September 2016, Q2

The intention here is that the fund would be exhausted by the end of the term, so no end of term value to the policyholder (not mentioned until right at the end of the question so important to read it all before attempting the question). The advantage of this type of CI product for the policyholder could be lower premiums. But, there is the risk the premiums / sum assured will change if investment returns are not as high as anticipated. In some countries I believe there is a tax advantage to writing cover in a UL wrapper, so this could also be the driver for this structure.

Part (vi) is asking you how you would ensure that the premium charged would be enough to cover the expected future costs. In this case, we have done this if the UF is exhausted at age 85. So, we need to describe a cashflow projection for the unit fund. This would need to then be repeated at different premium rates if the fund was exhausted too early (or too late).

It's an unusual product, but just stick to the information given in the question and you will pick up marks in the exam.