COURSE 5: November 2001- 2 -GO ON TO NEXT PAGEMorning Session**BEGINNING OF EXAMINATION 5**MORNING SESSION1.(5 points) With respect to participating life insurance products,(a)Explain the rationale for offering participating products.(b)Describe the considerations in setting policyholder dividends.(c)Describe the concerns regulators have with policyholder dividends.2.(6 points) Describe the rating variables that should be considered when developing groupinsurance medical claim costs.3.(6 points) Describe each of the following provisions which can be included in anindividual disability income contract:(a)Residual Disability Income Benefit;(b)Guaranteed Insurability Option Benefit; and(c)Cost Of Living Benefit.
COURSE 5: November 2001- 3 -GO ON TO NEXT PAGEMorning Session4.(5 points)You are given the following retirement plan information for an individual:Current Age40Entry Age30Retirement Age65Social Security Benefit$11,700Current Salary$80,000Annual Salary Growth3%Personal Savings Accumulation Rate7%Final Salary (at age 64)$162,624Retirement Benefit1% of final 5-year average salary timesyears of serviceAnnuity Conversion Factor @ age 658.1958The individual begins saving for retirement at his current age.Calculate the level percent of salary that should be allocated to personal savings eachyear to provide this individual with a 70% full replacement ratio. Show all work.5.(8 points) Describe the following reserve methods for life insurance products:(a)simplified net premium method;(b)realistic net premium method;(c)gross premium method; and(d)accumulation method.
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