurance company performs administrative functions such as enrollment, eligibility, claims payments, etc. for the employer. In this contractual arrangement the employer holds the insurance risk of the policy, not the insurance company.
