Premium Calculation - Initial expenses.

Query is specific about the premium payable m thly.
I met some questions wherein the statements used for the initial expenses are as ..
X% gross on first annual premium
X% on First Premium
X% of Gross annual premium
X% of total annual premium
In some solutions they used initial expense term in equation as X% * P and X% * m * P ( P is premium )
Query 1) When to use X% * P and When X% * m * P ?
2) Is there any specific rule by which one can identify when to apply what?
Expecting reply soon.

 

To answer ur ques 1)
Let assume P=12 pa payable mnthly..
[i.e. premium of rs.1 is paid every month]
So, ur first annual premium will be 12 and ur first premium will be paid after 1st month of Rs 1.
.
Now read carefully, if they ask for X% of first ANNUAL Premium, that will be = X%×P(= X%×12 here)
.
While if they ask for X% of FIRST PREMIUM PAYMENT, that will be = X%×P×(1/m) {= X%×12×(1/12) = X%×1 here}
.
Hopefully it helps.
Regards,
Shikha

 

Not getting it. Am referring to IAI Q.12) May'08 and UK Q.12) Sep'06. Both questions are same.
Content in the questions related my query are as.
IAI Q.12) May'08 -
Level premiums are payable monthly in advance for the term of the policy, ceasing at earlier death.
...
Initial expenses: £200 and 25% of the total annual premium (all incurred on policy commencement)

UK Q.12) Sep'06 -
Level premiums are payable annually in advance for the term of the policy, ceasing on earlier death.
...
Initial expenses: £200 and 25% of the total annual premium (all incurred on policy commencement)

1) Till now what i understood is, if its telling X% of annual premium and if premiums are payable m thly then use ( m * X% * P ) and if premium is annual then ( X% * P ).
Am i following the correct concept?
2) Solution to IAI, the premium is monthly, then why not used \(12 * 0.25 * P\) instead \( 0.25 * P \)
Why ?

 

As far as I have understood ur ques, the difference have arisen because of the way they have let the notations.
.
In IAI ques, they must have let P=monthly premium, so our Annual Prem=12P
.
While in IFOA ques, since prem are payable annually, so P=annual Prem

 

This is what I got when I tried to write equation of above questions!