• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Chapter 10

K

kimiko

Very Active Member
Hi Mark, can you help me understand this part on page 19 Solutions: "If the average size of withdrawing policies is larger than those that remain, then there will be less contribution per remaining policy, on average, to cover per-policy expenses. So profits may fall if withdrawal rates increase, even if the amount of per-policy expenses were to be unaffected." Is it because larger policies contribute larger profits?
 
kimiko said:
Hi Mark, can you help me understand this part on page 19 Solutions: "If the average size of withdrawing policies is larger than those that remain, then there will be less contribution per remaining policy, on average, to cover per-policy expenses. So profits may fall if withdrawal rates increase, even if the amount of per-policy expenses were to be unaffected." Is it because larger policies contribute larger profits?
Click to expand...
Hi Kimiko

Yes that's right. Larger policies contribute larger profits if the expense loading is calculated as a proportion of the premium.

Best wishes

Mark
 
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