Exam 15: Insurance Companies

A policyholder wishes to annuitize the cash value of her insurance policy at retirement. The cash value is $725,000. What payment (to the nearest dollar)can he expect if he wishes to receive 15 years of payments (starting next year)and interest rates are 5.25 percent?

What is the combined ratio after dividends for this line? Are premiums sufficient to generate profitability for this line? Why or why not?

In a typical variable life policy the policyholder may vary the premium payments and the maturity date of the policy.

In a universal life policy the cash value of the contract grows at a fixed rate set by the life insurer.

Everything else constant,what is the maximum expected loss ratio that would yield a profitable line after including investment income?

The top 10 property and casualty firms underwrite half of all the P&C premiums written.

Premiums on standard annual renewable term life will generally increase as the policyholder ages.

A 65-year-old wishes to convert the cash value of his insurance policy into an annuity. He can select an annuity that will last 15 years or one that lasts 20 years. If the cash value is $450,000 and interest rates are 5.25 percent,how much less per year will he receive if he chooses the 20-year annuity?

Hurricane damage in a given area is an example of a ________ for which it is difficult to predict loss exposure.

In terms of dollar costs,the worst U.S. catastrophe since 2000 was caused by

Estimates of the cost of the September 11,2001,terrorist attacks on the World Trade Center indicate that the cost to insurance companies was as high as

A 65-year-old person has saved $1,250,000 and wishes to receive 10 annual annuity payments,beginning in one year. If the annuity rate is 5.75 percent,he can expect to receive $167,829 per year.

Halliburton was allowed to bankrupt one of its subsidiaries in settlements of lawsuits on asbestos cases. What are the pros and cons of allowing a firm to limit its liability by shifting the liability to only one subsidiary rather than placing all of the corporation's assets at risk?

An investor has $25,000 that he can invest today. In addition to this amount,he can also invest $12,000 per year for 30 years (beginning one year from now)at which time he will retire. He plans on living for 25 years after he retires. If interest rates are 8 percent,what size annual annuity payment can he obtain for his retirement years? (All annuity payments are at year-end. Round your answer to the nearest dollar.)

A whole life insurance policy pays the face value of the contract on death of the policyholder to the beneficiaries.

At P&C insurers,if the combined ratio is less than 100 percent,the premiums charged were sufficient to cover

Why are P&C insurers dependent on investment yields? Is this an argument for changing how this industry operates and/or how we regulate the industry? Explain.

In 2016 the average combined ratio after dividends for the P&C industry was________.

Policy reserves are a(n)

A policyholder wishes to annuitize the cash value of her insurance policy at retirement. She desires an annual payment of $95,000 per year and the cash value is expected to be $1,100,000 at retirement. Approximately how many payments can she expect to receive if annuity interest rates are 5.122 percent?