Question

What does the Guarantee Charge represent in unit linked products?

a.

A charge levied at the time of policy surrender

b.

A charge applied to fund management

c.

A charge levied as a percentage of the value of assets and adjusted by adjusting the Net Asset Value

d.

A charge levied at the beginning of each policy month from the policy account value

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).A charge levied as a percentage of the value of assets and adjusted by adjusting the Net Asset Value Explanation:The Guarantee Charge in unit linked products is a charge levied as a percentage of the value of assets and is adjusted by adjusting the Net Asset Value. This charge is applied at the time of computation of NAV, usually done on a daily basis.

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Q. What does the Guarantee Charge represent in unit linked products?
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