Question

How are bonuses usually expressed in 'with profit contracts'?

a.

As a percentage of the premium paid

b.

As a fixed amount determined by the insurer

c.

As a percentage of the Sum Assured (Face Value of Basic Contract)

d.

As a percentage of the policy term

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).As a percentage of the Sum Assured (Face Value of Basic Contract) Explanation:Bonuses in 'with profit contracts' are typically expressed as a percentage of the Sum Assured (Face Value of Basic Contract), representing the additional benefits policyholders receive based on the policy's performance.

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Q. How are bonuses usually expressed in 'with profit contracts'?
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