The complexity of critical illness cover may give rise to different aspects. One aspect may be the reinstatement of life cover (buy back option). The buy back option may become useful if used under a prepayment critical illness policy. This could help the insured person accumulate enough funds for a death benefit gradually after a critical illness claim is made. For example, after prepayment due to critical illness the remaining life sum still existent could be reinstated by around 25 percent after two years of survival. But this may depend upon the agreement made by the insurer and the insured. If longer years of survival happen, the sum could be further increased.
Another advantage of the buy back option is that it can look like a surplus on top of the original policy bought. The premium values may depend mostly upon the age of the person buying the reinstated life cover. The raise in value of the premium can be around 10 percent as per the length agreed for the survival period. The added expenses may not be very high as most persons suffering from a critical illness cover may not live before the end of the survival period. Thus the buy back option may not be fully used.
Moreover, yet another aspect of the critical illness cover is the child and juvenile cover. The child and juvenile cover may be directly included in the parents’ critical illness cover. The child and juvenile critical illness cover may be offered automatically or as an extra. However, the automatic cover requires that the parents pay separate premiums for the child cover even if they do not have any. Another option may also stipulate that an additional premium be paid for each child included in the cover. The diseases covered for juvenile critical illness cover may differ from that in the adult’s critical illness policy.
Other than marketing procedures, essential factors of a critical illness product may be determined by medical and technical conditions. Medical considerations as well as underwriting may unveil three important conditions for the cover of critical illness.
1. The critical illness definition must be clear enough so that a critical illness claim may be reviewed and accepted.
2. The critical illness conditions covered must be well priced judged on accurate statistical data.
3. The critical illness product must be well product against the risk of antiselection.
The first condition mentioned above can be confirmed by consulting medical experts. The dilemma that may be often encountered as good critical illness definitions will be shown below based on the example of heart attack (myocardial infarction).
The definition recommended by Munich Re may be as follows:
“The death of a portion of the heart muscle as a result of inadequate blood supply to the relevant area”. The diagnosis for this will be evidenced by all of the following criteria:
a) a history of typical chest pain
b) new electrocardiogram changes
c) elevation of infarction-specific enzymes
“Non-ST segment elevation myocardial infarction (NSTEMI) with elevation of troponin I or T is excluded.”
By measuring the rise of troponin the malfunction or death of even 1 gram of heart muscle could be known. This may not result in the patient being handicapped but nonetheless could be referred to as myocardial infarction.
Part 3 of this article will further discuss about the various aspects of critical illness cover including more details about the definition of myocardial infarction by Munich Re.
For more information about
life insurance and
critical illness insurance please visit www.unbeatablelifeandcriticalinsurance.co.uk.
