

Publisher: Cambridge University Press
E-ISSN: 1783-1350|47|3|803-836
ISSN: 0515-0361
Source: ASTIN Bulletin, Vol.47, Iss.3, 2017-06, pp. : 803-836
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Abstract
This paper considers the problem of a lifelong health insurance cover where medical inflation is not sufficiently incorporated in the level premium determined at policy issue. We focus on the setting where changes in health benefits, driven by medical inflation, are accounted for by an appropriate update or indexation of the level premium, the policy value, or both premium and policy value, during the term of the contract. Such an updating mechanism is necessary to restore the actuarial equivalence between future health benefits and surrender values on the one hand, and available policy values and future premiums on the other hand. We extend existing literature (Vercruysse
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