Prolonged Illness Insurance

In this paper there is described an approach to the coverage for the catastrophic aspect of a serious and prolonged illness as well as the methods used in arriving at a set of rates to be charged therefore. This type of insurance is relatively new and has been initiated by several large Life Insurance companies and Blue Cross-Blue Shield organizations. A paper on the subject by Alan Thaler appeared in the Transactions of the Society of Actuaries. Mr. Thaler describes the statistics developed from an internal questionnaire of a certain group of the employees of the Prudential Insurance Company and the conclusions as to the rates based on the results of such data.