F
Flamy
Member
Hi, this comes from chapter 30. When policyholders surrender bonus separately from the rest of a with profit policy, the surrender value is calculated prospectively.
My question is why is the prospective method necessary here, as the retrospective method is needed to check that surrender value is less than earned asset share. Appreciate that the future bonus is included in the prospective method to give policyholders the profits accumulated but not yet distributed, and this can not be done in the retrospective calculation, however the cap of earned asset share is there so I dont see the point of prospective method at all. Can someone please help?
Thank you.
My question is why is the prospective method necessary here, as the retrospective method is needed to check that surrender value is less than earned asset share. Appreciate that the future bonus is included in the prospective method to give policyholders the profits accumulated but not yet distributed, and this can not be done in the retrospective calculation, however the cap of earned asset share is there so I dont see the point of prospective method at all. Can someone please help?
Thank you.