G
Goh Ze Liang
Member
Hi ! Good day. Hope you guys are doing well. I have a few queries pertaining asset share & with profit products.
Q1: The asset share is effectively the accumulated of premiums with investment returns less any deductions. One of the typical deductions mentioned is the Charges of smoothing. I understand that the difference between the actual asset share and a smoothed asset share will be the smoothed amount, but i assume this is not being used as a cost of smoothing or charges of smoothing else it is the same as the unsmoothed AS. Can i take it as the cost of smoothing would be the "opportunity cost"? Say using the difference in amount between SAS & AS multiplied by a investment return? Appreciate for the enlightenment in this questions.
Q2: I am bit confuse about the relationship between estate (usually understand it as undistributed surplus or asset less liabilities) and asset share. The undistributed asset will grow if the company continuously underpay the regular bonus (means will have higher TB)- do i it understand it as the estate will grow as well? During maturity, the TB will be the Earned AS (may be smoothed or un-smoothed) less then SumAssured+Bonus declared. Hence say, for illustration purposes, assuming a 2 year term policy, at t=1, the policy has asset share of 100 and the SA is 50, the company decides to declare a 30 dollar RB and hence the SA increase from 50 to 80. The additionally 20 undistributed ones are still remained within the Asset share, just that it has not been declared and will be pay out at maturity via TB. Hence the questions is where does the "estate" come into play? if following, this logic means any underpayment or undistributed profits is not going to flow to any of the estate and will just be retained in the asset share of the policies. And how the the estate being build up assuming a company just started up and starting to have its first with profit policies.
Apologies for the lengthy thread and thank you in advance.
Q1: The asset share is effectively the accumulated of premiums with investment returns less any deductions. One of the typical deductions mentioned is the Charges of smoothing. I understand that the difference between the actual asset share and a smoothed asset share will be the smoothed amount, but i assume this is not being used as a cost of smoothing or charges of smoothing else it is the same as the unsmoothed AS. Can i take it as the cost of smoothing would be the "opportunity cost"? Say using the difference in amount between SAS & AS multiplied by a investment return? Appreciate for the enlightenment in this questions.
Q2: I am bit confuse about the relationship between estate (usually understand it as undistributed surplus or asset less liabilities) and asset share. The undistributed asset will grow if the company continuously underpay the regular bonus (means will have higher TB)- do i it understand it as the estate will grow as well? During maturity, the TB will be the Earned AS (may be smoothed or un-smoothed) less then SumAssured+Bonus declared. Hence say, for illustration purposes, assuming a 2 year term policy, at t=1, the policy has asset share of 100 and the SA is 50, the company decides to declare a 30 dollar RB and hence the SA increase from 50 to 80. The additionally 20 undistributed ones are still remained within the Asset share, just that it has not been declared and will be pay out at maturity via TB. Hence the questions is where does the "estate" come into play? if following, this logic means any underpayment or undistributed profits is not going to flow to any of the estate and will just be retained in the asset share of the policies. And how the the estate being build up assuming a company just started up and starting to have its first with profit policies.
Apologies for the lengthy thread and thank you in advance.