O Chapter 6 Life insurance products

Question 1

15 Life insurance products

Answer 1

• Term assurance (level)
• Term assurance (decreasing)
• Term assuranve (renewable)
• Term assurance (convertible)
• Endowment assurance
• Pure endowament
• Wholes life assurance
• Critical illness
• Long term care
• Income protection
• Immediate annuiries
• Deffered annuities
• Income drawdown
• Investment bond
• Keyperson cover

Question 2

Key feachers for life insurance

Answer 2

• Often long term
• Typically only one clame
• Known clame amounts
• Used for: protectklm against the financial impact of death or ill health, savimgs
• Group and indevidual basis

Question 3

Profite formular fore life insurance

Answer 3

Premiums net of reinsurance premiums paid
+Investment income and gains
-Claims (e.g. death, sickness, maturity, widthdrawal) net if reinsurance recoveries
-Expenses and commission
-Increase in provisions (reserves)
-Increase in the cost of capital
-Tax
=Profit

Question 4

Assumptions needed in Life Insurance

Answer 4

premium rates per policy
sales volumes and mix of business
investmesn returns, e.g. bond yields, dividend yields and grewth
expense levels
expense inflation
commission rates
mortaliry rates
morbidiry rates
withdrawal rates