Ch 17: Actuarial Funding

Question 1

Conditions for actuarial funding

Answer 1

Higher FMC on all units
Actuarial funding must be permitted under the appropriate legislation
Unit fund benefits must be contingent on death and on survival for minimum period of years
There must be surrender penalty, defined as % of bid-value of units
There must be a unit-related charge on the unit fund
Charges that are not used for actuarially funding (including a portion of the unit charge and/or policy fees) should be sufficient to cover the renewal expenses on the contract.
Non-unit reserve must be sufficient to cover the excess of death benefit over the unit fund available