Flexible Varying Premium Option for Long Term Care Insurance and Critical Illness Insurance

Abstract

Flexible, varying long term care insurance programs are determined. Input variables such as issue age, targeted present value and year-to-year premium relationship are supplied, as are some members of a set of process variables. A non-supplied process variable is calculated based on the input variables and the supplied process variables. An insurance program based on the supplied variables and the calculated process variable is then determined, such that the premium schedule increases (or alternatively, decreases) over time to at least one leveling point, at which premiums become level.

Description

PRIORITY CLAIM[0001]This application is a continuation of commonly assigned, co-pending U.S. patent application Ser. No. 12 / 346,602, filed Dec. 30, 2008, entitled “Flexible Varying Premium Option for Combination Products Including Long Term Care Insurance,” the entirety of which is hereby incorporated by reference (the “FIPO for Combination Products Application”). The FIPO for Combination Products application is a continuation in part of commonly assigned, co-pending U.S. patent application Ser. No. 11 / 291,554, filed Nov. 30, 2005, entitled “Flexible Varying Premium Option for Long Term Care Insurance,” the entirety of which is hereby incorporated by reference (the “FIPO for LTCI Application”). The FIPO for LTCI Application claims the benefit under 35 U.S.C. §119(e) of U.S. Provisional Patent Application Ser. No. 60 / 665,211, filed Mar. 24, 2005, entitled “Long Term Care Insurance, A New Premium Paradigm: Increasing Premiums with Cap at Later Ages,” the entirety of which is incorpora...

AI Technical Summary

Benefits of technology

The patent describes a computer program that can calculate flexible, long-term care insurance programs for people. The program takes into account various factors like the person's age, the value of the care they need, and the expected increase or decrease in income. It then creates an insurance program that provides a gradual increase or decrease in premiums over time to match the person's needs. This program is designed to be beneficial for both the person and the insurance company. The program can also include additional features and provide customization options for different situations.

Problems solved by technology

The reality is that most insureds would be unable to afford this increasing cost.

Medicare provides limited coverage for long-term care expenses for people over age sixty-five.

However, a policy with adequate coverage is fairly expensive.

A delay in purchase will result in even higher premiums later.

This is due to the increase in premiums by issue age and the rising cost of care due to inflation.

As well, the health status of the purchaser might have worsened, resulting in a rejection of coverage by the insurer.

In later years when adequate coverage becomes critical, the premiums required can be prohibitively expensive.

However, the policy has no cash value.

Due to the low frequency of claims, few insurers have credible insured experience to determine the premiums accurately.

Insurers are subject to long-tailed risks in claim, mortality, policy lapse, investment and expense experience.

In general, insurers' experience has been unfavorable as evidenced by rate increases by a number of insurers on in-force policies as well as new business.

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