I
Ivanhoe
Member
I am unclear about the exact nature of cash flows of Unit linked policies. Some basic issues that I am unfamiliar with. I will be glad if you could respond
1. For a minimum guaranteed sum assured for Unit linked policies, when they charge the unit account by deducting the number of units equal to qx(guaranteed sum assured-Bid value), aren't they actually reducing the unit fund further?
2.If this is anyway followed, this charge will be an inflow to the Non unit account and there will also be an outflow to the same extent, isn't it?
So, what is the risk here? Is it that they underestimate qx? Do we do all the reserving and cash flow forecasting right at the outset or do we determine qx at the end of every year and then smooth it?
Will some one please shed some light on the timing of calculation of cash flows and on the mortality charge?
1. For a minimum guaranteed sum assured for Unit linked policies, when they charge the unit account by deducting the number of units equal to qx(guaranteed sum assured-Bid value), aren't they actually reducing the unit fund further?
2.If this is anyway followed, this charge will be an inflow to the Non unit account and there will also be an outflow to the same extent, isn't it?
So, what is the risk here? Is it that they underestimate qx? Do we do all the reserving and cash flow forecasting right at the outset or do we determine qx at the end of every year and then smooth it?
Will some one please shed some light on the timing of calculation of cash flows and on the mortality charge?