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Dread Disease Cover—An Actuarial Perspective

Published online by Cambridge University Press:  11 August 2014

A. C. Dash  and
D. L. Grimshaw
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Extract

A Dread Disease contract pays out a lump sum on the diagnosis of any of a number of specified diseases. Those most commonly covered are heart attack, coronary artery disease requiring surgery, cancer and stroke. The benefit can take either of two main forms—it may provide an acceleration of all or part of any death benefit or it may be an additional benefit. It can be sold in conjunction with many conventional products or as a stand-alone policy.

Dread Disease contracts were originally developed in South Africa in the early 1980's, although cancer riders had previously been sold in the U.S.A., Japan and Israel. To some extent the marketing of these contracts was insensitive and preyed on people's fears in a distasteful way. This may explain some initial reluctance amongst U.K. insurers to enter this market; however with marketing literature now emphasizing more positive aspects, this appears to have been overcome.

Type
Research Article
Information
Journal of the Staple Inn Actuarial Society , Volume 33 , Issue 1 , 1993 , pp. 149 - 193
Copyright
Copyright © Staple Inn Actuarial Society 1993

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References

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