Chapter 28 - Pricing health and care contracts

Question 1

What is the difference between sickness inception rates compared to claim inception rates, and how is it viewed in an income protection world

Answer 1

Sickness inception rates relate to when individuals fall sick. In an income protection insurance context, this corresponds to the point in time when the individual is first deemed unable to work

Claim inception rates relate to the point in time at which benefits payments commence. In an income protection context, this corresponds to the end of the deferred period

Question 2

When would sickness and claim inception rates be equal

Answer 2

When there is no deferred period, so that the benefit payments commence immediately as the policyholder falls sick