Surrender Values & Alterations (25 – 27)

Question 1

Principles for surrender values

Answer 1

– PRE
– not too low
– consistent with maturity values
– ≯ AS in aggregate
– competitors
– no frequent changes
– not excessively complicated calc
– documented
– avoid selection

Question 2

Calculation methods for surrender values

Answer 2

1. retrospective
2. prospective

Question 3

Unit-linked contracts surrender values

Answer 3

Specified at outset
– % unit value
– % premium

Question 4

Without-profits alterations

Answer 4

– affordability
– consistency with boundary conditions
– stability
– avoid lapse & re-entry
– fairness
– ease of calc & explanation

• PRE
• Competitors
• Regulation

Question 5

Methods of calculating paid-up

Answer 5

– proportionate paid-up
– equating policy values