Compare Critical Illness Cover

Basically, what you are looking for is whether or not the company is using numbers and facts that are realistic, while also considering the company’s history.

Basis for dividends, interest rates and non-guaranteed factors:

Are any of the underlying experience factors significantly different from current experience? If so, examine which ones and how they differ.

If the policy is participating, is there a substantial probability that the current illustrative dividend scale cannot be continued, if current experience holds?

If the policy is nonparticipating, is there a substantial probability that current illustrations cannot be supported by currently anticipated experience?

• Is the policy of the traditional participating variety, or does it contain non-guaranteed pricing elements using a means other than dividends?
• If the policy is not participating, what are the non-guaranteed elements involved? These are usually non-guaranteed interest crediting rates, mortality charges, loadings, etc.?
• If the policy is participating, does the company state that the contribution principle (i.e., aggregate divisible surplus should be distributed in the same proportion as the policies are considered to have contributed to the company’s divisible surplus) is being followed in the illustrative dividend scale? If it is not, how does ii differ?
• If the policy is nonparticipating, what is the company’s practice with respect to determination and re-determination of non-guaranteed pricing elements, with particular reference to (a) the degree of discretion reserved by the company and (b) whether any of the elements are guaranteed to follow an outside index.

As seen, the mortality charge is the cost of pure life insurance protection, based on experience tables developed by actuaries and on actual mortality experience. It is the amount the company charges the policy owner periodically for the insurance element in the policy. Other expense charges include a fee for policy administration, company overhead and taxes.

Each company determines its own mortality charges based on these tables and other factors. Larger companies determine their own mortality charges based on these tables, their experience and other factors, while smaller companies rely on industry wide statistics.