PARTICPATING WHOLE LIFE   

APLII EXERCISE 3 PARTICPATING WHOLE LIFE

 

  • Find the Cash Value and Death Benefit @age 65, for a Male [C3], Standard Risk Class, with each Participating Whole Life Dividend Option APLII [F7]: Accrued, Apply to Premium, PUA, and 1 Year Term.

 

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Accrued           Apply              1 YR Term       PUA

  1. Cash Value =                      =                      =                      =

 

  1. Death Benefit             =                      =                      =                      =

 

 

  • Find the Cash Value and Death Benefit @age 65, for a Female [C3], with each Participating Whole Life Dividend Option APLII [F7]: Accrued, Apply to Premium, PUA, and 1 Year Term.

 

Accrued           Apply              1 YR Term       PUA

 

  1. Cash Value =                      =                      =                      =

 

  1. Death Benefit =                      =                      =                      =

 

 

  • In what policy year does the Policy become self-sustaining with the:

 

PUA Option     Apply Option

  1. Male             =                      =

 

  1. Female =                      =

 

  • Discuss the tradeoffs between the four Participating Whole Life Dividend Options: Accrued, Apply to Premium, PUA, and 1 Year Term.

 

  • Which Participating Whole Life Dividend Options: Accrued, Apply to Premium, PUA, and 1 Year Term would be financially preferred and why? (This is not intended to be a personal question, and no personal information is expected or required.)

 

 

  • With the APLII Data Input Basic Assume Policy Elements set to Above Original values, and with the PUA option, change the MORTALITY DIVIDEND FACTOR % [H7] from 15% to 13%. Using the Goal Seek function Calculate the EXPENSE DIVIDEND FACTOR % [G7] that would provide the Original PUA Cash Value, question 1) Male or 2) Female), at age 65.

 

Cash Value @65          Expense Dividend Factor %

Male     =                                  =

Female =                                  =

 

  • Based on the answer in 6), is the Participating Whole Life Policy Dividend more sensitive to the MORTALITY DIVIDEND FACTOR % or the EXPENSE DIVIDEND FACTOR %?

EXPLAIN WHY.

 

 

APLII INPUT:

Adjustable Policy Elements

Projected Interest Rate [P7] = Projected

Annual Interest Rate Change [Q7] = .001 should show as 0.10%

Note: This creates an increasing interest rate scenario in APLII Column AB

  • Compare the relative increase in Cash Value @65 with increasing PROJECTED INTEREST RATES [P7], with decreases in the MORTALITY DIVIDEND FACTOR % [H7] and EXPENSE DIVIDEND FACTOR % in Question 7)

 

What is the Financial Explanation for the relative impact on Cash Value @65?

 

 

 

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