Bonus Distribution

[Rajat gupta]

Hi All,

Can somebody please tell?
In revalorisation (as used in Italy not France) or contribution method do we have scope to distribute profit arsing on conventional without profit contracts , Unit linked contracts or profits on surrenders to with profit policyholders? Can a company offer a same product with different bonus method (like addition to benefit, revalorisation and contribution method) in the same territory ?

Thanks in advance!

Regards,
Rajat

 

[Mark Willder]

Hi All,

Can somebody please tell?
In revalorisation (as used in Italy not France) or contribution method do we have scope to distribute profit arsing on conventional without profit contracts , Unit linked contracts or profits on surrenders to with profit policyholders? Can a company offer a same product with different bonus method (like addition to benefit, revalorisation and contribution method) in the same territory ?

Thanks in advance!

Regards,
Rajat

Hello Rajat

The Core Reading does not mention how these aspects work in different countries, so you wouldn't be expected to know in the exam.

The Italian method given as an example in the ActEd text only distributes investment surplus, so does not include profit from other contracts. The contribution method described in the Core Reading distributes profit from investment, expenses and mortality only, so doesn't include profit from other contracts. Other formulae for the contribution method exist though, perhaps one of our North American students would like to give some examples.

A company may be able to offer more than one type of with-profits contract as long as the rules in the country permit it. Traditionally most countries have focused on only one type of with-profits. However, companies in the UK for example have offered several different types of with-profits.

Best wishes

Mark

 

[Rajat gupta]

Thanks Mark