F108 Final Glossary Checked Flashcards
(397 cards)
Accelerated benefit
A death benefit where the benefit payment is made prior to death. If less than 100% of the total benefit is accelerated, then the contract remains in force and pays out the remainder of the benefit on death. Some life insurance products have a critical illness (CI) accelerator that pays out on the earlier of death or diagnosis of a CI. Where optional illness benefits are offered as an accelerator on a product, no survival period is applied.
Accrual rate
In a defined benefit (DB) retirement context, the rate at which the pension benefit is built up, often expressed as a fraction of salary per year (generally set to provide a pension, or with a target replacement ratio, with x years’ service). It is the fraction of final or other (for example, career average) salary that the member will receive at retirement for each year of service in the fund.
Accrued benefit method
A DB retirement funding method that targets a stable funding ratio. Includes the projected unit method (PUM) and current unit method (CUM).
Accumulated fund credit
A defined contribution (DC) fund member’s accumulated contributions plus investment returns earned, minus expenses deducted to date. This can be calculated for an individual member or all members of a fund. Also referred to as the member’s fund balance, accumulated fund, or accumulated credit.
Active (or in-service) member
A contributing member of a benefit arrangement.
Active management
An investment management strategy where the investment manager or decision-maker actively selects the underlying securities or asset types based on a particular chosen strategy with the aim of identifying mispriced securities.
Actively at work
Performing the normal function of one’s job. Group arrangements often extend cover up to the evidence-of-health (EoH) limit for all members of the group without underwriting, provided they were actively at work or on regular annual leave on the day the policy commenced.
Activities of daily living (ADL)
ADLs are functional tests used to determine incapacity for products such as CI and LTCI. ADLs that are commonly used as criteria for health and care products include washing, dressing, feeding, toileting, mobility, and transferring (physical positioning).
Actuarial liability (AL)
For a DB or DC retirement fund, the present value of the liabilities of the fund in respect of all members, including the pensioners’ and deferred pensioners’ benefits. May be based on the attained age (AAM), entry age (EAM), projected unit (PUM) or current unit (CUM) methods.
Actuarially neutral
When the expected present value of the cost of the benefits is equal to the expected present value of the income from it. It could also refer to the case where the benefit is equal tåo the actuarial reserve and hence the decrement does not create a surplus or strain.
Acute (condition)
Medical conditions with a sudden onset that are of a non-degenerative nature where a cure is a reasonable prospect. They may occur over a short time or develop into a chronic condition.
Additional Unexpired Risk Reserve (AURR)
Top-up amount required on the UPR so that it equals the URR. AURR = max{(URR - UPR, 0)}
Additional voluntary contributions (AVCs)
Retirement fund members may make voluntary contributions to their retirement fund savings, over and above their regular contribution. In a DB fund, AVCs may buy extra service or accrue an additional DC entitlement. In a DC fund, AVCs will add to the member’s accumulated fund credit.
Adequacy
Related to a benefit system where the system is able to provide benefits at a reasonable standard.
Administrator
(In a South African benefit arrangements context) an entity appointed by a medical scheme or retirement fund to run the operations such as collect premiums or contributions, pay claims or benefits, and enforce regulatory compliance. In retirement funds, administrators may also fulfill such functions as managing cashflows and communicating with members.
Adverse selection
When one party does not have, or has agreed or contracted to give information that the other party does not have and which is relevant to the transaction. In other words, there is asymmetric information between two parties in a transaction, agreement, or contract.
Affinity group
A group of individuals linked by a common definitive purpose, ideology, or interest. For example, members of an organisation that is not common employment.
Age-specific fertility rate
Number of live births per 1,000 women in the relevant age band. (See also total fertility rate.)
Aliasing
A linear dependency among observed covariates in a model. Intrinsic aliasing is when there are inherent dependencies in the definition of the covariates. Extrinsic aliasing is when dependencies arise among the covariates, but which arise from the nature of the data itself rather than inherent properties of the covariates.
Alternative reimbursement models (ARM)
Used by the health and care environment to align the incentives of the provider and the funder. The intention is to move away from a fee-for-service environment and to structure payments to providers to encourage them to provide high-quality, cost-effective healthcare.
Analysis of surplus (AOS) or profit
Analysis of the level of assets relative to the liabilities at one point in time (the opening surplus) and the level of assets relative to the liabilities at a subsequent point in time (the closing surplus) and attributes the change to different causes.
Annuitisation
When a retirement fund member purchases an annuity of any type with their retirement savings.
Annuity guaranteed period
The minimum years after an annuity payment commences that the annuity will be guaranteed to be paid, regardless of the survival of the annuitant.
Appraisal value
The value of a business as a whole, both the existing business and the future new business. In an insurance business, appraisal value would be the sum of the embedded value and the company’s goodwill.