- Premium indexing in lifelong health insurance
- Far East Journal of Mathematical Sciences
- Volume | Issue number
- Special Volume | 4
- Pages (from-to)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
For lifelong health insurance covers, medical inflation not incorporated in the level premiums determined at policy issue requires an appropriate increase of these premiums and/or the corresponding reserves during the term of the contract. In this paper, we investigate appropriate premium indexing mechanisms, based on a given medical inflation index. First, we consider a general relation between benefit, premium and reserve increases, which can be used on a yearly basis to restore the actuarial equivalence that is broken due to observed medical inflation over the past year. Next, we consider an individual premium indexing mechanism, depending on the age at policy issue, which makes the relative premium increases above the observed medical inflation more stable over time. Finally, we consider an aggregate premium indexing mechanism for a portfolio of new entrants, where the relative premium increase above the observed inflation is independent of age-at-entry, introducing intergenerational solidarity.
If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library, or send a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible.