Chapter 1 - Market Factors And Trends In Financial Protection Planning Flashcards
What is the aggregate demand for life assurance primarily driven by
Affordability
as well as movements in the housing market, income per head and various other economic factors, and whether they have dependents
The main reason that employees have a greater need for pension planning now compared to the mid twentieth century is because , in those days…
Most employees became members of large final salary schemes and tended to stay in the same job for most their working lives
In the last 60 years, there have been a rethink insurance pricing due to the most part
Improving mortality
Insurance is most effective for event or risks that are
Low frequency and high impact 
The introduction of non-smoker rates by most providers has led to
Anti-selection against companies who retain the aggregate policy stance
If there is a 30% reduction in premium cost, what would be the expected increase in the level of sums assured that people would be prepared to buy?
15%
According to US research by (Pauly, 2003).The price elasticities of demand for mortality coverage is -0.5. Which implies that for every 10% reduction in premium costs, there is a 5% increase in the level of some assured the people of a pair to buy .
Today’s multichannel distribution of insurance products was preceded by industrial sales forces. What was the major reason for them dying out?
Too expensive
The pricing of critical illness cover is more complex than that for term insurance, there are a range of reasons for this such as
Product type is vary, conditions vary, definitions vary
The two main events that have a high potential impact on individuals and their families, and which should be the focus for insurance based solutions are death, and
Disability
What market distortions can occur if preferred life policies are developed
If a series of different preferred life regimes emerge, it can become difficult to get a base indication of the likely cost of cover, and very hard to choose the best deal in terms of quality of the product on offer
What two factors are the most common way to categorise different types of risk?
Likelihood and impact
What is the most effective way of financing the payments of benefits to the relatively few people who are affected by certain kinds of risk?
Pooling the risk through insurance
what are the individual and aggregate drivers for the demand of life insurance
Individually is driven by age, income and life stage of the person I think of it as the individual
Aggregate level is driven by affordability, the housing market and income per capita think of this as the market factors
How has technology affected the purchase of protection?
It has become much easier to buy protection without advice, leading to a more standardised, and simplify the process, which tends to increase the likelihood of quick completion but is not without its problems
What does the life insurance protection gap signify
The shortfall in the amount of protection necessary to maintain the current living standards of dependants
How can insurers affect public attitudes to taking out protection insurance?
Through the advertising and marketing public information campaigns and day-to-day dealings with the customers
What is preferred life assurance?
A product which segments lives according to lifestyle or health characteristics
Does preferred life occur in any context in the UK market?
Not explicitly, but it is emerging in advertently as underwriting standards become more stringent, such as with vitality life
How could online protection lead to the commoditisation of term life insurance?
Because of the exclusive focus on price, rather than the benefits provided
Life-insurance, technically mitigates personal financial risk by doing what?
Transferring the risk for an individual to a group of individuals
Rapidly improving trends in mortality, meaning of the biggest concern facing most people is what
Living too long
Main drivers of life assurance policies
Affordability, housing market, economic factors, family situation (number of dependents), health & morbidity (people living longer)
What is a preferred life policy
Higher premium discounts for being able to meet certain criteria I.E; healthy lifestyle habits. These are increasing with wider availability through technology
What is the protection gap
The shortfall in the amount of cover necessary to maintain current standard of living of dependents
