Pricing Critical Illness

Question 1

Pricing Critical Illness

Incidence Rate Development Process

Answer 1

1. General Population age-specific incidence rates
2. Adjust rates for condition definitions
3. Trend
4. Adjust incidence rates from general pop to insured pop
5. Segment incidence rates into smoker/non-smoker rates
6. Create select and ultimate rates
7. Compare rates to experience rates

Question 2

Pricing Critical Illness

4 Major Types

Answer 2

• Basic (Covers 3-4 major conditions)
• Enhanced (Covers 15-20 additional conditions)
• Enhanced + Return of Premium on Expiry
• Enhanced + Return of Premium on Expiry/Surrender

Question 3

Pricing Critical Illness

Critical Illness Incidence Rate

Answer 3

Probability (during year) of being diagnosed with covered CI, meeting policy definition, and still being alive at end of period