instituational Q: life insurance policies, pension

policy, usually, correct, question, insurance

i’m looking at the 2007 AM Institutional question on Pawtucket Mutual – are we supposed to know these policy terms:
whole life
term life
fixed rate annuities
??
also:
the time horizon of a pension? it is not indefinite. it is a single stage plan usually? it is not appropriate to say indefinite, correct?
thx

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cchang

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发表于 2013-4-22 12:07 | 只看该作者

Whole Life - a policy lasting fot eh individuals entire life
Term Life - a policy that lapses/expires after X years
Fixed Rate annuities - annuities that grow at a fixed rate. Provide longevity protection but have inflation risk.
Time horizon - almost always into perpetuity assuming the plan is a going concern. Additionally, you prob want to state that if the workforce is older etc you may have a higher focus on income to meet the higher benefits projected in the near term.

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rohitdoshi

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发表于 2013-4-22 12:07 | 只看该作者

whole or term doesnt protect against inflation does it?

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jacksparrow

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发表于 2013-4-22 12:08 | 只看该作者

generally, no. You purchase a policy that specirfies a payment in todays dollars in the occurance of death. That said, im sure there are riders you can add to the policies for additional premiums to have inflation protection. You could also do a Variable Universal Life where your beenfit is based on investments, which would protect you from inflation in the long run (hypothetically)

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JoeyDVivre