A
Alan2007
Member
Chapter 1 Page 21
I dont understand the 2 core-reading paragraphs
The core reading paragraph is:
Designs in which benefits escalate when not claiming usually feature escalating premiums as well. A simple and popular design has the premiums increasing at the same rate as the benefits. This effectively means that the increase is based on the premium assumption prevaling when the original contract was effected
Can you please explain the underlined?
Some protection against trends in claims experience (and high inflation) may be obtained by an alternative design whereby the increase in premium is based on the current.......................................
There are a number of possible variations on these two designs.
I dont understand any of the above paragraph?
How can high inflation be bad for the insurer if both the premiums and benefits increase say at 3%?
Thanks
I dont understand the 2 core-reading paragraphs
The core reading paragraph is:
Designs in which benefits escalate when not claiming usually feature escalating premiums as well. A simple and popular design has the premiums increasing at the same rate as the benefits. This effectively means that the increase is based on the premium assumption prevaling when the original contract was effected
Can you please explain the underlined?
Some protection against trends in claims experience (and high inflation) may be obtained by an alternative design whereby the increase in premium is based on the current.......................................
There are a number of possible variations on these two designs.
I dont understand any of the above paragraph?
How can high inflation be bad for the insurer if both the premiums and benefits increase say at 3%?
Thanks