1. Posts in the subject areas are now being moderated. Please do not post any details about your exam for at least 3 working days. You may not see your post appear for a day or two. See the 'Forum help' thread entitled 'Using forums during exam period' for further information. Wishing you the best of luck with your exams.
    Dismiss Notice

Mock exam

Discussion in 'SP2' started by Sayantani, Mar 25, 2022.

  1. Sayantani

    Sayantani Very Active Member

    Hi Mark,

    I had a quick query. I had given mock exam for the upcoming April 2022 exam some days back. Just now I got back the grade which is D and 43%.
    I am pretty upset about it. The comments are still not ready to be downloaded. Is there any chance if I follow them I could actually pass for this diet. I have pretty much lost confidence now.
     
    Sayantani, Mar 25, 2022
    #1
  2. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi Sayantani

    Please don't lose confidence. The mock is a difficult paper and is meant to be as challenging as the real exam. I wouldn't expect many people to pass it at this stage - the aim is to peak on the day of the exam. The point of doing the mock is to make the mistakes now so you know what to do differently on the day of the exam. There is still time to practice exam papers with what you have learnt from the mock to improve your score.

    Best wishes

    Mark
     
    Mark Willder, Mar 25, 2022
    #2
    Sayantani likes this.
  3. Sayantani

    Sayantani Very Active Member

    Thanks Mark. I am trying my best to incorporate the comments I have received.
     
    Sayantani, Mar 27, 2022
    #3
  4. N_Exam

    N_Exam Very Active Member

    Hi Mark,

    Mock exam question 3 is about a unitised with profits endowment assurance.
    For part 3i) my answers were from a point of view that the customer is in charge of their investments as it is a unitised product. (Thus they could have higher surrender value than another customer because the investments they chose performed better.)
    However, the model solution is from a point of view that the company is in charge of the investment strategy for the customer.

    Is the company in charge of the investments because it is a with profits product? My general thinking is that for a Unit linked product the customer is in charge of their investments. Where has my understanding gone wrong?

    Thank you.
     
    N_Exam, Apr 1, 2022
    #4
  5. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi

    Many companies have only a single with-profits fund, while they might offer a very wide range of unit-linked funds. So it is fair to say that the policyholder has quite a lot of control over the investments with unit-linked, eg they might choose to invest 60% in the pacific equity fund and 40% in the UK bond fund (although the insurer would choose exactly which pacific equities and UK bonds these funds would contain). But if the policyholder chooses with-profits (unitised or conventional), then the insurer will be deciding the split of assets between the different types.

    Best wishes

    Mark
     
    Mark Willder, Apr 1, 2022
    #5
  6. N_Exam

    N_Exam Very Active Member

    So please let me know if I understand this correctly:-

    If its a With Profits product, for unitised and conventional, the insurer decides where to invest the policyholders premiums. Thus the investment risk is with the insurer.

    However for a purely Unit Linked product, the policyholder decides where to invest their premiums.
    Thus investment risk is with the policyholder.

    Is this correct- is look like Unit Linked is not a straight forward "policyholder has the investment risk" product as we can have With Profits Unit Linked product.

    Thank you.
     
    N_Exam, Apr 4, 2022
    #6
  7. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi

    No, this doesn't sound quite right.

    You need to separate out the ideas of who chooses the investments and who carries the risk.

    For with-profits (both conventional and unitised), the insurer will choose the assets. There is an investment risk for both the policyholder (as low returns mean low bonuses) and the insurer (as low bonuses mean lower shareholder transfers and there is a danger that the guarantee bites, ie the asset share is smaller than the guarantee).

    For unit-linked the insurer offers a range of funds and the policyholder chooses which to invest in. The policyholder has investment risk as lower returns mean a lower fund value. The insurer may have some investment risk if charges are related to fund size, and will have more risk if there is a maturity guarantee.

    By with-profits unit-linked, do you mean unitised with-profits? In the exam I'd stick to calling this unitised with-profits.

    Best wishes

    Mark
     
    Mark Willder, Apr 4, 2022
    #7
  8. N_Exam

    N_Exam Very Active Member

    Yes, that clears things up. I understand my mistake. Please let me know if below is correct:-

    My mistake is that i forgot that there are "Unit Linked" and "Unitised With Profits" products.
    They are similar in that premiums are used to invest in funds. The units of comprised of underlying assets.

    They are different in that for "Unit Linked", the investment decisions are made by the policyholder. As the funds invested in grow, so does the unit value (and vica versa).
    For "Unitised With profits" (Which is a type of accumulating with profits, not conventional) the insurer decides where to invest the premiums. These are in funds. As the funds grow, reversionary bonuses can be added to the policy. This can be an increase in unit value or additional units (of fixed value) added to the policy.
     
    N_Exam, Apr 4, 2022
    #8
  9. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Yes, this all looks good.:)

    Best wishes

    Mark
     
    Mark Willder, Apr 5, 2022
    #9
  10. N_Exam

    N_Exam Very Active Member

    Thank You Mark!
     
    N_Exam, Apr 6, 2022
    #10

Share This Page