Presentation on theme: "CRITICAL DIAGNOSIS INSURANCE"— Presentation transcript:
1 CRITICAL DIAGNOSIS INSURANCE David R. Beard, ASA, MAAA, CLUAVP, Product DevelopmentEMC National Life Company
2 Course Objectives Most Common Covered Illnesses History Concept of ProductAlternative Product DesignsUnderwritingRatesBenefitsMarkets2/23/07EMC National Life Co.
3 Incidence of Critical Illness About 1,400,000 new cancer cases are expected to be diagnosed in 2006.*On average, every 45 seconds someone in the United States has a stroke.**About every 26 seconds an American will suffer a coronary event, and about every minute someone will die from one.*** American Cancer Society. Cancer Facts and Figures Atlanta. American Cancer Society, 2006.** American Heart Association. “Heart Disease and Stroke Statistics – 2006 Update.” Circulation. Dallas: American Heart Association, 2006.2/23/07EMC National Life Co.
4 Survival Rates 70% Heart Attack Victims Survive At Least Three Years 75% Stroke Sufferers Are Still Alive One Year LaterThe 5-Year relative survival rate for all cancers diagnosed between 1995 and 2001 is 65%.** American Cancer Society. Cancer Facts and Figures Atlanta. American Cancer Society, 2006.2/23/07EMC National Life Co.
5 Paying for Critical Illness 90% Dependent Upon CaregiversSavings And Borrowed Funds Subsidize CareCritical Illnesses Create Heavy Emotional And Financial Burdens2/23/07EMC National Life Co.
6 Introduction and Facts About Critical Illness Harvard Law School Study, February 2005Half of all bankruptcies in America stem from high medical expenses. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 even though 76% had medical insurance when they fell ill.** Wegner, Jonathan. Critical Illness Policies Sell, But Some Question the Need. Omaha World Herald 4 Jun. 2005: 01D.2/23/07EMC National Life Co.
7 Can You Survive Financially? 33% of Families Deplete All Or Most Of Their Savings As A Result Of A Serious Illness67% Of All Cancer Related Costs Are Indirect, Non-medical ExpensesExperimental Medical Treatments May Not Be Covered By Your Health Insurance2/23/07EMC National Life Co.
8 History of Critical Diagnosis Dr. Marius Barnard of South AfricaConcern About Financial Impact On PatientsConcept Spread To United Kingdom, Japan, AustraliaIntroduced in Canada And United States During Late 1900s2/23/07EMC National Life Co.
9 Introduction of Critical Diagnosis/Illness Insurance Critical Illness coverage was first offered in South Africa in 1983.More than 70 carriers in the United Kingdom offer Critical Illness with over $100 billion in sales since its introduction in 1987Over 500,000 policies were sold in the first 10 months available in Japan2/23/07EMC National Life Co.
10 The Concept Upon Diagnosis What The Product Is Not Terminal Illness RiderViatical Settlement2/23/07EMC National Life Co.
11 Traditional Products Not the Answer…If You Survive! Disability% of Monthly SalaryLengthy Waiting Periods - ExecutivesDependent Upon Ability to WorkLong-Term CareDaily BenefitHospital Stay or Home Nursing RequirementAccumulation ProductsRetirement2/23/07EMC National Life Co.
12 Traditional Products Not the Answer…If you Survive! LifeIntended for dependents/beneficiariesNot available if sufferer is aliveHealthLimited in scope/access (HMO-PPO)Portability at risk2/23/07EMC National Life Co.
13 Product Design Rider Attached To Life Insurance Policy Health Policy And RidersTreatment Of Death, By Policy Type2/23/07EMC National Life Co.
14 Critical Illness Insurance Traditional life insurance provides financial security for your family if you die……but not for you if you live.Now Critical Benefits Life provides both!2/23/07EMC National Life Co.
15 Version 1.0 $50,000 Minimum Benefit $250,000 Maximum Benefit Issue Ages (age last birthday)Up to Table 820 Year Term Or To Age 7050% and 100% Accelerated Death BenefitWaiver of premium, accidental death, and children’s term riders are available2/23/07EMC National Life Co.
16 Covered Conditions (1.0) Heart Attack Stroke Invasive Cancer 2/23/07 EMC National Life Co.
17 Covered Conditions (1.0) Terminal Illness Non-invasive Carcinoma % initial benefitParalysisKidney FailureMajor Organ TransplantBlindness2/23/07EMC National Life Co.
18 Version 2.0 $20,000 Minimum Benefit $1,000,000 Maximum Benefit Issue Ages (ALB)Up To Table 820 Year Term Or To Age 70,50% and 100% Accelerated Death BenefitWaiver Of Premium, Accidental Death, And Children’s Term Riders Are Available2/23/07EMC National Life Co.
19 Covered Conditions (2.0) Loss of Independent Living HIV for Medical PersonnelCoronary Artery Bypass Surgery - 25% BenefitCoronary Angioplasty - 10% BenefitSevere Burns2/23/07EMC National Life Co.
20 Sample Annual Premium Male, 45, NonTobacco $100,000 Term $ 493 CI 50% $ 976CI 100% $1,4032/23/07EMC National Life Co.
21 Critical Benefits Example 2/23/07EMC National Life Co.
22 Version 3.0 $20,000 Minimum Benefit $500,000 Maximum Benefit Issue Ages (ALB)Up To Table 410 Year Term Or To Age 70100% Accelerated Death BenefitWaiver Of Premium, Accidental Death, And Children’s Term Riders Are Available2/23/07EMC National Life Co.
23 Covered Conditions (3.0) Advanced Stage Cancer Heart Attack Stroke Kidney Failure (End Stage Renal Disease)Major Organ Transplant SurgeryParalysis**Blindness**Severe Burns**Terminal Illness or DeathOccupational HIV Infection**Early Stage Cancer (25%)Coronary Artery Bypass Surgery (25%)Coronary Angioplasty (10%)** Benefits are excluded under the Children’s Rider2/23/07EMC National Life Co.
24 Covered Conditions (3.0)ALS (Amyotrophic Lateral Sclerosis or Lou Gehrig’s Disease)Advanced Multiple Sclerosis (25%)Advanced Alzheimer’s Disease**** Benefits are excluded under the Children’s Rider2/23/07EMC National Life Co.
25 How Product is Underwritten Full UnderwritingLarge Lump-sum BenefitsDetailed Health And Health-History QuestionsExaminations May Be RequiredSimplified Underwriting$100,000 Or LessShort-Form ApplicationsPhysical Exams Not RequiredAccept Or Reject Basis2/23/07EMC National Life Co.
26 Additional Considerations Morbidity vs. MortalityFinancial UnderwritingIndividual vs. Worksite MarketsGenetic/Family History Importance2/23/07EMC National Life Co.
27 Industry Rate Structure Health vs. Life ProductPolicy vs. Rider ConsiderationLevel vs. Increasing PremiumsGuaranteed vs. Indeterminate PremiumsReinsurance Role2/23/07EMC National Life Co.
28 Benefit Triggers 48 Worldwide Definitions Of Critical Illness NAIC Model DefinitionsDefinitions And Analysis Of Main IllnessesPartial-Payment ConsiderationsPayment In Event Of DeathWaiting And Survival Periods2/23/07EMC National Life Co.
29 State Compliance Issues NAIC ModelMin Loss RatiosMax Guaranteed RatesADL’sExclude Pre-Ex Conditions2/23/07EMC National Life Co.
30 CI Benefit Taxation Not Clear 1099 LTC Ask Your Tax Advisor 2/23/07 EMC National Life Co.
31 Potential Markets Disability Income Enhancement High Deductible Major MedicalLifestyle Adjustment ExpensesNeeds Analysis SolutionStay At Home Parents - Child CareKey Man Business Protection2/23/07EMC National Life Co.
32 Sources of Additional Information Critical Illness Rider for Individual Insurance, Wendy Lee, FSA, MAAAActuarial Practice Forum January 22, 2007 Volume 1 Issue 2Gen Re Critical Illness Survey2/23/07EMC National Life Co.