Actuarial Concepts and Claims
Actuarial basics
Candidates must understand mortality tables, morbidity, life expectancy, premium calculation (risk, expense, and savings elements), reserves, valuation, and surplus. Grasp the difference between mortality (death) and morbidity (illness), and the effect of interest, expenses, and lapses on pricing.
Claims
Know the claims process: notification, documentation (death certificate, claim form, proof of identity), investigation, assessment, and settlement. Understand early claims (within the contestability period), accidental death claims, suicide clauses, and presumption of death. Be clear on non-disclosure as a ground for denial and on claims handling timelines.
Traps
Questions often confuse reserves with surplus, or mortality with morbidity. Another trap is treating an early claim as automatically declined; it is investigated more closely, not automatically refused.
Worked example
A policyholder dies in year 2 of a 20-year policy with a two-year contestability period. The insurer investigates and finds material non-disclosure. The claim may be denied and premiums refunded, depending on the jurisdiction. Rule of thumb: within the contestability period, the insurer may rescind for non-disclosure; after it, the policy is generally incontestable except for fraud.
Key rule
Premiums reflect risk, expenses, and interest; reserves are liabilities, surplus is the excess of assets over liabilities.
Insurance Law, Regulation and Ethics
Legal framework
Candidates must understand the Insurance Act or equivalent, licensing of insurers, agents, and brokers, solvency and capital adequacy requirements, policyholder protection schemes, and market conduct rules. Know the roles of the regulator, the ombudsman, and the courts.
Ethics
Grasp the ethical duties: integrity, competence, confidentiality, fair dealing, conflict of interest management, and anti-money laundering obligations. Understand treating customers fairly, suitability, disclosure of commission, and complaints handling.
Traps
Questions often confuse the roles of the regulator and the ombudsman, or treat a code of conduct as law. Another trap is assuming commission disclosure is optional; in many regimes it is mandatory.
Worked example
An agent recommends a high-commission product that does not suit a client's needs. This breaches suitability and fair dealing, even if the client signs. Rule of thumb: the test is whether the recommendation meets the client's needs, not whether the client consented.
Key rule
Regulation sets the minimum legal standard; ethics sets the higher professional standard.