INS 313 Theory Questions: Unit-Linked Insurance Policy

300 Level  Department of Insurance exam questions and detailed answers. Download the answers in document format. Correct, detailed, and straightforward answers.

Questions:

a) Dotun paid a premium of #1,000,000 to Consolidated Hallmark Insurance PLC which was used to buy shares of Unilever PLC by the insurer at a rate of #2 per share. The shares were eventually sold for #1,500,000. Dotun decided to cash-in on the policy and Consolidated Hallmark Insurance PLC offered a price of #1.75 for each unit. You are required to:

(i) determine the units of shares bought by Consolidated Hallmark Insurance PLC.
(ii) calculate how much will be paid to Dotun as claim under the policy
(iii) determine the bid-offer gap

b) Highlight the advantages of a unit-linked policy over conventional investment outlets.

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