M_F102_Health and care products Flashcards
CI Conditions covered
Cancer Stroke Heart disease Coronary Artery by pass surgery
- condition must be perceived by public to be serious; must be able to clearly define qualifying conditions; must have data to price the benefit.
CI Product Variations
- possible for benefits to be tiered, pays out a partial benefit depending on severity of the condition
CI Risks to the insurer
- main risk is higher than expected rates of diagnosis, related anti-selection risk and selective withdrawals (individual contracts) and withdrawal when asset share is negative.
Long Term Care
All forms of continuing personal or nursing care and associated domestic services for people who are unable to look after themselves, whether in their own home or in a state-sponsored or care-home setting.
LTC Pre-funded products
Benefit trigger depends on claims definition (single/multiple event e.g. disabled at a certain level for a certain duration)
LTC Product Variations
Premiums may be guaranteed, useful as policyholders may be living off a fixed pension.
LTC Immediate needs solutions
Provides for individuals needing care due to uncertain survival period, receive guaranteed lifetime income for a single premium.
LTC Pensions Solutions
Usually LTCI needed for people in retirement who are receiving a pension.
LTCI needed as pension is usually not enough to cover cost of care, possible to have a pension plan with CI rider.
LTC Risks to the insurer
Main risk relates to transfer probabilities, healthy/sick/death, sick to healthy unlikely, but may transit between sick states.
LTC Capital Requirements
Similar to an endowment as a benefit may or may not be paid (but this may depend on product design)
May also depend on extent of guarantees offered.
LTC Risks to the insurer
Claim definition (e.g. ineffective use of ADLs) may lead to exploitive claims.
LTC Risks to the insurer
Investment risk as significant reserves may ne needed, also expense risk.
LTC Risks to the insurer
Marketing risk as benefit may not cover full cost of care.
LTC Immediate needs solutions
Helps determine quality of care insured can afford.
Benefits may escalate.
Death benefit also possible.
LTC Immediate needs solutions
Similar to impaired annuity, but structure may vary, also consider tax, capital and benefit flexibility differences.
LTC Product Variations
But guarantee may be expensive due to uncertain pricing basis and capital requirements.
LTC Product Variations
Unit-linked version possible. Offers a surrender/death benefit, combines investment element with LTCI. Split unit/non-unit fund, risk of rising risk charge eroding unit fund, unit fund may be used to draw from or may be protected.
LTC Product Variations
Indemnity vs. cash benefits. Full indemnity unlikely as cost too uncertain for insurer.
LTC Product Variations
Due to uncertainty, premium may be loaded and may then be excessively expensive, hence reviewable pre-funded plans more common,
LTC Pre-funded products
Benefit may dependent on level of disability (e.g. pay 50% if fail 2 of 6 ADLs)
CI Conditions covered
- may be split into ‘core’ and ‘additional’ benefits
CI Product Variations
- premium rates may be guaranteed or reviewable, reviewable popular since CI products are new and claim costs uncertain.
CI Risks to the insurer
- possible expense risk, minimal investment risk.
Long Term Care
Intended for people unlikely to get better. Covers a wide range of needs, some people may require minimal assistance.
Long Term Care
Care may be formal or informal (e.g. by family members).
Long Term Care
Nursing-care only is narrowest form of long term care.
Long Term Care
Costs broadly divided into living costs, housing costs and personal care.
Long Term Care
Specialist medical care may also be required.
CI Risks to the insurer
- risk of inappropriate underwriting and claim management due to difficulty in carrying out these tasks.
CI Risks to the insurer
- potential reputational damage if misunderstanding of benefits covered.
CI Risks to the insurer
- difficult to source adequate data for pricing, particularly if benefits are tiered.
CI Risks to the insurer
- difficult to define benefits (that are legally and medically objective, but understandable to the consumer).
CI Product Variations
- possible to add conditions to the covered list, little extra risk for greater perceived benefit.
CI Product Variations
- on the downside, may cover condition that is no longer critical due to medical advances, example of benefit not meeting the need.
CI Product Variations
- also possible that benefit exceeds costs to cover medical expenses or lifestyle adjustments, again example of benefit not meeting need.
CI Conditions covered
- potentially many conditions may be covered, that offer minimal additional benefit to the policyholder.
CI Conditions covered
- terminal illness is often added, which covers conditions that reduce life expectancy, may also appear as an accelaration benefit on a life policy.
CI Conditions covered
Childrens benefits may be included as a rider, with such benefit payment not leading to a cessation of cover, often cost is less than the perceived benefit
LTC Pre-funded products
Benefit may be a lump sum, annuity certain or annuity with max payment term. Benefit may escalate and period of payment may be an option. The benefit, if limited, may hence not meet the need.
LTC Pre-funded products
Premiums may be single, regular, restricted regular or retrospective (e.g. from home equity release).
LTC Pre-funded products
Usually death benefit not provided, surrender benefit also unlikely, paid up benefit likely.
LTC Pre-funded products
May allow for cost of assistive devices, which in turn may help defer the trigger of further benefits. Care advice common.
LTC Pre-funded products
ADLs most commonly used to assess level of dependency, may also be a mental impairment trigger.
