Recent Health Form Filings
2015-Sep-03 - Rex Durington
Hause Actuarial Solutions, Inc. (Hause) periodically reviews new health form filings as a service to our clients and friends. This installment of our review covers approved form and rate filings from July 2014 to July 2015. The predominant policy types approved during this period were for Critical Illness (9 companies), Hospital Indemnity (4 companies), and Accident products (3 companies).
The following charts show the benefit structures and a premium comparison for each product type. This information may be useful as companies design and price their future product offerings. As always, Hause will be happy to assist in these efforts.
It's been almost two years since our last article on Critical Illness (See Critical Illness Overview - 2013 Update under Actuarial Articles on this website). Virtually everything discussed in that article remains the same - just with more players. In plan design, there have been minor changes in benefits with fewer triggers in many cases and more use of riders for optional coverages.
One has to wonder why very specific rider triggers are necessary for benefits such as Spouse Re-education, Day Care benefits, and Medical Specialist Consults among others. It would seem that the attractiveness of Critical Illness lies principally in providing a lump sum benefit for a catastrophic illness/accident.
Some of the newer benefits include: Mortgage Protection, Disability Income, Unemployment Benefits, Waiver of Premium, Return of Premium and Death Benefits.
Table A below shows the primary distribution of covered benefits by diagnosis/procedure for the reviewed policy forms. Note that while nine forms were filed, detail information was only available for seven of the nine as reflected in the counts below.
|Table A - Critical Illness - Benefit Structure|
|Invasive||7||Heart Attack||7||Renal Failure||7||Paralysis||5|
|Skin||3||CABG (By-Pass Surgery)||5||Alzheimer's||2|
|Prostate||1||Angioplasty||3||Loss of Speech/|
|Benign Brain Tumor||5||Valve Replacement||2||Loss of Hands/Feet||2|
|Childhood Conditions *||1|
|* Generally includes Down's Syndrome, Cerebral Palsy, Cystic Fibrosis, Muscular Dystrophy, Birth Defects and Type I Diabetes|
Due to the wide variation in benefit triggers for Critical Illness products, caution is advised on premium comparisons. Some rate manuals approach one hundred pages long with numerous adjustments for inclusion/exclusion, underwriting (guaranteed issue or simplified issue), benefit reduction, benefit maximum, etc. That being said, many of the benefits beyond cancer, heart attack, stroke and transplants add little to the total premium. Table B, then, may be viewed as a general introduction to prevailing rates which should be supplemented by an assessment of the merits of add-on benefits beyond the primary cost drivers. In pricing, Hause provides a more "apples-to-apples" comparison of company rates based on each client's perception of the market.
|Table B - Premium Rate Comparison|
Annual Rates per $1,000 Benefit
No Reduction at Advanced Ages
While there were four companies with approved policy forms and rates during the review period, only two are shown in the table below, because three of the companies were from the same parent group and have identical benefit and cost structures.
|Table C - Hospital Indemnity - Benefit Structure|
|Benefit||Company A||Company B|
|Dollar Limit||Period Limit||Dollar Limit||Period Limit|
|Per Admit||NA||NA||$500-$3,000||1 per period of care|
|Daily Benefit||$500||31 days/Cal. Yr.||$10-$400||20-40 days per period of care|
|Intensive Care Unit||$500||10 days/Cal. Yr.||No added benefit||NA|
|Skilled Nursing Facility||NA||NA||$10-$400||20-100 days|
|Days 1-20, 1-100 or 21-100|
|Physician Office Visits||Not covered||Not covered||$10-$60||Not specified|
|Surgical Benefit||$1,000 Inpatient||2 surgeries / Cal. Yr.||$250-$3,000||1 per period of care|
|Emergency Room||$100||1 per Cal. Yr.||$200||Not specified|
|Ambulance||$100 Ground||2 per Cal. Yr.||See above||ER and Ambulance are a combined benefit|
|Anesthesia||$100/day||2 days maximum||Not covered||Not covered|
|Urgent Care||$50/visit||1 visit per Cal. Yr.||Not covered||Not covered|
|Table D - Premium Rate Comparison|
Monthly Rates per $100 Benefit (except Office Visits per $10)
|Office Visit (per $10)||$6.69||$7.30||$8.78||$11.13|
Company A's product would appear to be marketed to a younger demographic while Company B adds a Skilled Nursing Facility benefit which may appeal more to older individuals. In fact, Company A anticipates an average issue age of 39 as compared to Company B's average expected issue age of 69.
Recent Accident Product filings feature as many or more benefit options than critical illness coverage. The difference being that Accident Products generally have fixed indemnity limits by specific benefit or procedure rather than a diagnosis-based payment.
Table E below outlines the range of coverages offered. For example, one company had fifty different scheduled benefits, another had thirty.
|Table E - Accident Products Benefit Structure|
|Emergency Room||Hospital||Intensive Care||Rehabilitation||Urgent Care||Office Visits|
|Per Visit Benefit||Admit Benefit||Admit Benefit||Admit Benefit||Per Visit Benefit||Follow-Up|
|Confinement Benefit||Confinement Benefit||Confinement Benefit|
|Ambulance Air||Ambulance Ground||Lodging||Transportation||Chiropractic|
|Blood||Loss of:||Herniated Disc||Lacerations||Riders:|
|Burn||Hand(s)||Knee Injury||Skin Graft||Common Carrier||Bereavement|
|Coma||Foot/Feet||Physical Therapy||Tendon/Ligament||Disability Income||Burial/Cremation|
|Concussion||Eye(s)||Surgical Benefits||Rotator Cuff||Family Care||Mortg5age Protection|
|Emergency Dental||Fingers/Toes||Prosthetics||Brain Damage||AD&D||Survivor Education|
|Eye Injury||Internal Organ||Paral$34.90ysis||Sport-Related Injuries||Seatbelt Rider||Pedestrian Benefit|
|Fractures / Dislocations||X-rays||Scans||Remains Identification|
Based on the wide range of benefits provided, premium comparisons are even more difficult than with Critical Illness Policies and the same cautions apply. As with Critical Illness, the specificity of the benefits generally means that many of the benefit triggers contribute very little to the overall premium rate.
|Table F - Premium Rate Comparison|
|Issue Age||Company A||Company B||Company C|