Question

What is the purpose of offering low annual bonuses and a high terminal bonus in some with-profit policies?

a.

To maximize short-term profits for the insurer

b.

To minimize investment risk for the insurer

c.

To provide consistent returns for policyholders

d.

To protect against falls in investment markets and choose more profitable long-term investments

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (d).To protect against falls in investment markets and choose more profitable long-term investments Explanation:Offering low annual bonuses and a high terminal bonus in some with-profit policies aims to protect against falls in investment markets and allows the insurer to choose more profitable long-term investments while ensuring consistent returns for policyholders.

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Q. What is the purpose of offering low annual bonuses and a high terminal bonus in some with-profit policies?
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