Chapter 15: Assumptions (2)

Question 1

How many claim incidence rates will be determined for LTCI, CI and PMI?

Answer 1

LTCI:
single claim incidence rate will be derived for LTCI

CI:
separate claim incidence rates will be calculated for the different illnesses/ conditions

PMI:
separate claim incidence rates will be calculated for the different treatments

Question 2

List examples for when mortality rates areimportant?

Answer 2

claims in payment for LTCI
accelerated CI
survival period for stand-alone CI

Question 3

How candistribution channel affect lapse rates?

Answer 3

sales practice may differ:
lapse rates are likely to be higher where clients have been put under more sales pressure to buy a policy, or to take a larger policy

target markets may differ:
along with associated socio-economic levels

target markets may differ:
along with associated financial sophistication levels which can lead to different perceptions of the value of a contract