Module 10 Flashcards
A type of group insurance claim that is random, unpredictable, and usually high cost, such as an out-of-country medical emergency
Catastrophic unknown event
The basis for
most group
insurance
claims
predictable budgeable event
The amount of funds an insurance company holds in relation to a disability claims, which represents the value of a future liability, accounting for the loss of premium, increased mortality, and potential coverage to age 65
waver of premium reserve
The charge for issuance
of an individual policy
without an individual risk
assessment.
group conversion charge
The number of deaths
divided by the number of
individuals insured at
beginning of year
mortality rate
The number of disabilities
divided by the number of
individuals insured at
beginning of year
morbidity rate
Frequency of health care, dental and life insurance claims, expressed as the percentage of insured individuals who incur a claim.
utilization rate
The amount set aside that represents an estimate of the current value of all future periodic payments to an LTD claimant.
disabled life reserve
A portion of the group benefits plan premium set aside for claims incurred in one contract year but not reported until the next contract year.
incurred but not reported reserve IBNR
The rate dependent on the frequency of claims, the amount of claims paid, plus claims-related reserves.
net premium rate
The net premium rate plus administration expenses, risk charges, profit margins, and applicable sales and premium taxes
gross premium rate
A type of expense that includes things like cost to print plan member booklets, pay commissions, service of a group.
general administration expenses
Expenses related to the cost of paying claims can be expressed as a percentage of premiums, flat dollar amount, or fixed fee per transaction.
claims administration expenses
The charge to cover the possibility of a group terminating coverage in a deficit position.
risk charges
A margin built into the expenses, varying by benefit, group size, and premium volume, by which insurers earn profits.
profit margins
A charge for an
arrangement which limits
financial liability for plan
sponsors.
pool charges
The specific definitions of
spouse and child
factored into manual
rate calculations.
contractual definitions of child and spouse
The anticipated annual cost of providing a benefit plan, which reflects a number of factors such as an aging population, inflation, economic events, and forecasts.
cost trend factors
A factor included in a rate that anticipates that claims may be deferred if plan members are aware that new benefits will be effective at a future date.
pre notification factor
The book used by insurers
to record typical group
rates for various benefits.
manual
The average annual
claim for a benefit
divided by 12.
monthly tabular net manual rate
Method of rate setting using demographics of a group and the collective claims experience from benefits plans of a pool of plan sponsors.
pooled rating
Method of rate setting
that uses the group’s
own experience, either
fully or partially.
experience rating
The relationship between total adjusted premiums and sum of paid claims, change in waiver of premium or disabled life reserves, change in IBNR reserves and if used, interest credit on reserves.
incurred claims loss ratio
The ratio that is
effectively equal to
premiums less retention.
target loss ratio
