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Reserves in Unit-linked insurance

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asked Nov 2, 2017 in BUS 3024S - Contingencies by anonymous

Hi there

My question is pertaining to setting up reserves for unit-linked insurance contracts for the benefits to be paid out. From the examples I have done, I have noticed that, reserves are not really set up? Should we assume that no reserves are set up unless explicitly told. BUS3024S Test 2 2007.pdf (0,2 MB)

I have attached the 2007 paper as an example. Question 3 part (i). When drawing up the tables, the memo does not include reserves and they only account for reserving in part (ii)

1 Answer

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answered Nov 8, 2017 by Njabulo (360 points)
In most of the recent papers (Test 2 2016 Q4b, Test 2 2014 Q4b)  they have explicitly mentioned whether they require reserves or not, yet in the older tests they don't. I understand the confusion. I think it depends on the examiner and therefore its best you ask your lecturer which is the best approach.