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April 2019, Q5

Discussion in 'SP2' started by 1495_sc, Aug 1, 2021.

  1. 1495_sc

    1495_sc Ton up Member

    Hello,

    Can someone please help in understanding the features of the product described in Q5 part i)

    A conventional immediate annuity with 50% spouse’s pension payable on the death of the annuitant.

    Is it simply an immediate annuity which will also pay 50% lumpsum on death of annuitant to spouse? 50% of spouse pension- what is this referring to? Is it 50% of last annuity payment paid to annuitant which is referred to as spouse pension? The wording is not clear hence I cant think of an investment strategy in the first place.

    Thank you in advance!
     
    1495_sc, Aug 1, 2021
    #1
  2. 1495_sc

    1495_sc Ton up Member

    For the same attempt, Q6 part iv) instead of pointing at issues in the model , cant we simply elaborate on how it is the auditor's responsibility to ensure that true and fair view of financial position is being reflected through the insurer's model? As far as my understanding goes, it is not surprising for the auditor to ask for validation.
     
    1495_sc, Aug 1, 2021
    #2
  3. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    A spouse's pension is an annuity paid at 50% of the level of the main benefit from the death of the policyholder until the death of their spouse.

    Best wishes

    Mark
     
    Mark Willder, Aug 2, 2021
    #3
  4. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    I'm not sure how your approach would score the marks needed by this question, particularly as the role of the auditor isn't part of the course. Instead we need to explain why the auditor needs to check the cashflows, and thew importance of this modelling feels like something that is relevant to the course.

    Best wishes

    Mark
     
    Mark Willder, Aug 2, 2021
    #4
  5. 1495_sc

    1495_sc Ton up Member

    Thank you for clarifying my doubts, Mark. It is very helpful!
     
    1495_sc, Aug 2, 2021
    #5

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