Whatever is being discussed here relates to life insurance alone. This discussion is not applicable to other types of Insurances. It may kindly be born in mind.
THE ACTUARIAL TABLES:
What we call actuarial tables are not life tables, but death tables. They are carefully prepared based on the actual mortality data. In other words, we can, with almost certainty predict the deaths for any given 1000 lives of any age. There could be objective risk, but that is marginal. During advanced years say after 70 years of age, the predictions of a person’s death becomes a certainty. All we need is an intelligent and sharp mind to predict.
MEDICAL EXAMINATIONS:
When a life Insurer offers a policy to a buyer, the buyer is thoroughly examined medically. We have the blood samples to conduct tests. The insurer knows the vital health details of the insured better than the insured himself! With the blood sample, while using the advanced technology the insurer can know every health aspect of the insured – past and future. This cutting-edge technology can manipulate life and death. In life insurance industry this technology and its implications are unimaginable.
CANCELLATION CLAUSE:
In a life insurance contract, the insurer has as much right to cancel the policy as the insured. There are many reasons which help the insurer to cancel the life insurance cover. I can refer to a few – fraud, suppression of material facts etc. What is a material fact is a matter of interpretation than definition. Anything and everything can be construed as material fact!
PREVENTING A CLAIM:
We have all data. What will happen if we allow a young policy holder to pay the yearly premium for 40 or 50 years for an endowment/whole life policy, and based on our data cancel the cover for the policy holder when it is certain to become a claim? I am not discussing what will happen to the policy holder. All I can say that through this cutting-edge technology spawns a life insurance enterprise of unimaginable greed which manipulates life and death as the ultimate profit-making tools.
HIGH RETURNS:
For an insurer to attract policy holders all it has to do is to offer higher returns / bonuses. It is, after all, ‘Use and File’. To make the agents & brokers procure more business, the insurer can offer higher remuneration and as we know remuneration can be negotiated. Having received the premiums for a long period, while using the predictions of the death table cancel the cover for high valued policies. Make use of the cancellation clause. The insurer will follow the law in letter, making the insurance Regulator and Court’s impotent. These cancellations will save huge payouts – they could be related to death/disability. These cancellations can result in high profits.
ASSUMPTION OF RISK:
In the times of ‘claims settlement ratio’ playing a great role, timely cancellations will boost the settlement ratios to 100%. The cancellation ratios are never examined either by the regulator or by the public. This results in greater profits, greater bonuses, and greater remuneration to the intermediaries and greater salaries to loyal employees. What is being suggested may sound immoral, but certainly not illegal. I wish to look for such an insurer who wants to profit from this ‘assumption of risk’.
About the Author
Dr. K. Raja Gopal Reddy is a seasoned internationally qualified Insurance professional.
What you are reading here, may not answer all the questions we have, but has the absolute power of asking unsettling questions which increase the interest in the strange world, and show the contradictory wonders lying just below the surface of the commonest things of life. Look at this disturbing but beautiful thought of Friedrich Nietzsche “God is dead. God remains dead. And we have killed him”.
Dr. Reddy can be reached at: raja66gopal@gmail.com