Hello Tutor, Kindly help me with these doubts --: Ques 1: Chapter 3 – LTCI -- Immediate needs LTCI And Impaired annuities. How their product structure is different? Am not able to understand. Can you please tell me? Ques2: Chapter 3 – LTCI -- What exactly is Pension solutions Variation of LTCI. Core reading material seems confusing. Can you explain with example of this variation of LTCI Ques3: Kindly clarify me with examples of difference among (IP context) 1. Proportionate benefits 2. Partial benefit 3. Rehabilitation benefit Ques 4: (a)Can you tell me what is profit sharing arrangements/agreements between “employer and insurer” AND “insurer and reinsurer” with the help of an example. (b) How profit sharing arrangements helps in reducing PMI cost for employer
Hi Kamal Thanks for the questions. I'll take each in turn. 1. There may be no difference in the structure of immediate needs and impaired life annuities. They both pay a regular income, starting now, for the remainder of the policyholder's life. However, the types of policyholder that take these out will be different. Immediate needs annuities are taken out by people that need care for the rest of their lives, so often people in their 80s or 90s. Impaired life annuities are usually bought to provide a retirement income, so these policyholders will be younger, they will also usually be in much better health than an immediate needs policyholder, eg the impairment might be smoking. Given the different target market and different policyholder needs, then there may be some differences between the contracts. For example, an immediate needs annuity may be paid directly to the care provider and may be indemnity based (although linked to a price index is more common). 2. All the Core Reading is trying to say is that there may be ways to use a pension to pay for LTCI (instead of selling the home, or using other savings say). So there may be creative product designs that merge together LTCI and retirement income. This is a potential new market that has only recently been discussed and we will have to wait and see what new products might be launched. 3. These three terms are defined in the Glossary. 4. If the reinsurer makes a profit on the business (ie reinsurance premiums exceed reinsurance claims) then it may share part of that profit with the insurer. Similarly, if the insurer makes a profit it may share it with the employer. There will be an agreed formula to determine how the profit is shared. If the employer has a profit sharing agreement then it has an incentive to help reduce claims costs through better health and safety practices. The insurer is sharing the risk with the employer, and so may need smaller margins. These could both reduce premiums. I hope these answers help. Best wishes Mark
