With-Profits Policies Flashcards
What type of life office would give all its profits to the policy holders?
A mutual life office
What is an MRV?
Market Value Reduction - applied by the life office when a surrender or switch takes place in order to protect the interest of the policyholders remaining in the fund
What is a PPFM?
Principles and Practices of Financial management - A document that the regulartor requires offices offering with - profits policies to give to its policy holders
Who decides how to distribute any surplus?
The directors of the life office
How often are bonuses usually declared?
Annually
What is a solvency margin?
The degree by which assets exceed liabilities
What is usual split between policyholders and shareholders and for the distribution of the surplus?
Policyholders= 90%
Shareholders= 10%
How can an office declare a bonus in a year when the stock market has crashed?
By utilising reserves built up in good years
When is a terminal bonus payable?
When there is a claim, some life offices pay on surrender too.
What is the purpose of the interim bonus?
To allocate bonus on a claim for the period since the last annual declaration
What 2 types of unitised with profits funds are there?
Fixed price and variable price
What is the purpose of am MVR?
To reduce a surrender or switch if it would otherwise be in excess of the value of the underlying assets, eg in a stock market crash.
What document sets out how an office runs its with profits business?
PPFM (Principles and Practices of Financial Management)
