Critical Illness Insurance - Benefit Eligibility Selection
When developing a Critical Illness insurance product, many important decisions must be made. Unlike other forms of insurance, Critical Illness insurance is unique in that insurers must decide which conditions to cover when developing their product. This exercise can be the simplest part of the product development process or one of the most complex. Nearly every Critical Illness policy covers the core benefit eligibility triggers of Invasive Cancer, Heart Attack, Stroke, End Stage Renal Disease, and Major Organ Transplant. In addition, most policies provide partial payments for Carcinoma In-Situ, Coronary Artery Angioplasty and Coronary Artery Bypass Grafting.
Beyond that, a number of insurers offer additional benefit eligibility triggers that may include such conditions as Paralysis, Severe Burns and Loss of Vision. Each may make sense, depending upon the insurers’ market. For instance, including Paralysis makes perfect conceptual sense when the insurer plans to co-market Critical Illness with its Disability Product.
Regardless of the Benefit Eligibility Trigger under consideration, insurers may benefit from evaluating any proposed trigger against the following criteria before deciding to include it in their offering:
- Is the condition normally “critical”? Is it a significant medical event that would likely have considerable financial consequences for the insured?
- Can the condition be well defined? Will the consumer understand exactly what they are purchasing and will the insurer have a firm understanding of what it is they are pricing?
- Can reliable incidence rates be developed? Are there good population incidence rates that can be studied in order to help price the risk?
- Can the risk be appropriately underwritten? Do we have the tools to determine if the proposed insured has had the condition or is highly predisposed to it? Can we screen out those who are selecting against us?
- Can the benefit eligibility be objectively determined at time of claim? Will our claims departments be able to properly adjudicate the claim, paying all that should be paid and denying those that don’t meet the criteria?
- Will inclusion of this benefit likely have a favorable impact on sales? Will more people purchase the policy because the trigger is included? If so, will these be the right people?
If the answer to all of the above criteria is “Yes,” then this may well be a benefit that makes sense to include in your Critical Illness policy. If any of the above criteria are not met, insurers may want to reassess inclusion of the eligibility trigger.
Continue to check back for more blog entries that will walk through the continuum of Critical Illness insurance issues.