Chapter 24 - Pricing And Financing Strategies

Question 1

Cost vs price

Factors taken into account with premiums

Answer 1

Tax
Commission 
Cost of capital 
Contingency margins
Options and guarantees 
Provisioning bases
Experience rating
Investment income
Reinsurancr costs

Question 2

Cost vs price

Factors influencing price

Answer 2

Distribution channels
Level of competition
Approach taken to expense and profit loading
Captive market that is not price sensitive

Question 3

Incidence of monies paid

Answer 3

Pay as you go (unfunded)

Funded:
lump sum in advance
Terminal funding
Regular contributions
Just in time funding
Smoothed pay as you go

Question 4

Defined benefit pension schemes - amount of contributions

Actual may differ form calculated

Answer 4

As to rectify any shortfall or surplus in pension scheme
Reflect sponsors desire to pay less or more into scheme
Due to legislative constraints