Life insurance- GBE

Question 1

What are the 5 different methods of selling the policies?

Answer 1

1. Intermediaries
2. Tied Agents
3. Own sales force
4. Direct Marketing
5. Internet selling

Question 2

What are the 3 different methods of Direct Marketing?

Answer 2

1. Mail Shots
2. Telephone selling
3. Press advertising

Question 3

What are the ways that policies sold through an intermediary have to be competitive?

Answer 3

1. Commission
2. Bonus rates
3. Premiums and benefits
4. Past investment performance and expense charges
5. Administration

Question 4

What are some of the possible regulations on companys?

Answer 4

1. Restictions on the types of contracts sold
2. Requring the companies to be “authorized” to sell a particular type of contract
3. Restricting the selling of the contracts
4. Regulations on how assets should be valued
5. Regulations on how liabilities should be valued
6. Require publication of results in prescribed format
7. Restrictions on premiums or charges
8. Require certain contract conditions
9. Regulations on the possible underwriting
10. Restrict the maximum amount of business that the company may write

Question 5

In what ways will the actuarial association issue professional guidance?

Answer 5

1. Matters to consider when determining the suitability of the design and price of a new product
2. Matters to consider when determining the value of liabilities
3. Matters to consider when advising on the distribution of surplus to with profit policyholders or shareholders

Question 6

What are the risks a life insurance company faces?

Answer 6

1. Mortality
2. Morbidity
3. Investment returns
4. Expenses and Inflation
5. Types and Volumes of new business
6. Withdrawls
7. Guarantees
8. Options
9. Taxation

Question 7

What are ways that risk can be reduced?

Answer 7

• Designing of the contract
• Reinsurance
• Underwriting
• Prudent pricing
• Reduced guarantees
• Prudent Investment
• Not offering a contract at all
• Profit/loss sharing

Question 8

What are some of the issues to consider when premium pricing?

Answer 8

• The nature and terms of the contract
• The solvency and competitiveness
• Demand in the market

Question 9

What are the issues to consider in premium pricing for a unitised business?

Answer 9

The charges

Question 10

What are the liabilities of the life insurance company?

Answer 10

The benefits that it has payable to it’s clients

Question 11

Why is valuation important?

Answer 11

• Determine if the companys solvent
• Determine the surplus that has arisen during the year
• Determine how much surplus can be distributed
• Determine an appropriate level of charges