Chapter 4 Flashcards
(19 cards)
Why has the life insurance industry introduced preferred risk classes?
To create a low cost product.
What was the purpose of the Framingham heart study?
To identify risk factors for coronary artery disease.
What is the offspring study?
The additional 5000 children added to the original cohort of the Framingham heart study.
What is the goal of multivariant regression?
To separate and quantify the influence of each risk factor according to its own independent contribution to risk.
What does multiple regression mean?
Multiple variables are used to predict the outcome.
What is the coefficient?
A formula generated number related to the variable it is predicting.
What is accelerated underwriting?
Using publicly available data instead of physical exams, blood and urine testing results in faster underwriting.
What data is publicly available?
Driving history, criminal history, home value, income, net worth, bankruptcy, address, prescription, drug histories, dental records, medical claims data, education, and credit reports.
What are the two preferred risk stratification models?
One model applies point grouping and the other applies to knockout criteria to define different risk classes
What is the point system for preferred risk categories?
Points are given for all risk factors and after they have been calculated, lower point totals represent reduced mortality, risk, and higher point values represent higher mortality risks.
What is the knockout system and preferred risk categories?
Criteria are established as a series of rules associated with each factor where by the proposed insured either qualifies for the risk class or is knocked out of the risk class based on the rule.
When does the knockout method create issues?
With insured who made the preferred criteria on all, but one factor. The other favorable factors cannot offset the one unfavorable criterion, unlike a point system that can count for this.
According to the Framingham study, what are the primary risk factors for developing coronary artery disease?
Age, sex, blood pressure, cholesterol, high density Lipoprotein, diabetes, left ventricular, hypertrophy on resting EKG, and smoking.
Why is Bill not a component of the Framingham risk model?
In a multi variant setting other risk factors soak up the signal from obesity. It is well known that obesity is a risk cracker for coronary artery disease and all cause mortality.
What are the additional mortality markers in setting preferred criteria?
Accidental death risk.
Drugs, and alcohol.
Personal medical histories.
Family medical histories.
Treatment
What is included an accidental death hazard for preferred criteria?
Driving
Hazardous applications (scuba divers, racing motorcycles, or automobiles, mountain, climbers, sky, divers, para, sailors, participation in extreme sports, pilot, and parentheses
Dangerous Occupations
Criminal history
What are the limitations of preferred risk underwriting?
Most studies were done on middle aged in individuals. The assumptions are less well suited to younger or older individuals.
What are the advantages to preferred risk classes?
It allows companies to compete effectively by applying lower priced products to healthier risk
What are some challenges to preferred risk underwriting?
Exams and fluids originally launched preferred underwriting. They also create a time delay. No one one exams and fluids are replaced with publicly available data the underwriting model is referred to as accelerated underwriting.
Because you were proposed insurance to qualify for the better risk classes. There is more potential for proposed insurance to be disappointed.
Underwriters are under additional scrutiny to stay within the guidelines for fine or mortality class differentials then when assessing risk class
