Q3.5 in course notes asks the advantages and disadvantages of regulation in the sale of unit linked savings products. In the answer provided, the solution is just an outline of the costs and benefits of regulation in GENERAL without much connection to the unit-linked products. For the exam, will such a general answer be sufficient? Or will I needs to provide the specific points to connect it with unit linked savings products?
Hi George I believe you’re referring to part (i) of the question: ‘Outline the main benefits and costs associated with the regulation of the sale of unit-linked savings products by life insurers.’ Your question is a good one, and you are correct that we should be thinking about the specifics of a question when answering it. However, CP1 is about breadth and is fairly general so the regulation of specific products / investments / functions is not covered. Therefore, the general benefits and costs of regulation should be used/applied when asked for benefits and costs for a particular investment/ policy and function – the general points made just need to be relevant. It is a good strategy for CP1 to aim to tailor points to the specifics of the question as much as possible, such as is done in the solution for this question by referring to investment / unit-linked funds and to charges (rather than premiums). However, it is still fine to include more general points where such tailoring is not feasible, provided those points could be relevant to the context. I hope this makes sense.
