On group critical illness the premium calculation method depends on the number of members at quotati...
On group critical illness the premium calculation method depends on the number of members at quotation or review date.
Plans with between five and 19 members will be offered a single premium, also known as a current cost plan. Premiums will be calculated for each member on current premium rates. This means premiums are recalculated each year and are dependent upon the age of the members at the beginning of each plan year. Premium rates increase with age.
If the number of lives in an existing plan increases to 20 or more, the cost will be calculated on the simplified administration basis, outlined below.
Plans with 20 members or more will usually be offered a unit rated plan. A unit rate, with the cost expressed as a rate per £1,000 of benefit being insured, is calculated based upon the total benefits for members at the commencement date or plan anniversary.
The premium charged for the insured benefit is based on the unit rate. If the number of lives in an existing plan falls below 20, the costing basis will revert to single premium costing. Unit rates and the rate tables underlying single premium costed plans are usually guaranteed for two years. New rates may apply at the end of the two-year period.
Premium loadings may be imposed in respect of benefits for members who have been subject to medical evidence because their cover exceeds the non-medical limit, or who are joining outside the normal eligibility conditions. Any loading will reflect their medical condition or unusually hazardous pursuits they may undertake. Such loadings apply immediately but become payable at the next plan renewal.
