Actuarial case explained
How is a medical expense shared between insured and insurer?
Purpose
Decision informed
Look at premium, deductible, coinsurance, cap, and sum insured together.
Benefits and cash flows
- 1Initial deductible borne by the insured.
- 2Coinsurance on remaining eligible expense.
- 3Insurer payment subject to the contractual limit.
Assumptions
| Assumption | Value / unit | Source and status |
|---|---|---|
| Morbidity | Age bands | Illustrative Illustrative laboratory rates |
| Hospital level | Relative factor | Illustrative Model assumption |
| Medical trend | Not modeled | Convention Explicit limitation |
Method
Cost sharing
The contractual cost-sharing structure is calculated separately from the illustrative tariff.
Pago aseguradora = min(SA, (Gasto − Deducible) × (1 − coaseguro))Results and interpretation
An age-based premium is not a renewal projection: the engine includes neither experience nor medical trend.
Applied example
Laura's renewal
Laura, age 45, renews a major medical plan with a $5,000,000 sum assured, a $40,000 deductible, and 10% coinsurance. The premium increases every year even without claims.
Adjust the parameters to observe how the result changes.
Annual premium
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Actuarial interpretation
The illustrative tariff increases with age through morbidity bands. It is not a renewal projection: this engine includes neither experience data, medical inflation, nor trend, so those assumptions must be modeled and validated separately.
Validation and limits
What is checked
- —Deductible, coinsurance, and sum-insured boundaries.
- —Accident indemnity cross-checks.
What it does not prove
- —There is no frequency-severity model fed by experience data.
- —The loss ratio comes out of the premium itself, so it is circular and illustrative only.