Chapter 4

Question 1

4 Bases for products

Answer 1

• Without profits
• With profits
• Index linked
• Unit linked

Question 2

Unit fund

Answer 2

The PH’s premiums less charges

Question 3

Non-unit fund

Answer 3

charges
- actual costs (expenses)
- profit distributions
+ capital injections

A policy’s contribution to the non-unit fund is the difference between total policy asset share and the unit fund at that point.

Question 4

Attraction of UL policies

Answer 4

• flexibility
• potentially higher benefit for given premiums
• lower premiums for given benefit

Question 5

Withdrawal risk

Answer 5

• When the asset share is negative, a financial risk from withdrawal exists
• At other times, the risk depends on how withdrawal benefits compare to the asset share