according to the split deferred policy in IP ,100 will be paid if 13 weeks sickness which increses to 500 if 26 weeks sickness .IS it as the deferred period increases the benefit amount incresees, because the more the deferred period the more severe is the sickness rate. Or is it that ,after the deferred period of 13 weeks ,for first 13 weeks 100 is paid and later 500 is paid.this looks something like escalating benefits . secondly,under options there are 3 categories : ie. either the term might increase , the cover might increase or under ACI (accerelated CI ) he may avail for death claim in case he has availed the CI benefit . My question is :as he can avail for death benefit , he must also be given to avail the under CI once again ,since now the cause may be due to different reason alltogether .Is this allowed ?or is it that since once he was entitled -finish there it ends .
Just a quick speculation I don't really know what part of the course you are exactly referring to. But I have some speculations here!!! Split DP The aim of providing split deferred period is to tailor to the customer needs. In your example, after 13-week dp, the insured receives $100 a month and rises to $500 after another 13 weeks. This can be seen as two IP policies, the first one is of 13-week dp with $100 a month of benefits which is payable for 13 weeks. The second policy is one with 26 weeks of dp and $500 a month of benefits thereafter. It just combines into one policy and called as split dp. This type of policies would be quite useful to coincide with other benefits the insured may have effected, e.g. company group IP or state benefits. The benefits, other than the individual policies, might have stopped after 26 weeks hence a greater benefit is required. Also another reason will be the need for "long term care". If the insured has the claim in place for a reasonably long period, say in this case 26 weeks, the insured might need to require some sort of care provision to maintain independence, at least for a temporary period. The extra benefit is designed to cover this sort of care expenses. CI option (Buyback option) The last item is called a buy-back option. This is quite common with accelerated CI policies. The insured, at the policy inception, has an option to effect a death cover, normally a 1-year term cover to coincide with the CI definitions, after a CI claimed is lodged and paid out without further medical underwriting. The sum insured of the death cover can be chosen at the start or at the time of lodging the CI claim. If the choice was at the time of CI claim, some sort of financial underwriting may apply. Another way of deciding the death cover of sum insured might be in the way of buying an Excess Life option. Example ACI, Sum insured = $100,000 payable upon diagnosis of CI or death The insured can purchase extra cover for death, say extra $5,000. So, if the insured is diagnosed with a CI, the policy pays $100,000. If the insured dies during the policy, a death claim, the policy pays out $105,000. In the case of CI claim, the insured can exercise the buyback option, if purchase at the policy inception, of having the life cover for 12-months of $5,000 without any types of underwriting. The $5,000 is the Excess Life option. (FYI, policy can also effect an Excess CI option. Obviously in this case, death claim will have a lower sum payable than a CI claim. Also no buyback option for this Excess CI for obvious reason!!! (yes you are dead already, why you need to cover for CI!!!! LOL) Please feel free to correct me!!!! Good luck everyone!!! Me, personally need a miracle to happen to pass ST1.....lol.
Spot on - thanks, psychopath 0_o. The split deferred period is mentioned on page 14 of Chapt 1 of the 2009 Notes. The Core Reading gives the main reasons for having this as: (1) integrating with employer supplied benefits (such as sick pay schemes) and (2) reducing the premium/ cost. The option to reinstate life cover following a CI claim, is known as a “life buy-back option”. I have also heard of a “CI buy back option”, where you can reinstate the CI cover following a CI claim. The reinstated benefit might be at a lower level that the original. Usually there would be a minimum period between claims (say, one year), and the insurer might offer the reinstated benefit only for non-linked causes (i.e. not for the same disease type, although this might be difficult to check in practice). However, I think this is getting beyond the scope of the course! Best of luck to you all. Steve
