Hello- Can someone please clarify my doubts below?
Q2 part ii) How is the existing profit model adapted? Why are we not considering assumptions like withdrawal and expenses in the model? As the maximum cover is decided at the time of offering the policy to policyholder, why are we still not considering this as model for point of sale?
While the solution talks about ways in which the profit model can be adapted, how is the maximum cover level ultimately calculated? For example, we know the formula used in profit model after we make assumptions. Similarly, what about the maximum cover level when we have appropriate policy data and assumptions?
Thank you in advance!
Q2 part ii) How is the existing profit model adapted? Why are we not considering assumptions like withdrawal and expenses in the model? As the maximum cover is decided at the time of offering the policy to policyholder, why are we still not considering this as model for point of sale?
While the solution talks about ways in which the profit model can be adapted, how is the maximum cover level ultimately calculated? For example, we know the formula used in profit model after we make assumptions. Similarly, what about the maximum cover level when we have appropriate policy data and assumptions?
Thank you in advance!