Apply a Payment Frequency Discount

This example shows an adjustment rule that reduces the base premium depending on how far ahead in time the policyholder pays his or her premium. The policyholder has a discrete number of choices (pay 1 month, 3 months, 6 months or 12 months ahead). The further ahead the policyholder pays, the higher the discount becomes.

In this example, set up a schedule definition that includes additional logic to evaluate the chosen payment frequency. The logic in this example is rather simple, but this feature can also be used for more complex, custom evaluations for adjustment rules.

Step 1 - Setup Time Period

The first step is to set up the time period that governs the 'condition' columns on the adjustment rule. In this example there is only the condition on the payment frequency.

Table 1. Step 1 - Setup Time Period
Time Period

Name

Start

End

Calendar year 2020

2020-01-01

2020-12-31

More time periods can be set up later, for example to specify that from calendar year 2016 going forward a new frequency choice - pay 2 months ahead - becomes available.

Step 2 - Setup Dynamic Logic Condition

The second step is to set up the logic that compares the policyholder’s payment frequency to the values in the adjustment rule.

Table 2. Step 2 - Setup Dynamic Logic Condition
Dynamic Logic Condition

Code

Logic

FREQ

return policy.collectionSettingList.asOf(lookUpDate).frequency = adjustmentRule.frequency

Step 3 - Setup a Schedule Definition

The next step is to set up a schedule definition. The schedule definition controls which columns the adjustment rule shows in addition to the columns for the value and value type. Add a single column (dimension) for the payment frequency. The dimension name has to be the same as the name used in the dynamic logic condition, that is adjustmentRule.frequency.

Table 3. Step 3 - Setup a Schedule Definition
Schedule Definition

Code

Description

Type

Premium Scope

Line/Rule Evaluation Condition

DC_FQY

Payment Frequency

Adjustment

Total

FREQ
Table 4. Step 3 - Setup a Schedule Dimensions
Schedule Dimensions

Header

Name

Type

Parameter

Dyn Field

Usage

Frequency (months)

frequency

Generic

-

-

Value

Step 4 - Setup Adjustment Rules

Now the schedule definition has been created, a new adjustment type has become available in the adjustment page.

The next step is to set up adjustment rules for this new adjustment type. Because the adjustment is a discount the percentage has a negative sign.

Table 5. Step 4 - Setup Adjustment Rules
Adjustment Type

Code

Description

DC_FQY

Payment Frequency
Table 6. Step 4 - Setup Adjustment Rules with New Adjustment Type
Adjustment Rules

Frequency (months)

Adjustment

1

0.0 %

3

-0.5 %

6

-1.0 %

12

-1.5 %

Step 5 - Assign the Adjustment

The adjustment rule configuration is now complete, but it won’t be applied in the premium calculation until it is attached to an enrollment product or, in case of a group adjustment, group account product, group account or group client . To complete the example, set up an enrollment product and link it to the adjustment type that we’ve created.

Table 7. Step 5 - Assign the Adjustment
Enrollment Product

Code

Assigned Schedule Definition

BASIC PLAN

DC_FQY

When assigning multiple adjustments, specify the sequence in which the different adjsutments are calculated. This is especially relevant for adjustments that are based on a percentage. More information on how adjustment rules are evaluated during premium calculation can be found in Calculate Premium.