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Life Insurance Industry in US

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'''Key Findings'''
 
* The first level of segmentation in Life Insurance industry is on the basis of Age and Gender. Then they are further segmented on the basis of their health class and thereafter on the basis of their smoking habits.
* It is noteworthy that although the companies charge less premium for women than men, the increase in premium as the health class shifts is higher for women than men. This is an indication that the companies maintain a policy of high risk averseness for women as their health class goes down.
* Companies consider Best and Preferred health class customers in the same segment as the premium charged is same for both these classes.
* Transamerica charges low premium across all categories of health classes. So we can say that they are trying to tap the major chunk of the market by competitive pricing strategy.
* Pruco (Prudential) charges the lowest premium for nicotine patch users. Hence, it may be concluded that the company is aggressively trying to dominate this segment.
* AIG and Genworth charges least premium for Best and Preferred health class individuals falling under non-smoking category while they charge relatively higher premium for all the smoking sub-categories. This shows that these companies are targeting non-smoking category and are risk averse in nature.
 
 
==Objective==
* To perform sensitivity analysis and qualitatively quantitatively determine the variation in the monthly premium charged by the various life insurance companies.* To understand Life Insurance life insurance companies' behavior towards different segments, which are based on gender and health groups.
==Methodology==
We have divided our The analysis broadly into 3 was divided in three parts:
'''Overview of Life Insurance'''<br>
We first studied the basics A basic understanding of Life Insurance the life insurance industry was developed through secondary resources like websites on the internet, journals etc. as to understand This answered question like what is life insurance, why people should go for it, what various types of life insurance are available and how segmentation is done in the Life Insurance life insurance industry. We covered the The Term Life Insurance was analyzed in detaile detail because people over 60 years of age, which was our the focus area in for this study, generally opt for this insurancetype.<br>
'''Premium Calculation using online Premium Calculator'''<br>
We determined the The premium charged by the following life insurance companies were determined using online premium calculators:
:* [http://www.transamerica.com '''Transamerica Life Insurance companyCompany''']:* [http://www.aig.com '''American General Life company Company (AIGAG)''']:* [http://www.prudential.com/ '''Prudential Financial (Pruco life insurance companyLife Insurance Company)''']:* [http://www.genworth.com '''Genworth Financial (Genworth life insurance companyLife Insurance Company)''']
:* [http://www.ing-usa.com/ '''(ING) Reliastar Life Insurance company''']
We considered cases for The analysis was carried out both for men and women. The test cases were chosen with the following attributes:
:* For men height and weight assigned were 5’8’’ and 176 lbs respectively while for women height and weight assigned were 5’4’’ and 162 lbs respectively.
:* Date of Birth was taken as 3rd March, 1949 (more than 60 yrs), coverage amount as $250,000, the guaranteed term as 15 years and state as California both for male and female.
:* Premiums were calculated considering various health conditions as blood pressure, cholesterol, cardiac problems or cancer in the family, medical advice or treatment for major illness etc. <br>
''Source: http://intelliquote.com''
'''Ratings of Life Insurance the life insurance companies considered'''
'''Sensitivity Analysis'''<br>
Finally we analyzed The sensetivity analysis was used to understand the companies' response to different health conditions on the basis of the variation in the premium amount. From To enable this we also determined , the key health parameters which were also determined since they have a major impact on the premium charged.
==Assumptions==
* Height and weight for both men and women considered are test cases were obtained from the median height and weight prevailing in USA.
* Coverage amount was based on the median annual household income of USA taken as $50,000 and Term duration assumed to be 15 years.
''Source: http://en.wikipedia.org/wiki/Life_insurance''
===Why should people go for Life Insurance Policylife insurance===
* To make sure their family will be well taken care of if they die.
* To minimize tax burden and to ensure whatever they have earned goes to their heirs as since it is a tax free way to transfer their wealth.
* The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse financial consequences caused by the death of the Life Assured.
* Some insurance policies like Universal life insurance, whole life insurance and some term life insurance can be settled for cash value, the value that can be borrowed against or cashed in when the owner needs money.
===Types of Life Insurance===
Broadly Life Insurance , life insurance is divided into Temporary Life Insurance classified as temporary life insurance and Permanent Life Insurancepermanent life insurance. These can be further sub -classified. Various life insurance policies prevailing in United States are:
[[Image:types.jpg|thumb|center|600px|[http://www.metlife.com/individual/insurance/life-insurance/index.html#overview Source: metlife.com]]]
'''Benefits of term life insuranceTerm Life Insurance:'''
[[Image:benefits.jpg|thumb|center|500px|[http://www.genworth.com/content/products/lifeinsurance/term_life_insurance.html source: genworth.com]]]
===Segmentation in Life Insurancethe life insurance industry===Segmentation in Life Insurance the life insurance industry is done on the basis of:
Companies call refer to these segments as 'rating classes'. Different companies give different weights to different diseases and they have their own health check-list while developing these rating classes. All the people in a rating class do would not have the same life span but they have a fairly predictable life expectancy. This gives companies a basis to determine the premiumspremium amount.
==Sensitivity Analysis==
Each of these the health classes stated above has been further categorized on the basis of smoking habits of an individual as follows:.
===Premium charged by different insurance companies for “Non-Smokers” for in different health classes=== 
===Premium charged by different insurance companies for “Smokers – having less than 1 pack a day” in different health classes=== 
===<span style="color:#C41E3A">Like this report?</span>===<p align="center"> '''This is only a sample report with brief analysis''' <br>'''Dolcera can provide a comprehensive report customized to your needs'''</p>{|border="2" cellspacing="0" cellpadding="4" align="center" "|style="background:lightgrey" align = "center" colspan = "3"|'''[mailto:info@dolcera.com <span style="color:#0047AB">Buy the customized report from Dolcera</span>]''' |-| align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services Patent Analytics Services]|align = "center"| [http://www.dolcera.com/website_prod/services/business-research-services Market Research Services]|align = "center"| [http://www.dolcera.com/website_prod/tools/patent-dashboard Purchase Patent Dashboard]|-|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/patent-search/patent-landscapes Patent Landscape Services]|align = "center"| [http://www.dolcera.com/website_prod/research-processes Dolcera Processes]|align = "center"| [http://www.dolcera.com/website_prod/industries Industry Focus]|-|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/patent-search/patent-landscapes Patent Search Services]|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/alerts-and-updates Patent Alerting Services]|align = "center"| [http://www.dolcera.com/website_prod/tools Dolcera Tools]|-|}<br>===Premium charged by different insurance companies for “Smokers – more than 1 pack a day” in different health classes=== 
* Transamerica charges the least premium in all health classes except for the Standard Plus health class in which Prudential charges the least and in Standard health class in which AIG charges the least for women.
* ING seem to be very risk averse in this category for men as the premium charges for all health classes is among the highest at $413 (except for the Standard Class in which Prudential charges a monthly premium of $414 ).
* For women , different companies charge the highest premium chargers vary as followsfor different health classes:
* In this category too, maximum difference between the premium charged for men is 49% while that for women is as high as 77%.<br>
 ===Premium charged by different insurance companies for “Nicotine patch users” in different health classes===
==Company Analysis==
* The graphs presented below depict the premium charges of the respective insurance company for different health classes and sub-categories based on smoking habits.* It is noteworthy that although the companies charges less charge lesser premium for women than for men, but the increase in premium as the health class shifts, is higher for women than men. This is an indicative indicates that the companies maintain a policy of risk averseness for women as their health class goes down. <br> 
===Pruco Life Insurance Co. (Prudential)===
* Although Prudential charges higher premium for other categories, the their charges are the least for nicotine patch users.* The premium charges charged for nicotine users are is only '''29% higher for men''' and '''35% higher for women''' than the that for non-smokers in the Best and Preferred health classclasses.
However, premium the variation among in premium charged for smokers are is as follows:
* '''''For Standard Plus and Standard health class, the premium charges premiums charged for Nonnon-smokers and Nicotine nicotine patch users are the same. This indicates that the company may be treating these two segments as one or at par with each other.'''''* From the graph we find that as the health class of the Nonnon-smoker moves from Best/Preferred health class to Standard, the premium charged increases by 29% for men and 35% for women in Standard Plus , and by 62% for men and 75% for women in Standard health class. This shows that the '''''sensitivity of the company increases with the decrease deterioration in health condition and they are more sensitive to the Standard health segment'''''.* One interesting thing to note is that the company charges the same premium for both men and women who smoke for the health classes – Best, Preferred and Standard Plus. However the premium increases by 22% (< 1 pack of cigarette) and 25% (> 1 pack of cigarette) for men , while for women it increases by 51% and 30%respectively.
* '''''The highest rate differential is found in the Best and Preferred segments where the average rates between Non-smokers and Smokers (excluding nicotine patch users) differ by 181%'''''.<br>
 ===Reliastar Life Insurance company Company (ING)===
* '''''The highest rate differential is found in the Best and Preferred segments where the average rates between Nonnon-smokers and Smokers smokers differ by as much as 209%'''''.<br> 
===Trnasamerica Transamerica Life Insurance Co.===
* '''The highest rate differential is found in the Standard Plus segment where the average rates between Nonnon-smokers and Smokers smokers differ by as much as 183%'''.<br>
===American General Life company Company (AIG)===
'''''The highest rate differential is found in the Best and Preferred segments where the average rates between Nonnon-smokers and Smokers smokers differ by as much as 203%'''''.<br>
 ===Genworth Life Insurance company Company (Genworth Financial)===
* '''''The highest rate differential is found in the Best and Preferred segments where the average rates between Nonthe non-smokers and Smokers smokers differ by as much as 229%'''''.<br>
===Average variation of premium for Nonnon-Smokers smokers across Health Classes health classes compared to premium charged in for the Best Health Class===
[[Image:NS combinednew.jpg|center|600px]]
===Average variation of premium for smokers across health classes compared to premium charged for the Health Class===
===Average variation of premium for Smokers across Health Classes compared to premium charged in Best Health Class===
[[Image:new2.jpg|center|600px]]
[[Image:S combined* In AIG, monthly premium for men who smoke more than 1 pack of cigarettes a day remains constant at $413 in all health classes.jpg|center|600px]]* In AIG, monthly premium for women who smoke more than 1 pack of cigarettes a day in the Best health class is $219 which increases by 34% to $294 for all other health classes.<br>
==Points to note==
 
* It is noteworthy that although the companies charge lesser premium for women than for men, the increase in premium as the health class shifts is higher for women than men. This is an indication that the companies maintain a policy of high risk averseness for women as their health class goes down.
* Companies consider Best and Preferred health class customers in the same segment as the premium charged is same for both these classes.
* Transamerica charges low premium across all categories of health classes. So we can say that they are trying to tap the major chunk of the market by competitive pricing strategy.
* Pruco (Prudential) charges the lowest premium for nicotine patch users. Hence, it may be concluded that the company is aggressively trying to dominate this segment.
* AIG and Genworth charges least premium for Best and Preferred health class individuals falling under non-smoking category while they charge relatively higher premium for all the smoking sub-categories. This shows that these companies are targeting non-smoking category and are risk averse in nature.
* In AIG, monthly premium for men who smoke more than 1 pack of cigarettes a day remains constant at $413 in all health classes.
* In AIG, monthly premium for women who smoke more than 1 pack of cigarettes a day in Best health class is $219 which increases by 34% to $294 for all other health classes.<br>
==Constraints==
* This study incorporates only five insurance companies because of the constraint of data availability.
* The study is limited only to the state of California; however, we it was observed that the premium charges in other states are were similar to that of those in California. ==<span style="color:#C41E3A">Like this report?</span>==<p align="center"> '''This is only a sample report with brief analysis''' <br>'''Dolcera can provide a comprehensive report customized to your needs'''</p>{|border="2" cellspacing="0" cellpadding="4" align="center" "|style="background:lightgrey" align = "center" colspan = "3"|'''[mailto:info@dolcera.com <span style="color:#0047AB">Buy the customized report from Dolcera</span>]''' |-| align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services Patent Analytics Services]|align = "center"| [http://www.dolcera.com/website_prod/services/business-research-services Market Research Services]|align = "center"| [http://www.dolcera.com/website_prod/tools/patent-dashboard Purchase Patent Dashboard]|-|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/patent-search/patent-landscapes Patent Landscape Services]|align = "center"| [http://www.dolcera.com/website_prod/research-processes Dolcera Processes]|align = "center"| [http://www.dolcera.com/website_prod/industries Industry Focus]|-|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/patent-search/patent-landscapes Patent Search Services]|align = "center"| [http://www.dolcera.com/website_prod/services/ip-patent-analytics-services/alerts-and-updates Patent Alerting Services]|align = "center"| [http://www.dolcera.com/website_prod/tools Dolcera Tools]|-|}<br>
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