Critical Illness Insurance Information

The modal factor- The modal factor on Monthly Bank Draft premiums ranges from 8.66% to 9% which means that you will pay anywhere from an extra 3.92% to 8%. The carriers impose these factors because they do not have the use of the money for the entire year, and because they find that, depending on the mode, there is a higher chance that the policy will lapse. This is discussed in greater detail in Question 66.

Policy Fees- the annual policy fee typically ranges from $45 to $90. The policy fees are added on top of the rate per thousand. The major impact is to the seller of the policy as policy fees are usually non-commissionable. That is, the carrier keeps the policy fee and the agent’s commission is not paid on the fee.

Premium Level Number of Years- the premium can be for 1, 5, 10, 15, 20, and 25 or 30 years; of these options, how many years are guaranteed?

Rating Bands- Bands are classes of amount of coverage where the higher the amount of coverage, the lower the cost per thousand dollars of coverage.

Renewability - the policy is guaranteed to be renewable for a certain number of years (or to a specified age), upon timely payment of the premiums, regardless of any changes in health or finances.

Riders- what optional benefits are available; for example: Disability Waiver, Return of Premium Rider, Family Accidental Death Benefit, Guaranteed Insurability Option, Child Rider and Terminal Illness Rider? Have these been shown on the illustration? These should be considered separately. Keep in mind that many of these riders are more profitable for the insurance carrier, than for the policy-owner.

Risk Class: Companies differentiate not only between smoker and non-smokers. Each of these classes is further divided into four or five classes. Recently, available classes were: Best Available, Preferred Better Non-Smoker, Preferred Non-Smoker, Standard Better Non-Smoker, Standard Non-Smoker, Tobacco(NonCigarette), Preferred Smoker, Standard Better Smoker and Standard Smoker. What does the designated rate class mean? Are there better rate categories?