Transferable Ageing Provisions in Individual Health Insurance Contracts

We consider lifetime health insurance contracts in which ageing provisions are used to smooth the premium profile. The capital stock accumulated for each individual can be decomposed into two parts: a premium insurance and an annuitised life insurance, only the latter being transferable between insurers without triggering premium changes through risk segmentation. In a simulation based on German data, the transferable share declines in age and falls with an increasing age of entry into the contract. In spite of different benefit profiles, it is almost identical for women and men.