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in BUS 3024S - Contingencies by (1.6k points)
edited by


In the memo below, if bonuses vested at the beginning of the year  how would the underlined bracket change? I realize we would now be accumulating the last bonus added to the end of the year instead of (in the case here) we have not since it was added at the end. So would the accumulating factor just change to 'advanced'?

Please ignore the last picture. 

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1 Answer

+1 vote
by (2.9k points)
I'm not entirely sure this will ever be asked because I am no aware of any bonus agreement that gives a person a bonus at the start of the year. There are other, more efficient, ways of offering bonuses for buying a policy and the idea of a bonus is to incentivise longevity (which getting your first bonus at the start doesn't really do anything and will likely annoy the policyholder who won't get a bonus in the last year therefore potentially incentivising a lapse).

But, for the sake of having fun with theory, yes you would just change the s to be in advance and your bonuses would then be loaded.