course5_1103 - COURSE 5 MORNING SESSION APPLICATION OF...

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COURSE 5 MORNING SESSION APPLICATION OF BASIC ACTUARIAL PRINCIPLES SECTION A-WRITTEN ANSWER
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COURSE 5: Fall 2003 - 2 - GO ON TO NEXT PAGE Morning Session **BEGINNING OF EXAMINATION 5** MORNING SESSION 1. (5 points) A large employer is considering offering a private pension plan. (a) Describe the reasons for offering such a plan. (b) Describe the process involved in designing and implementing such a plan. 2. (5 points) (a) For basic group term life insurance, briefly describe each of the following items: (i) Typical plan designs offered (ii) Eligibility provisions (iii) Continuity of coverage provisions (b) Briefly describe how supplemental group term life insurance is different from basic group term life insurance with respect to: (i) Typical plan designs offered (ii) Eligibility provisions (iii) Continuity of coverage provisions
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COURSE 5: Fall 2003 - 3 - GO ON TO NEXT PAGE Morning Session 3 . (5 points) (a) Describe the reasons a life insurance company may reinsure its risk. (b) ABC Life Insurance Company has a 40% quota share reinsurance treaty on a first dollar basis. Its retention limit is $500,000 per policy. Policy 1 Policy 2 Net Amount at Risk $750,000 X Amount Retained R Y Amount Reinsured on a First Dollar Basis S Z Amount Reinsured on an Excess Basis T $100,000 Calculate the missing values in the table above. Show all work. 4. (5 points) Explain the U.S. laws and regulations with respect to market conduct that apply to a life insurance company and its agents. 5. (6 points) Mary and John, respectively 45 and 42 years old, are considering the purchase of a non-participating whole life, joint last-to-die policy, paid-up at first death with: a 5 year term individual rider life insurance convertible and renewable up to age 65 for Mary and John; a Critical Illness rider covering 50 illnesses for Mary and John; a Disability income rider providing a lifetime benefit with a 2 week waiting period for Mary and John. (a) Describe briefly the policy and its riders. (b) Describe alternatives to each coverage that could reduce the cost to Mary and John.
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- 4 - GO ON TO NEXT PAGE Morning Session 6. (7 points) For a defined benefit pension plan, you are given: Pension plan formula: 1.5% of final year’s salary for each year of service up to 10 years, plus 2.0% of final year’s salary for each year of service after 10 years. Interest Rate 6% Salary Growth Rate 4% Pre-retirement decrements None Assumed retirement age 65 ( 29 12 65 a 12 Assets at 1/1/2003 300,000 Assets at 1/1/2004 320,000 Contribution made on 12/31/2003 5,000 Funding method Projected unit credit Employee Age at Hire Age on 1/1/2003 Salary on 1/1/2003 A 30 40 30,000 B 30 60 50,000 (a) Calculate the unfunded accrued liability at 1/1/2003. (b)
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This note was uploaded on 03/27/2012 for the course MATHEMATIC 4523 taught by Professor Zhangqiang during the Spring '12 term at City University of Hong Kong.

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course5_1103 - COURSE 5 MORNING SESSION APPLICATION OF...

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