Assurances Linked to Unit Trusts

Extract

1. The object of this paper is to look at the two principal types of unit-linked contracts that are now being offered with reference to the actuarial problems that they raise. In particular the calculation of premium rates, valuation, analysis of surplus and investment problems are discussed.

2. In looking at the policies that are currently offered in the unit-linked field there are two broad groupings into which most fall. These are the ‘Decreasing Term Assurance’ group and the ‘Endowment Assurance’ group. There are of course variations within each group. The main difference between the groups is that there is virtually no investment risk to the office in the Decreasing Term Assurance group but there is an investment risk in the Endowment Assurance group.

3. Because these two groups of contracts are very different and raise different actuarial problems, it is convenient to sub-divide this Paper and deal with the two groups separately.