精算师考试试题(12) 

Faculty of ActuariesInstitute of Actuaries

EXAMINATIONS

14 September 2001 (am)Subject 302 — Life Insurance

Time allowed: Three hours

INSTRUCTIONS TO THE CANDIDATE

1.

You have 15 minutes at the start of the examination in which to read thequestions. You are strongly encouraged to use this time for reading onlybut notes may be made. You then have three hours to complete the paper.You must not start writing your answers in the booklet until instructed todo so by the supervisor.

Write your surname in full, the initials of your other names and yourCandidate’s Number on the front of the answer booklet.Mark allocations are shown in brackets.

Attempt all 8 questions, beginning your answer to each question on aseparate sheet.

2.3.4.5.

AT THE END OF THE EXAMINATION

Hand in BOTH your answer booklet and this question paper.

In addition to this paper you should have availableActuarial Tables and an electronic calculator.

302—S2001

? Faculty of Actuaries? Institute of Actuaries

1

Describe the aim and main features of catastrophe reinsurance from the point ofview of a ceding life insurance company.[5]

2

State the basic features of an actuarial model to be used to determine the annualpremium rates for a new life insurance product.[5]

3

A life insurance company currently sells only without profits term

assurance business. All the contracts are sold through its own salesforce.In order to diversify its product range, it plans to launch a regular premium unit-linked pension contract. The only charge levied under the contracts will be anannual amount equal to 1% of the value of the units.

Discuss the principal risks the company faces in relation to the new pensionproduct.

[8]

4

A life insurance company calculates the surrender values under its with profitsendowment assurances using a prospective method, based on the guaranteedbenefits at maturity. It has been suggested that the surrender value should beincreased by the addition of terminal bonus and that the rate of terminal bonusto be applied on surrender should be the same as that which applies to maturingpolicies of the same duration.

Discuss the issues that should be considered before making the change, outliningany investigations that would be required.[11]

5

(i)(ii)

State the principles of setting supervisory reserves.[8]

Explain how the net premium method for valuing conventional with

profits life assurance contracts meets these principles.[6]

[Total 14]

302 S2001—2

6

A life insurance company has an established portfolio of income protection

business, which provides an income to policyholders during periods of incapacitydue to sickness. It is considering implementing a claims management process,where health professionals are used soon after a claim is notified to the insurer totreat the claimants and help them back to work. The process will also be used onthe claims currently in payment.Describe:(i)(ii)

The potential impact on the claim inception and termination rates.

[6]

How the claims experience could be analysed and how the results could beused to amend the pricing basis.[10]

[Total 16]

7

(i)(ii)(iii)

State the principles of investment that apply to a life insurance company.

[2]Describe how the regulatory framework might impact on the company’sinvestment decisions.[4]State, with reasons, the types of investments a life insurance companymight use to back a portfolio of level without profits immediate annuities.

[8]Describe how your answer to part (iii) would differ if the annuityinstalments:(a)(b)

increase in line with an index of retail prices; or

increase or decrease in line with an index of equity market values

[5]

[Total 19]

(iv)

302 S2001—3

PLEASE TURN OVER

8

A proprietary life insurance company markets unit-linked single premium wholeof life investment contracts, which it distributes through intermediaries whoreceive initial commission on the sale of each contract but no renewalcommission.

The contracts all have 100% allocation to units with no bid/offer spread and anannual management charge of 1% per annum of the unit value.

The sales director has suggested that in order to increase sales, the companyshould increase the rate of initial commission it pays to certain intermediariesthat have satisfied the following criteria:

? The persistency of their business is better than average.

? The profitability of their business is higher because of a significantly higher

than average case size.(i)(ii)

Discuss the sales director’s suggestion.

[10]

Describe the persistency and expense investigations that would be

performed in order to determine the amount of additional commission thatcould be paid.[12]

[Total 22]

302 S2001—4