Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

F202 > Chapter 3 - Product Design, Pricing and Distribution > Flashcards

Chapter 3 - Product Design, Pricing and Distribution Flashcards

1
Q

Ways to mitigate risks: (8)

A
  1. Underwriting
  2. Waiting periode
  3. Exclusions
  4. Premium reviews
  5. Age limits
  6. Clear disclosure during sale and in policy contract (mitigate reputational risk)
  7. Reinsurance
  8. Retention incentive
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Critical illness benefit payable in any of the following 3 events:

A
  1. Upon happening of event
  2. Upon reaching a defined degree of impairment
  3. On undergoing a surgical procedure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

4 Characteristics of an illness that makes it appropriate to be included in CI product:

A
  1. Condition perceived by public to be serious and to occur frequently
  2. Each condition covered can be defined clearly so that there is no ambiguity at claim stage
  3. Sufficient data is available to price the benefit
  4. There is the ability to avoid anti selection
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

4 Major diseases covered by CI:

A
  1. Heart attack
  2. Stroke
  3. Coronary artery bypass graft (CABG)
  4. Cancer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Needs met by CI: (5)

A
  1. Income can be provided from the lump sum to buy an annuity
  2. Repay mortgage or other loan
  3. Business partners can purchase CI policies on the lives of each other
  4. Recuperation after illness
  5. Change in lifestyle can be funded (eg to move to less stressful job)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Definitions of disability: (3)

A
  1. Occupation based
  2. Related to ADLs or ADWs as a claim criteria
  3. Referring to functional impairment and physical impairment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Activities of daily living: (6)

A
  1. Feeding
  2. Dressing
  3. Washing
  4. Toileting
  5. Mobility
  6. Transfer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Advantages of ADL over occupation based definitions: (4)

A
  1. Can be applied to wider range of lives
  2. Can be applied besonderhede retirement
  3. Offer simplicity of using only one definition throughout the term of the policy
  4. Less subjective than one based on ability to perfomr an occupation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Exclusions on IP may include: (5)

A
  1. Claims resulting from drug/alcohol abuse
  2. Self inflicted injury/attempted suicide
  3. War
  4. Criminal activities
  5. Failure to follow appropriate medical advice
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

After the loss of a key individual, employer has the following options: (4)

A
  1. Find a suitable replacement
  2. Up-skill another employee
  3. Change business model
  4. Consider winding up the business
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Premium waiver can be applied in the following events: (3)

A
  1. Disability of specified life insured
  2. Death of specified life insured
  3. Retrenchment of specified life insured

(Where specified life insured can be different from the life insured covered under the main policy)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In investment products PH can choose one or more of the following types of underlying portfolios: (3)

A
  1. Market linked portfolio, with or without investment guarantee
  2. Smooth bonus portfolio
  3. Guaranteed product
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

As part of the Effective Annual Cost measure charges on investment products should be split into these 4 components:

A
  1. Investment
  2. Advice
  3. Administration
  4. Other

(Must be shown as annualised percentages)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Mechanisms to limit market risk for smooth bonus portfolios: (3)

A
  1. Use of market value adjusters
  2. Choice of assets to invest in
  3. Management of bonus stabilisation reserves
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a deferred compensation contract?

A

Employer takes out endowment policy on the employee and pays the premiums.
In event of claim, proceeds are paid to employer, who pays this over to employee ito the arrangement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Traditional annuities can be split up into 4 groups that indicates when payments stop:

A
  1. Single life annuity
  2. Joint life annuity
  3. Temporary annuity - pmts continuing while PH is alive within a specified term
  4. Term certain annuity
17
Q

Different ways in which employer benefits can be structured: (3)

A
  1. Employer directly take out group insurance policy for the employees
  2. Employer establish pension or provident fund to facilitate and organise the investment and payout of employees’ RA
  3. Umbrella funds are pension or privident funds that pool the retirement investments of multiple, unrelated employers into a single legal structure
18
Q

Characteristics of an approved scheme: (2)
(approved schemes have premiums that are tax deductible, and benefits that are taxed)

A
  1. Must contain an element of retirement funding
  2. Approved schemes can only cover the employee, cannot provide cover to family members
19
Q

Life insurers can be involved in retirement products in the following ways: (3)

A
  1. LI can administer pension or provident funds
  2. LI can offer investment portfolios to pension or provident funds
  3. LI can offer insurance products, in the form of risk/annuity products, to pension or provident funds
20
Q

Definition of Micro insurance:

A

Insurance that is accessed by low-income populations, providedby a variety of different entities, but run in accordance with generally accepted insurance practices

21
Q

Objectives of micro insurance regulatory framework: (6)

A
  1. Facilitate the formalisation of currently informal providers, and in the process promote the formation of regulated and well-capitalised insurers, as well as small business development
  2. Lower barriers to entry, which should encourage broader participation in the market and promote competition among insurers
  3. This would further support poverty alleviation through economic growth and job creation
  4. As well as provide increased access to protection against losses
  5. Enhance consumer protection within this market segment through appropriate prudential regulation and improved enforcement of compliance
  6. Facilitate effective supervision and enforcement, thereby supporting the integrity of the insurance market as a whole
22
Q

Micro insurers have the following lighter prudential requirements: (2)

A
  1. Lower minimum regulatory capital requirements
  2. A simpler, dedicated prudential regulatory model suited to the risk profile of micro-insurers
23
Q

Features of burial societies: (6)

A
  1. Offer financial support for funeral costs for their members
  2. Fixed amounts paid for funeral benefist are subject to a low minimum
  3. Membership size is limited
  4. Not covered by Insurance Act
  5. Not regulated by PA
  6. Primary regulator is the FSCA
24
Q

Features of friendly soceities: (4)

A
  1. Allowed to offer guaranteed funeral benefits upnto max of R15 000
  2. Operate under Friendly Societies Act
  3. Have limited reporting requirements to FSCA.
  4. In some cases this requires periodic actuarial valuation as well as actuarial scrutiny of any benefit/prm changes
25
Q

Amendements to the long term insurance PPT 2017 set out additional requirements for Micro insurance and funeral products: (5)

A
  1. Term if Micro insurance is limited to 12 months (does not apply to funeral)
  2. Policy benefits must be defined on a sum assured (rather than indemnity) basis
  3. Waiting periods may not exceed one quarter of the term of the policy
  4. Limitations on exclusions that can be applied, and exclusions for pre existing conditions are not permitted
  5. Valid claims must be settled within 2 business day of receipt of full documentation
26
Q

Persistency risk can be mitigated through: (2)

A
  1. Allowing PHs to skip a certain number of prms before cancelling the product
  2. Introducinf automatic prm deductions from salaries/wages
27
Q

Persistency risk can be mitigated through: (2)

A
  1. Allowing PHs to skip a certain number of prms before cancelling the product
  2. Introducinf automatic prm deductions from salaries/wages

F202 (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions