Rashi Gupta
Keen member
I have a question on the computation of premium under IP product!
To compute the premium for IP product, we follow the methodology of Inception/Disabled life annuity where
Cost of claim=claim inception rate*claim eligibility probability* disability annuity * discount factor * annual benefit amount
According to this, I infer that
claim inception rate = Proportion of people suffered illness/accident
claim eligibility probability = Proportion of People who fits into eligibility criteria
disability annuity = income received during the claim period which is post claim income
discount factor = applied on the future income
annual benefit amount =?
Can you tell me what does Disability annuity and annual benefit amount means in this equation?
And just a general question on IP pricing, If Inception/Disabled life annuity approach does not take account of recovery (or make no distinction about recovery or death),
then which approach is being used in reality?
because as per core reading, the multi-state modelling is also considered complex and the above method has its own limitations.
To compute the premium for IP product, we follow the methodology of Inception/Disabled life annuity where
Cost of claim=claim inception rate*claim eligibility probability* disability annuity * discount factor * annual benefit amount
According to this, I infer that
claim inception rate = Proportion of people suffered illness/accident
claim eligibility probability = Proportion of People who fits into eligibility criteria
disability annuity = income received during the claim period which is post claim income
discount factor = applied on the future income
annual benefit amount =?
Can you tell me what does Disability annuity and annual benefit amount means in this equation?
And just a general question on IP pricing, If Inception/Disabled life annuity approach does not take account of recovery (or make no distinction about recovery or death),
then which approach is being used in reality?
because as per core reading, the multi-state modelling is also considered complex and the above method has its own limitations.