PREMIUMS CALCULATION OF TERMINAL ILLNESS INSURANCE

Abstract

One related type of critical illness insurance is Long Term Care (LTC) Insurance. This study discusses the calculation of LTC insurance premiums with an annuity as a rider benefit. The benefit is included the cost of insurance care when diagnosed with a critical illness with a terminal condition or death because of any reason. The types of critical illnesses used in this study are cancer, heart disease, stroke, and diabetes mellitus. The data used are in the form of Indonesia's 2019 mortality table, and data on the prevalence of critical illness patients with terminal illness conditions. The net annual premium value in this study was obtained through the results of the multiple-state model determination of the transition probabilities of 10 states. The transition probability of an insured candidate is obtained from the prevalence of critical illness patients and the prevalence of mortality. Based on the case study, the net annual premium that must be paid by an insured female aged 35 years in good health is IDR 1,002,199 for the protection period, and the payment period is 10 years. The cost of insurance premiums for the male insured is greater than for the female insured. The higher the interest rate used, the smaller the net single premium that must be paid. The younger the age when registering the policy, the smaller the premium must be paid. The longer the coverage period, the greater the premium that must be paid. This result is expected to be a recommendation for the prospective insured to adjust the suitable premium.