Mortality Option and Guarantee

Hi,

Please could someone answer my query. Thank You

Mortality Option for TA:-
The course says that "As take up of the mortality option increases so the Cost of the option increases". Why is this?

I would think that as take up rate increases the cost decreases because
volume of policies increases and per-policy expenses decrease. So option cost decreases.
Also as take up increases, so the average mortality of lives tends to the average policyholder buying the product which is likley less than the one sbuying the option, so option cost decrease as less likelihood of claim.

Guarantee question I've already answered for myself.

 

Thank you, I see.

So does this mean:-

If withdrawals prior to exercise date are low, then higher the cost of the option?
because there are more policyholders who can potentially exercise the option?

The more encouragement given to policyholders to exercise the option, the higher the cost?
because more policyholders will exercise the option?

Thank you.

 

Thank you

 

Hi Mark,

Please can I ask a question about "Unitised With profits " (UWP) products Vs. "Unit Linked" (UL) products.
How are they similar and how are they different?

Notes say the charging structure could be similar. Ok i understand that. But could the UWP product have a non-unit fund also?

For the UWP, who invests the premiums? The company (like a usual WP product, so investment risk is on the company) or the policyholder (Like a UL product, so investment risk is on the policyholder)?

Does the UWP product act similarly to a WP product in that its units are smoothed and company profits are taken on bonus declarations?


Thank you.