Scoring Methodology of Whole Life Critical Illness

Introduction

 

Whole Life Critical Illness (“CI”) Insurance mainly covers life-threatening diseases. A fixed lump sum benefit is payable if the insured is diagnosed with a pre-defined illness. There are various types of CI products in the market, with some also covering early-stage, minor and juvenile diseases; and some also covering multiple times of specified major critical illnesses. The benefit amount differs based on the severity of the illness. 

 

10Life rates the products based on the critical illness coverage and the policy terms and conditions, under a strict and fair mechanism.

 

General Assumptions

  • Issue age 25 / 35 / 45; Smoker / Non-smoker; male/ female
  • US$150,000 basic sum assured with 25-year (or closest equivalent) premium payment term

1. CI Coverage Score

 

CI Coverage Score is a weighted score on Single CI coverage and Multiple CI coverage. A higher weight is put on Single CI since the first CI cases are most common. Multiple CI coverage is also considered as the survival and recovery rates of the first CI increase with medical advancement.

Coverage

Weighting

Single CI

65%

Multiple CI

35%

 

1.1 Single CI Coverage

 

The single CI coverage is mainly based on the payout (Sum Assured) on the following CI and items,

 

Cancer

 

  • Early Stage Cancer (Carcinoma-in-situ)
  • Major Cancer

Heart & Stroke

  • Early Stage Heart Disease Treatment (Angioplasty)
  • Major Heart Disease
  • Major Stroke

Unknown diseases coverage

  • Unknown diseases coverage - Some products cover diseases that are not yet defined to allow for new developments (e.g. by specifying the number of days of ICU admission, conditions requiring complex surgeries)
  • Scores are given to products where there is at least 20% sum assured covered for ICU admission and/or at least 100% sum assured covered for conditions requiring complex surgeries

Protection Amount Booster

  • Some products offer a booster to allow for a higher sum assured coverage in the earlier policy years. Scores are given to products with at least 50% additional sum assured in the first 10 years

 

The Single CI Coverage is weighted based on the approximate industry claim rates for male and female. The weightings are as follows:

Male

Female

Cancer

60%

65%

Heart and Stroke

30%

25%

Unknown diseases coverage

5%

5%

Early years booster

5%

5%

Single CI Coverage

100%

100%

 

1.2 Multiple CI Coverage

 

The Multiple CI Coverage is based on the total payout of the following CI,

 

Cancer

  • The coverage score is based on the payout assuming treatment periods of 5 years and 20 years.
  • Some products in the market offer continuous cancer treatment cash benefits during the waiting period, generally leading to a higher total payout.

Heart and Stroke

  • 3 times Heart Disease
  • 3 times Stroke
  • 2 times Heart Disease and 1 time Stroke
  • 2 times Stroke and 1 time

Other Diseases

  • The coverage score is based on whether the product provides multiple coverage in other diseases.

 

 

The Multiple CI Coverage is weighted based on the approximate industry claim rates for male and female. The weightings are as follows:

Male

Female

Cancer

65%

70%

Heart and Stroke

30%

25%

Other diseases

5%

5%

Multiple CI Coverage

100%

100%

 

2. CI Terms Score

 

The CI Terms Score is calculated based on the terms and provisions of each product. In the disease definitions and policy provisions, there may be terms and conditions that can be unfavorable to the policyholder during a claim. Also in between each multiple CI claim, a waiting period is usually required. The longer the waiting period, the less favourable to the insured.

 

Based on consultation with medical specialists, deductions are made to the Terms Score based on the following terms:

 

Cancer Terms

  • Vague exclusions on Cancer - "having borderline malignancy", "having low malignant potential"
  • Vague exclusions on Cancer - "Non-life threatening cancers"
  • Long waiting period for new cancer (>1 Years)
  • Long waiting period for recurrence cancer (>3Years)
  • Long waiting period for continuous cancer (>3Years)

Heart and Stroke Terms

  • Coronary Artery Disease not defined as part of Heart Disease (with only specified surgeries/ procedures defined)
  • Strict definition on Angioplasty - requires evidence of significant ECG changes
  • Exclusion on accidents, trauma or traumatic injury induced stroke
  • Exclusion on migraine induced stroke
  • Exclusion on vasculitis or infection induced stroke
  • Cover only Heart Attack under Multiple CI Heart Disease Coverage

Early CI Terms

  • Deduction from major payout after early-stage payout
  • No. of Early CI Claims covered
  • The Terms Score is reduced for products with only 1 early CI Claim and further reduced if no early CI Claim

Multiple CI Coverage Age

  • Although Whole Life CI Insurance covers up to whole life, the multiple CI benefits usually have an age limit. The market benchmark is age 85, and some products cover up to age 100. Hence the Terms Score is reduced for products with a multiple CI coverage age limit lower than age 100 and further reduced if lower than age 85.

Guaranteed Premium

  • While the premium term is fixed, only some products in the market guarantee that the premium would not increase after the first premium payment. The Terms Score is reduced if the premium is not guaranteed.


3. Whole Life Critical Illness Insurance 5-Star Rating


10Life Whole Life CI Insurance 5-Star Rating is awarded to the top products in the market. 

To earn a 5-Star Rating, the product must achieve:

(1) a CI Coverage Score of at least 9.0 and 

(2) a CI Terms Score of at least 7.0


Disclaimer

 

10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies.

 

Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information.

 

If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com.


Last Update Date: 31 Oct, 2022

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