Author: Clare Stone

When trying to model any product there are various elements that it can be helpful to have to hand.One such element is a sample model for the specific product that shows how to model some of the possible features under one or more use cases. Within Mo.net Model Development Studio you will find several of these lightweight samples to help accelerate your modelling projects. The Funeral Plan project has just been added to the samples for the next release and is one of the more fully featured examples. This was developed in partnership with Insight Life Solutions.

What in essence is a Funeral product ?

In general, a funeral policy is designed to be used to cover the costs associated with the funeral for the life that the policy covers by paying out a specific benefit amount. However, as well as a main member, the policy can be used to provide cover for several additional members including children. In order for a life to be permissible as an additional member they need to have a specified relationship to the main member and an insurable interest must exist between them and the main member.

What are the features covered by the Mo.net Funeral plan project ?

The funeral product covered comes in two varieties: Member only policy & Member and family policy. Under a member only policy the main premium only covers the main member and additional lives can be added as extended members for an additional cost. Each additional life is priced separately. Under a member and family policy there is a single premium to cover the main member, their spouse and a predefined number of children. Additional children can be added later for no additional cost provided the maximum number to be covered has not been reached. Additional members can be added in the same way as for the member only policy.

Many different types of benefits can be included:

• Main funeral benefit
• Memorial / unveiling benefit
• Cashback benefit
• Additional benefits such as grocery or airtime
• Personal accident

Some of these benefits have a waiting period associated with them whereby no payment will be made if the death occurs within the specified waiting period after the policy commencement or date at which the life was added to the policy. Waiting periods may differ for the different lives covered. The benefits can be level, increasing at a fixed rate, or increasing according to a premium rate table. Various premium patterns are allowed for with respect to timing of premium payments as well as amount of increase over time.

What calculations were developed in the Funeral plan project ?

The developed sample can be used for either pricing or reserving calculations.

When running the model for reserving calculations, the reserve required and the present value of cash-flows in respect of premiums, commission, claims, expenses, tax, reinsurance at the beginning of each month for the term of the projection are calculated. Reserves can be calculated on whichever reserving bases are required.

When running the model for pricing calculations, the premium is calculated allowing for a pre-defined profit margin.

How can using the Mo.net Funeral plan project help you ?

The sample model already contains the core functionality that you would require for modelling a funeral plan product in a real world environment. The flexible way that it has been built means that it can easily be extended and adjusted for any additional or differentiating features of your funeral plan product. This will enable you to get up and running immediately and hopefully have a finished bespoke project within a matter of weeks.