Chapter 12: General Business Environment 2

Question 1

2 Problems with regulation

Answer 1

• Restrict innovation

- Reduce benefits offered

Question 2

8 Common regulatory restrictions

Answer 2

• Restrict types of prods offered
• Restrictions on prem rates/charges for some types
• Restriction on rating factors used to calc prems
• Req’s wrt T&C’s of contracts offered
• Restrictions on channels through which can be sold OR req’ments on procedures to be followed OR info to be given as part of selling.
• Restrictions on ability to UW
• Indirect constraint on amount of business that may be written
• May limit investments.

Question 3

2 Common life insurance taxation approaches

Answer 3

• Tax on profits

- Tax on investment income

Question 4

Overall attractiveness of LI compared to other prods, depends on:

Answer 4

• Tax treatment of prems
• Taxation of LI’er funds during life of contract
• Taxation of eventual policy benfs