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WITHDRAWAL Definition

A

ahujas

Member
Hi there,
Does lapse, surrender and paid up risk fall under withdrawal risk or is it just the first two?
Is partially paid up policy treated as a withdrawed policy?
Apologies for asking a very basic question about the definition of the withdrawal, it has been cropping up everytime I see this word.:)
 
Does lapse, surrender and paid up risk fall under withdrawal risk or is it just the first two?
Is partially paid up policy treated as a withdrawed policy?
Apologies for asking a very basic question about the definition of the withdrawal, it has been cropping up everytime I see this word.
Click to expand...

Good question. I'm afraid people will use withdrawal to mean different things in practice. However, in the exam I'd be inclined to cover all the points you made (to get all the potential marks).

For example, a problem with withdrawals for unit-linked policies is we don't get the future fund management charges. If the policy lapses/surrenders then we don't get any more charges. If the policy becomes paid up, then the fund will grow more slowly and we get less charges. If a partial withdrawal is made, then we have a lower fund and hence lower charges.

Best wishes

Mark
 
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