3. Life Insurance Product Information Flashcards
After a full valuation, the actuary who has established a surplus, could declare a profit that gets paid to …
policyholder’s that have with-profit policies
As the performance of portfolios started indicating better returns than policyowners were getting from their (1)…, demand arose for a share in these profits. The result hereof was the development of (2)…
- with-profit policies
2. investment linked policies
Each insurance company needs to do a … as its required as a ruling in the Insurance Act.
valuation
Future mortality rates are influenced by HIV Aids because the:
- The rapid (1)… of infected numbers.
- The long period of (2)… (7 to 10 years).
- The absence of (3)… during the first part of the incubation.
- The (4)… of treatment.
- The (5)… attached to the disease
(1) growth
(2) incubation
(3) any obvious signs of HIV
(4) high cost
(5) social stigma
An … will occur when the actual expenses incurred in running the business are less than the expenses assumed.
expenses surplus
An … is the amount by which the interest actually earned on the assets of the insurer is greater than the interest earnings assumed.
investment earnings surplus
A … arises if the claims experience is less than that assumed.
mortality surplus
A … happens when policies are surrendered and the reserve (liability) no longer needs to be held.
surrender surplus
List five types of expenses the underwriter needs to consider when determining the premium:
- Paying doctors to do medicals
- New business acquisition expenses
- Underwriters
- Claims assessors
- Policy servicing clerks
More conservative investors with investment linked policies would utilize the (1)… whereas the more aggressive investors would (2)… their minimum guaranteed return for the higher potential return at maturity.
(1) minimum guaranteed return
(2) forfeit
Mortality rates are used in calculations for four different things?
- premium rates
- rates of annuities
- reserve values
- contribution rates for pension funds
Name 6 life insurance policies:
- Term insurance
- Decreasing term insurance
- Whole life insurance
- Reinforced whole life insurance
- Pure endowment
- Endowment insurance
The balance of such surplus is then held in the insurer’s …
reserve funds
The growth of investment linked policies was often linked to a …
minimum growth factor
The main reasons for carrying out a valuation is to test the (1)… of a life office - especially if there is any doubt about its financial standing. This is a test of the insurer’s (2)…
(1) solvency
(2) financial strength
The probabilities used to work out the mortality tables are based on average people therefore it means these are people who are …
not overweight, or not too healthy or too sick
The results of the valuation (valuation report) must be sent to the …
Registrar of Insurance
The second reason for carrying out a valuation is to determine the amount of … available.
surplus funds
The two valuation methods are:
- prospective method
2. retrospective method
The … owner may “unbundle” the component parts of the product (i.e. the allocation amounts and decreasing term insurance).
universal life policy
Universal Life products usually do not maintain a … in the decreasing term insurance component of the product.
fixed rate of decrease
Universal Life contracts usually also maintain a separate … in which a record is kept of the expenditures and killed in terms of the contract as it progresses overtime.
“memorandum-type” account
Under … the reserve value of a policy is calculated as the excess of the present value of future claims over the present value of future net premiums.
prospective method of valuation
Under … the reserve is the amount by which the premiums paid to the date of calculation, accumulated at the valuation rate of interest exceed the accumulated value of claims.
the retrospective method of valuations
… is a benefit that will pay an amount in the event of the accidental death or loss of hand, eye or foot of the insured.
Accidental benefits
… is a benefit that ensures that the sum insured (the death claim value) under the basic policy to which it is attached is “accelerated” and paid in a single lump sum to the beneficiary (usually the policyowner) in the event of the disability of the life insured rather than upon his death.
Capital Disability Benefits
… is when the insurance is only for a specific term but also decreasing over that term. These insurances are mainly used for mortgages that decrease over time.
Decreasing term insurance
… is benefit that provide a stated regular income during the period of a predefined form of disability.
Disability Income Benefits
… are benefits that provide for the payment of a lump sum in the event of an insured suffering a disabling health event as defined in the policy.
Dread Disease Benefits
… was issued for a fixed period as a combination of a term insurance and pure endowment.
Endowment insurance
… is a benefit that allows the insured to exercise an option at given intervals (usually every third policy anniversary) to increase the sum insured without having to provide evidence of continued insurability (i.e. Health, occupation or recreation).
Guaranteed Insurability benefits
… are benefits that provide for the regular payment or release of a portion of the total sum insured where long term treatment or care is required to take place in a registered nursing home or equivalent.
Long Term Care (LTC) or Frail Care Benefits
… are benefits that provide stated lump sum payments, irrespective of the actual cost of specifically defined medical treatments that may become necessary such as cardiovascular surgery, hip replacements and cornea grafts.
Major Medical Expense (MME)
… is about a person’s chances of being disabled.
Morbidity
… refers to a person’s death or chances of dying.
Mortality
… is a statistical factor used to determine the likelihood of something happening. Actuaries use these factors to build mortality tables to help them determine at what age an average person is likely to die.
Probabilities
… are issued for a fixed period to provide a stipulated sum (with or without profits) on a certain date in the future (the maturity date) if the policyholder is still living on that date.
Pure endowments
… is basically decreasing term insurance but supplemented with a bonus which keeps a level amount of cover. The bonus offsets the decrease in cover because it is decreasing term cover.
Reinforced whole life insurance
… is the simplest form of insurance and is only payable if death occurred in that term.
Term insurance
… is a benefit that provides for the acceleration of the payment of the death claim benefit in the event of an insured being diagnosed as suffering from a terminal illness.
Terminal illness benefits
… is a benefit that provides when a person is both the insured and the payer of premiums and where that person becomes disabled in terms of the given definition of disability, the insurer will waive all future premiums as an immediate benefit and then maintain the policy in force until normal expiry or maturity, with no further premiums payable by the policyholder.
Waiver of Premium (WOP) Disability Benefits
… covers the insured life not only for a given period but for the whole length of his life.
Whole life insurance
