T_Short q's 1

Question 1

Some needs met by CI

Answer 1

• Repay debts
• Replace lost income
• Pay for costs of care or treatment

Question 2

Unit pricing basic equity principle

Answer 2

the interests of unit holders not involved in a unit transaction should be unaffected by that transaction.

Question 3

what is the purpose of actuarial funding

Answer 3

to reduce new business strain on certain kinds of unit linked contracts.

Question 4

Asset share definition

Answer 4

Retrospective accumulation of actual experience on a policy.
the asset share is the maximum surrender value payable under any policy in order to prevent the policy from causing a loss to the company.
** asset shares are only affected by cashflows

Question 5

Various ways of declaring regular reversionary bonuses

Answer 5

Simple - as a % of the BASIC benefit only (initial sum assured)
Compound - as a % of the (basic benefit + attaching bonuses)
Super compound - different %s applied to the basic benefit and to the attaching bonuses

Question 6

How is PRE built up

Answer 6

• documentation issued by the lic
• company’s past practice
• current practice in the life insurance market

Question 7

outcomes based regulation

Answer 7

prescribed tolerated outcomes

Question 8

freedom of action regulation

Answer 8

rules only on publicity of information

Question 9

Prescriptive regulation

Answer 9

detailed rules as to what may or may not be done

Question 10

Smoothing of bonuses - ph benefits

Answer 10

smoothing provides wp policyholders with considerable protection from the short term fluctuations in returns which they would experience if they were invested directly in the investment markets.