actuarialsociety.org.za Life Insurance Fellowship Principles Sample Question Paper : Actuarial Society of South Africa
Organisation : Actuarial Society of South Africa
Exam : F102 Exam
Document Type : Sample Question Paper
Category or Subject : Life Insurance Fellowship Principles
| Want to comment on this post? Go to bottom of this page. |
|---|
Download Sample Question Paper :
A302 – May 2016 Exam : https://www.southafricain.com/uploads/2181-F102may2016.pdf
A302 – November 2015 Exam : https://www.southafricain.com/uploads/2181-F102Nov2015.pdf
302 – May 2015 Exam : https://www.southafricain.com/uploads/2181-F102May2015.pdf
A302 – November 2014 Exam : https://www.southafricain.com/uploads/2181-F102Nov2014.pdf
Life Insurance Fellowship Principles Sample Question Paper :
Time allowed : Three hours
Instructions To The Candidate :
1. Enter all the candidate and examination details as requested on the front of EACH OF your answer booklets.
Related : Actuarial Society of South Africa Communications Sample Question Paper : www.southafricain.com/2174.html
2. You have 15 minutes at the start of the examination in which to read the questions.You are strongly encouraged to use this time for reading only, but notes may be made. You then have three hours to complete the paper.
3. You must not start writing your answers in the booklet until instructed to do so by the supervisor.
4. Mark allocations are shown in brackets.
5. Attempt all eight (8) questions, beginning your answer to each question IN A SEPARATE BOOKLET.
6. Candidates should show calculations where this is appropriate.
Question 1 :
A life insurance company has historically sold conventional with-profits (CWP) policies, but has now decided to stop selling CWP contracts and to launch unitised with-profits (UWP) contracts for new business, in a separate fund.
Outline the advantages and disadvantages of this decision for the insurer as well as for the CWP and UWP policyholders. [8]
Question 2 :
An insurer is planning to add a new benefit to its product range, namely a critical illness benefit. This benefit, like others from this insurer, will be unit-linked. The benefit is offered on the following terms:
** Guaranteed lump sum benefit on occurrence of one of the critical illnesses as defined in the policy document
** The benefit payable on death or maturity is the value of the unit fund (if positive)
** The surrender value is equal to the bid value of units less a surrender penalty (if positive)
** Units can be purchased in a wide range of investment funds
** Risk charges and management charges are deducted monthly from the unit fund to cover the cost of the critical illness benefit and expenses, respectively
** Premiums are calculated such that the unit fund is projected to be equal to the sum insured at the maturity date, under prudent assumptions
i. Outline the benefits that are provided, and the policyholder needs that are met, by such a product. [3]
ii. Outline the investment-related risks to the insurer of this product and how such risks can be mitigated. [5]
After consulting with brokers, the company now plans to offer a minimum guaranteed unit fund on death or maturity based on an investment return (before taxes and charges) equal to 3% p.a., in an environment where CPI is expected to be around 3% p.a.
iii. Outline both how this benefit change increases the risks to the insurer, and ways to mitigate these risks. [7]
Question 3 :
A company has a large book of without-profit critical illness business, which is 100% reinsured on a risk premium basis.
i. List the risk factors which can be used to classify the critical illness data into homogeneous groups for a claims experience investigation. [3]
Each year the company’s actuarial team spends a significant amount of time investigating the claims experience on all of the company’s products, including the above-mentioned critical illness product. A manager in the company has made the following comment regarding this book of critical illness business.
ii. Discuss the manager’s statement, noting areas where these investigations might add value. [9]
Question 4 :
You are a product design actuary working for a large insurance company with a significant existing book of immediate annuity business. Historically, only age and gender have been used as rating factors when determining the single premium for annuities in this market.
i. Explain briefly why the current market practice may lead to poor value for money for the low income market. [1]
ii. Discuss briefly the factors that you will consider when designing your company’s annuity product. [12]
Contact Address :
Actuarial Society of South Africa
C/o Old Mutual Office 2
2nd Floor West End Mall
Jan Smuts Drive
Pinelands
7405