Component 1 Flashcards
What is an assurance contract?
** Assurance contracts** are policies which provide a payment on the death of a specified life within a given term
What is an annuity?
The life company’s annuity contracts provide payments which are not certain but contingent on the survival of a specified life. They may commence immediately upon purchase or after a specified period, provided the policyholder is alive on that date.
What is a term assurance contract?
A term assurance contract is a contract to pay a sum assured on or after death, provided death occurs during a specified period, called the term of the contract. No payment is made to the policyholder if the life survives to the end of the term.
E.g. to cover a mortgage within the term of the mortgage repayment.
What is a pure endowment assurance contract?
A pure endowment assurance contract provides a sum assured at the end of a fixed term, provided the policyholder is alive at that point. If the policyholder dies before the end of the term then no benefit is paid.
What is an endowment assurance contract?
An endowment assurance contract provides a sum assured on the earlier of death or survival to the end of a fixed term. It is a combination of a term assurance and a pure endowment assurance with the same term.
What is critical illness assurance?
A critical illness assurance pays out benefits if the policyholder suffers an “illness” covered by the contract. “Illness” under such a contact is usually fairly severe or permanent
What is accidental disability insurance?
Accidental disability insurance pays out benefits following accidental disability, such as loss of limb or sight
What is income protection cover?
Income protection cover pays out benefits if the policyholder suffers an illness and is unable to work for a period of time
What are long-term care contracts?
Long-term care contracts provide medical and/or nursing care, usually in old age.
What is a whole life level annuity
A whole life level annuity provides a regular stream of level payments, which terminate on death.
What is a temporary (term) level annuity
A temporary (term) level annuity provides a regular stream of level payments, which terminate on the earlier of death or survival to the end of a fixed term.
What is n|mqx?
n|mqx= P[n < Tx ≤ n + m]
note:
- n|1qx= n|qx*
- 0|mqx= mqx*
Expected Present Value (EPV) of Whole Life Assurance Contract
Using Kx - the curtate future lifetime of a life aged x
- P[Kx = k] = kpx.qx+k*
- k|qx = P[Kx = k] = kpx.qx+k*
