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.

Critical Illness

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
Invasive7Heart Attack7Renal Failure7Paralysis5
In Situ5Stroke7Transplant6Coma4
Skin3CABG (By-Pass Surgery)5Alzheimer's2
Prostate1Angioplasty3Loss of Speech/
Sight/ Hearing
Benign Brain Tumor5Valve Replacement2Loss of Hands/Feet2
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
Issue Age
B (Unisex)$5.14$9.31$17.44$31.15
F (Unisex)$6.42$11.42$21.85$39.75
Female Non-Tobacco30405060
B (Unisex)$5.14$9.31$17.44$31.15
F (Unisex)$6.42$11.42$21.85$39.75

Hospital Indemnity

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
BenefitCompany ACompany B
Dollar LimitPeriod LimitDollar LimitPeriod Limit
Per AdmitNANA$500-$3,0001 per period of care
Daily Benefit$50031 days/Cal. Yr.$10-$40020-40 days per period of care
$1,000180-365 lifetime
Intensive Care Unit$50010 days/Cal. Yr.No added benefitNA
Skilled Nursing FacilityNANA$10-$40020-100 days
Days 1-20, 1-100 or 21-100
Physician Office VisitsNot coveredNot covered$10-$60Not specified
Surgical Benefit$1,000 Inpatient2 surgeries / Cal. Yr.$250-$3,0001 per period of care
$500 Outpatient
$100 Office
Emergency Room$1001 per Cal. Yr.$200Not specified
Ambulance$100 Ground2 per Cal. Yr.See aboveER and Ambulance are a combined benefit
$500 Air
Anesthesia$100/day2 days maximumNot coveredNot covered
Urgent Care$50/visit1 visit per Cal. Yr.Not coveredNot covered

Table D - Premium Rate Comparison
Monthly Rates per $100 Benefit (except Office Visits per $10)
Issue Age30405060
Company A
Per Child
Company B
Inpatient Admit$1.37$1.56$2.17$3.13
Daily Hospital$6.08$7.41$10.83$15.67
Office Visit (per $10)$6.69$7.30$8.78$11.13
SNF 1-20$1.08$1.08$2.25$4.58
SNF 21-80$1.33$1.33$2.16$6.08
SNF 1-100$2.42$2.42$4.42$10.67
Out Surgery$2.16$2.50$3.33$4.42

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.

Accident Products

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
By Site:
Emergency RoomHospitalIntensive CareRehabilitationUrgent CareOffice Visits
Per Visit BenefitAdmit BenefitAdmit BenefitAdmit BenefitPer Visit BenefitFollow-Up
Confinement BenefitConfinement BenefitConfinement Benefit
Ambulance AirAmbulance GroundLodgingTransportationChiropractic
Specific Injury:
BloodLoss of:Herniated DiscLacerationsRiders:
BurnHand(s)Knee InjurySkin GraftCommon CarrierBereavement
ComaFoot/FeetPhysical TherapyTendon/LigamentDisability IncomeBurial/Cremation
ConcussionEye(s)Surgical BenefitsRotator CuffFamily CareMortg5age Protection
Emergency DentalFingers/ToesProstheticsBrain DamageAD&DSurvivor Education
Eye InjuryInternal OrganParal$34.90ysisSport-Related InjuriesSeatbelt RiderPedestrian Benefit
Fractures / DislocationsX-raysScansRemains 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 AgeCompany ACompany BCompany C