Benefits provided in other Markets

D Sai SrinivasD Sai Srinivas

Reinsurance Group of America, Incorporated 2004 & 2005 Life Reinsurance Company of the Year

Agenda

Background Benefits Should these benefits be covered in Should these benefits be covered in

India? Conclusion

Background

These are the benefits available in other markets but not available / actively marketed by life companies in Indiay p Each benefit came into existence due to

local market requirementslocal market requirements There is an overlap with general

insurance products

Benefits (not a complete list) Preferred Products Modified Death Benefit Hospital reimbursement Disability income, Temp disability Juvenile CI Functional Impairment

S C Staged Critical Illness Long-term Care

f Unemployment benefit, retrenchment Funeral Benefits

4

Preferred Products

Definition - Preferred Class: “Class of risk created from a group of standard risks using a specific set ofstandard risks using a specific set of underwriting criteria. It is expected to exhibit lower mortality than the standardexhibit lower mortality than the standard group.” Term Products for now All products in Term Products for now – All products in

future?

Preferred Products

Risk segmentation Gender 40s Smoker/Non-smoker 60s Non-smoker criteria 70s NS criteria, Lifestyle, HIV 80s, y , Family History, Cholesterol,

Blood Pressure 90sBlood Pressure,.. 90s Individual Pricing (genetic testing) ??

Preferred ProductsSegmenting the Risk M l A 40 N SSegmenting the Risk - Male, Age 40 N.S.

CREDIT DEBITSCREDITS

DEBITS

Class 1 Class 2 Residual

60% 70% 80% 90% 100% 110% 120% 130% 140%MORTALITY

80% Difference in Mortality Same Rate

Preferred Products - ComplicatedDeriving mortality assumption - RatingDeriving mortality assumption Rating

the ceding company’s classesPreferred Criteria Weight MMCNon Smoker 12.00% Never smoked or no tobacco for 15 + yearsDefinition MC

No tobacco for more than 12 yearsNo tobacco for more than 12 yearsC

MMC: Most Most Conservative No tobacco for more than 10 yearsMC: Most Conservative AC: Conservative No tobacco for more than 4 yearsA: Average LL: Liberal No tobacco for more than 1 yearML: Most Liberal ML

No cigarette for more than 1 yearMMLno cigarette for more than 1 year

Preferred Products - ComplicatedD i i t lit ti R tiDeriving mortality assumption - Rating

the ceding company’s classesPreferred Criteria Weight MMCBlood Pressure 22.00% Lower or equal to 120/80(male 45) MC

Lower or equal to 130/80qC

MMC: Most Most Conservative Lower or equal to 140/85MC: Most Conservative AC: Conservative Lower or equal to 145/90C: Conservative Lower or equal to 145/90A: Average LL: Liberal Lower or equal to 150/90ML: Most Liberal ML

Lower or equal to 155/95Lower or equal to 155/95MMLlower or equal to 165/95

Preferred Products

Preferred classes – simple (3) to sophisticated (12) Advantages Advantages

Best segmentation of risks Very limited potential anti-selection

Disadvantages Complex to price, administer, monitor, underwrite No experience

Strong CommunicationM k ti A t i l U d iti d M t Marketing, Actuarial, Underwriting, and Management

There will always be a mismatch

Hospital Reimbursements

Reimbursement of actual charges subject to some maximum limits in case of hospitalization due to illness or injury p j yfor the following: Hospital daily room & board Hospital daily room & board Doctor’s visit Misc. hospital expenses Intensive Care

Surgical Benefits

Reimbursement of actual charges in case of surgery subject to some maximum limits of the following:g Surgical fee Anesthetist’s fee Anesthetist s fee Operating theatre fee

Other hospital benefits

Reimbursement of actual charges of emergency outpatient treatment Reimbursement of actual charges ofReimbursement of actual charges of

Post hospitalization benefitsD il t h i Daily post surgery home nursing Chiropractor/physiotherapist consultation

Disability income

Information from Metlife’s website: One in 3 working Americans will become

disabled for 90 days or more before age 65 The average disability absence is 2 and a half

years. y More than 80% of working Americans don’t

have disability income insurance or aren’thave disability income insurance or aren t covered adequately.

Disability income

The chart below illustrates that an individual’s chances of disability are 2 to 3 times greater than death during their working years.(Source *)g g g y ( )

* Commissioner’s Individual Disability Table A ** National Underwriter Magazine, May 2001

Disability Income

Disability Income Insurance policies: Provide monthly income to help

maintain your standard of livingmaintain your standard of living Can be customized to fit your particular

it tisituation Help you retain independence andHelp you retain independence and

dignity without burdening others

Temporary Disability

Temporary Disability Insurance (TDI)provides benefit payments to insured workers for weeks of unemployment p ycaused by disability

Temporary DisabilityA l f th t t f th b fitAn example of the structure of the benefit: No benefits are payable for the first seven days of each period

of disability. If th l i t i l li ibl f b fit i th th If the claimant is also eligible for benefits in the three consecutive weeks immediately succeeding the first seven days, then those first seven days will also be payable.

The weekly maximum benefit is payable for no more than 26 The weekly maximum benefit is payable for no more than 26 weeks with respect to any one period of disability.

However, employees will not be able to collect disability benefits until they have exhausted all their accumulated sick leave.until they have exhausted all their accumulated sick leave.

This benefit is available for 6 months and Permanent Disability has got 6 months deferment. There is a connectivity.

This benefit is offered on credit life - a very useful benefit forThis benefit is offered on credit life a very useful benefit for loan repayment.

Juvenile Critical Illness

Covering child related illnesses 6 to 15 conditions are covered 6 to 15 conditions are covered Examples of conditions covered are: Severe

Asthma, Leukaemia, Bone Marrow Transplant,Asthma, Leukaemia, Bone Marrow Transplant, Insulin-dependent diabetes mellitus, Rheumatic Fever with Valvular Impairment, Kawasaki Disease with Heart Complication Major Head Trauma Brainwith Heart Complication, Major Head Trauma, Brain Surgery, Loss of Limbs, Glomerulonephritis with Nephrotic Syndrome, Severe Epilepsy, Severe Haemophilia Kidney Failure Liver Failure BacterialHaemophilia, Kidney Failure, Liver Failure, Bacterial Meningitis

Guaranteed insurability at age 21 for CI cover

Functional Impairment Respiratory Disorders

Impairment Definition and Severity Criteria Percentage of Sum Assured Payable

The insured must be diagnosed with a chronic respiratory disorder that causes permanent functional impairment. A Certified Respirologist must confirm the diagnosis and the disease severity with clinically appropriate tests such as chest xray, pulmonary function testing, arterial blood gases measurement and assessment of functional capacity.All pulmonary function testing must:be done by a registered pulmonologist or specialist physician,be done after the disease has been stabilisedbe done on optimal medical therapybe do e o opt a ed ca t e apybe done on a calibrated apparatus, andinclude at least three flow volume curves with less than 5% inter-test variability..On optimal medical therapy, once the disease has been stabilised, the insured must have all 3 of the following criteria:

50

the following criteria:1) Severe dyspnea, having to stop for breath after walking less than 100 meters on the level2) Exercise capacity less than 4 METS, and 3) Pulmonary function test must also show one of the following:Forced Expiratory Volume in one second (FEV1) consistently less than 40% of predicted, orForced Vital Capacity less than 50% of predicted, orDiffusion Capacity less than 40% of predicted.

Staged Critical IllnessProportion of sum assured payable

Criteria to qualify for the benefit

5% Prostate Cancer – T1N0M0

10%Prophylactic mastectomy for carcinoma-in-situ of breast

25% Stage 1 Cancer; orDiagnosis of Leukaemia

50% Stage 2 Cancer

75% Stage 3 Cancer

100% Stage 4 Cancer; orFailure of treatment for Leukaemia; orRelapse of Leukaemia; orp ;Diagnosis of Acute Myoblastic Leukaemia with poor prognosis; orRequiring a bone marrow transplant for Leukaemia

Staged Critical Illness

Buyback of Cover – e.g. can have 2 100% payment heart attacks Covers all body systems – not justCovers all body systems not just

those covered by CIIf i l diti t b d If single condition covers two body systems, pays both

Long term Care

Individuals who require long-term care are generally not sick in the traditional sense, but instead, are old and frail and , ,unable to perform at least two of the basic activities of daily living such asbasic activities of daily living such as dressing, bathing, eating, toileting, getting in and out of a bed or chair andgetting in and out of a bed or chair, and walking.

Long term Care

long term care insurance can pay for home care, often from the first day it is needed. It will pay for a y p ylive-in caregiver, companion, housekeeper, therapist or private-duty nurse

Long-term care insurance can also help pay Long-term care insurance can also help pay expenses for caring an individual who suffers from Alzhemer’s disease or other forms of dementia.Man older indi id als ma feel ncomfortable Many older individuals may feel uncomfortable relying on their children or family members for support, and find that long-term care insurance could h l With t l thelp cover expenses. Without long-term care insurance, the cost of providing these services may quickly deplete the savings of the individual and/or th i f iltheir family.

Unemployment Benefit /Unemployment Benefit / Retrenchment

Unemployment benefits are sums of money given to the unemployed by the government or a compulsory p y y g p ypara-governmental insurance system

Depending on the jurisdiction and the status of the person those sums may be meager covering onlyperson, those sums may be meager, covering only basic needs or may compensate the lost pay somewhat proportionally to the previous earned salarysalary.

They often are part of a larger social security scheme.

Unemployment benefits are generally given only to those registering as unemployed, and often on conditions ensuring that they seek work and do not g ycurrently have a job.

Funeral Benefit

Funeral in South Africa for a particular community is very important and a matter of social respectp And it is costly

H th F l b fit i d Hence the Funeral benefits are insured Generally, it is in the form a group coverGenerally, it is in the form a group cover

– covering a family or group of families

Should these benefits be covered inShould these benefits be covered in India?

Providing these benefits will expand the market Some benefits are social security measures andSome benefits are social security measures and

require government involvement Ex: Temp disability and Unemployment

There are many issues in providing these benefits There are many issues in providing these benefits Demand in the market Lack of data Uncertainty

Some of the benefits are not relevant to India Ex: Funeral Coveru e a Co e

Some benefits are relevant to India Ex: Hospital reimbursements

Conclusion

Companies in India need not immediately rush to provide these benefits? Companies in India may have to provide

these benefits eventuallythese benefits eventually Be careful while introducing these

benefits in India – weigh pros and cons

Thank You

Questions?