237 /342
臺大管理論叢
第
27
卷第
2S
期
237
The Valuation of Lifetime Cancer Insurance Policies
Summary
Cancer is one of the leading causes of death in many countries. With the help of
preventative healthcare and improvements in treatment, the mortality rate of non-cancer
diseases such as cardiovascular diseases, which are on the list of leading causes of death,
have significantly reduced over the past years. Therefore, cancer has, or will soon, become
the leading cause of death in many countries.
Since 1982, cancer has been the disease that causes the most deaths in Taiwan, and
morbidity from cancer has increased to over 60% in the last decade. It is generally known
that cancer risk increases with age. As the elderly are most vulnerable to cancer, and the aged
population continues to increase dramatically in many countries, cancer remains a very
important health issue globally. Although health services in all countries try to provide
adequate financial resources to support their healthcare systems, the budgets for cancer
health services are still inadequate in most countries. Even among patients with
comprehensive health insurance policies in developed countries, the financial burden of
cancer treatment can be substantial. Cancer insurance policies are designed as a
supplementary health insurance to reduce the financial burden for patients with the disease.
Traditionally, people use this type of insurance as a risk management approach, mainly to
hedge against the risk of morbidity of cancer. This type of insurance policy is also marketed
as being for risk management purposes in Taiwan, and claims to considerably reduce the
financial impact for patients with cancer during their treatment. However, the increasing
cancer morbidity has dramatically changed the insurance premium over the last few decades,
and most insurance companies have significantly increased the premiums for cancer
insurance policies. Therefore, this article aims to address the variation in lifetime cancer
insurance policies and provide an analytical solution for a fair premium.
A universal coverage healthcare system sponsored by the government was introduced to
Taiwan in 1995; a system characterized by easy accessibility and low cost. The system also
generates a national health insurance databank, the National Health Insurance Research
Database (NHIRD), for planning and research purposes. Taiwan’s NHIRD is one of the
Hong-Chih Haung
, Professor, Department of Risk Management and Insurance, National Chengchi
University
Shang-Yin Yang
, Assistant Professor, Department of Finance, Tunghai University
Mng-Chi Wang
, Specialist, Product Development, Nan Shan Life Insurance