Scoring Methodology of Term Critical Illness Insurance

Introduction

Term Critical Illness (“Term CI”) Insurance mainly covers life threatening diseases over a fixed time period. A fixed lump sum benefit is payable if the insured is diagnosed with a pre-defined illness. Term CI insurance products are usually with fixed premium and coverage term of 1, 5 or 10 years, mostly with guaranteed renewability up to a certain age. 10Life rates Term CI products based on the coverage under the major diseases including cancer, heart disease, stroke and other critical illnesses. Some products in the market cover only the top 3 critical illnesses (cancer, heart, stroke) and others cover a number of major critical illnesses. 

General Assumptions

  • Issue age 25/ 30/ 35/ 40/ 45; non-smoker; male/ female
  • HK$1,000,000/ HK$500,000  sum assured
  • 10-year coverage term

Cancer Coverage Score

The Cancer Coverage Score is calculated based on the scope and definition of cancer coverage, where points are deducted for the following unfavourable terms relative to the market:  
  • Vague exclusion on Cancer - "Non-life threatening cancers"
  • Exclusion on any top 10 common cancers 1 (including colorectum cancer, lung cancer, breast cancer, prostate cancer, liver cancer, stomach cancer, non-melanoma skin cancer, corpus uteri cancer, non-hodgkin lymphoma cancer and thyroid cancer)
  • Exclusion/ low coverage on carcinoma-in-situ (CIS)
  • Do not have continuous cancer treatment benefit

Heart Disease Coverage Score

The Heart Disease Coverage Score is calculated based on the scope and definition of heart disease coverage, where points are deducted for the following unfavourable terms relative to the market:  

  • Exclusion on heart diseases other than heart attack
  • Coronary Artery Disease not defined as part of Heart Disease (with only specified surgeries/ procedures defined)
  • Exclusion/ low coverage on angioplasty

Stroke Coverage Score

The Stroke Coverage Score is calculated based on the scope and definition of stroke coverage, where points are deducted for the following unfavourable terms relative to the market:
  • Exclusion on accidents, trauma or traumatic injury induced stroke
  • Exclusion on migraine induced stroke
  • Exclusion on vasculitis or infection induced stroke

Other Critical Illness (“CI”) Coverage Score

The Other CI Coverage Score measures the coverage scope of other major diseases beyond cancer, heart disease and stroke. The coverage scope is benchmarked against an international standard, Critical Illness Framework 2019 from Life Insurance Association Singapore, which includes a list of 37 major diseases2. Points are deducted for products that do not cover any of the 31 other major diseases (excluding cancer, heart disease, stroke, coronary artery by-pass surgery, angioplasty and other surgery for coronary artery disease) in the standard.  

General Terms Score

The General Terms Score is calculated based on terms and policy provisions, there may be terms and conditions that can be unfavourable to the policyholder during a claim. Points are deducted based on the following term(s): 
  • Required survival period after diagnosis
  • No multiple CI benefits
  • Deduction from major payout after early stage payout


Overall Term CI Score

The Overall Term CI score is weighted based on the approximate industry claim rates in Hong Kong. The weightings are as follows:
ScoreWeight
Cancer Coverage Score
65%
Heart Disease Coverage Score
10%
Stroke Coverage Score
7.5%
Other CI Coverage Score
7.5%
General Terms Score
10%
Overall Term CI Score
100%

10Life scores are for reference only, and do not constitute any insurance purchase advice. You should seek independent advice before purchasing any insurance products. If you have any questions or suggestions about 10Life's scoring methodology, please email us at enquiries@10Life.com.

Updated on February 19, 2021

1. Top 10 Cancer (Hong Kong) - https://www3.ha.org.hk/cancereg/topten.html
2. Critical Illness Framework 2019 from Life Insurance Association Singapore - https://www.lia.org.sg/industry-guidelines/health-insurance/2019/lia-critical-illness-ci-framework-2019/

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