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Life Insurance (Overview of Life Insurance (Key Risks [MIEW SOC] oP4qUAx8…
Life Insurance
Overview of Life Insurance
New business strain and capital
Provisioning
Setting Premiums
Underwriting
Contract Design
Contracts Sold
Key Features [LOC PIG]
Long Term
One Claim
Claim Amount known
Protection against death or illness
Individuals
Group
Investment Type
Without profit
Benefit amount specified
With profit
Benefit involves share in surplus of a company
Unit Linked
Benefit depends on the value of a unit fund
Indexed
Benefit moves in line with specified index
Investment strategy
Key Risks
[MIEW SOC]
Mortality, morbidity and longevity
Investment Risks
Expenses not met
Withdrawals too early
Strain
Credit Risk
Operational Risks
Life Insurance Products
Considerations [BCG]
Benefit Definition
Customers need being met
Group versions
Product Types [WAIT LICE]
Endowment
Pure
Assurance
Whole Life
Term
Level
Decreasing
Convertible
Convert to permanent form
Without further underwriting
Renewable
Renew contract for a further period
Income Protection
Provide income through periods of sickness or incapacity
Terminates at retirement age
Annuity
Immediate
Deferred
Income Drawdown
Leave accumulated pension at retirement and draw income from it each year
Draw down may be limited
May be an age limit to purchase annuity
Critical Illness
Provides lump sum on diagnosis of critical illness
Long Term Care
Cost in nursing home or private care post retirement
Assets to be Held
Fixed Interest Bonds
Liabilities guaranteed in money terms
Real Assets
Index Linked Bonds
Maximise returns to provide for discretionary benefits
Equities
Inflation linked liabilities such as indexed annuity payments or expense
Property
