More cheap tricks! In COVER's April 2009 issue Nuts and Bolts highlighted two techniques insurers could use to reduce premiums. Anthony Burpitt now outlines two further techniques insurers use to reduce their premiums
Having already examined (1) cherry picking the healthiest lives and (2) using as precise an age definition as possible, two other premium reducing tricks commonly considered are: Removing optional extras Every optional extra or rider benefit adds to the price of a protection product. Reinsurers are often asked by insurers what the impact would be if some or all of these were removed. The answer varies enormously. Every insurer or product offers different optional extras. For those who do have very similar or ‘standard’ option lists there are many different maximum payout limits, dif...
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