UNIVERSITY OF GHANA

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B.SC./B.A. FIRST SEMESTER EXAMINATIONS: 2019/2020

DEPARTMENT OF STATISTICS & ACTUARIAL SCIENCE
ACTU 403: ELEMENTS OF LIFE INSURANCE
INSTRUCTIONS: ANSWER ALL THE QUESTIONS IN SECTION A,
AND ANY OTHER TWO QUESTIONS IN SECTION B
TIME ALLOWED: TWO AND HALF (2 ½) HOURS

SECTION A
(ANSWER ALL QUESTIONS IN THIS SECTION)
(50 MARKS)

1. Explain briefly the principle of risk transfer in insurance.

2. What is a Rider? Give two examples.

3. What is an Annuity? State the fundamental purpose of this product, and explain how it
differs from life insurance.

4. To ensure equity, a life insurance underwriter uses risk classification as part of the
underwriting process. What are the four identifiable risk classes, and what do they
represent?

5. Differentiate between Facultative and Treaty Reinsurance. What are some of the reasons
why an offer of reinsurance may be unacceptable to a reinsurer?
6. What is the meaning of the term ‘Reserve’? What is the difference between prospective
and retrospective reserve?

7. In the determination of premiums as part of the process of product pricing, what are the
factors that influence the premiums chargeable?

8. State and explain briefly, four reasons why Insurers are regulated.

9. What is the difference between Moral Hazard and Morale Hazard? Explain Legal Hazard,
and give an example.

10. Explain what Embedded Value is. How is the Embedded Value of a life insurance company
determined?
 SECTION B

ANSWER TWO QUESTIONS ONLY

(ALL QUESTIONS CARRY EQUAL MARKS)

1. (i) Explain fully the ways in which Group Insurance differs from Individual Insurance.
(ii) Group Insurers must observe certain underwriting principles so that the loss experience
of the group is favourable. State and explain briefly all these principles.

2. (i) Define the term Underwriting. What is its purpose?

(ii) The Underwriting process requires the appraisal of a number of factors about an
application for life insurance, and assesses the risks involved.
State and describe all these relevant factors, and explain the importance of the Medical
Attendant Report and Medical Examination as part of the process.

3. (i) What is Risk Management? State the requirements that a risk must satisfy to be
considered insurable.
(ii) State and explain the steps involved in a Risk management Process.

4. (i) What is an Investment Policy for a life insurance company? Describe the relevant
considerations in constructing an investment portfolio for life insurance funds.
(ii) In fashioning out the Rules for an Investment Policy for life insurance funds, what are
the basic specifications that are considered.