What this means is there is a certain dance between examiner and =
candidate with some unspoken things taken for granted so you don't trip =
over each other. Among them,
1. If it's a direct quote from the material, don't dispute it on the =
exam.
2. If it's the negation of a direct quote from the material, it doesn't =
matter how much "smoke and mirrors" are placed around it to make it seem =
plausible - it's false.
The first item in Jim's question is a case of unspoken rule #2: The =
material says nothing about new business underwriting, much less that =
it's strict. It does say continued financial underwriting is necessary =
because you have an outstanding debt from the policyholder until the =
policy terminates and the terminal premium is received. False.
The third item in Jim's question is a case of unspoken rule # 1: The =
question is a quote from the material (some paraphrasing is ok). True. =
Yes, you could privately quibble over whether a reduced cash outlay in =
the first year vs a full year's premium payment in the renewal years is =
not a difference in rate - but the question addresses premiums, not =
rates. It is a fact that paid premium in the first year is less than in =
the renewal year.=20
-----Original Message-----
From: Jim Shoenfelt [SMTP:jimshoenfelt@amdyne.net]
Sent: Thursday, April 08, 1999 6:24 AM
To: Bruce Darling
Subject:=09
Well the first one was "typoed". I guess that means there's a place =
waiting for me on the examination commitee. Take two...
90-6-26-1=20
Bluhm 5
I tried to post this once before, and it *seems" like it didnt work. =
(Which is best because I had typos in there anyway. =20
I think this test question was graded incorrectly, and am hoping for the =
group's validation or comments. Thanks
1. "A policyholder faces strict new business u/w to qualify for [the =
reserveless] plan. Once qualified, renewal underwriting becomes less =
significant." The CAS says this is FALSE purportedly on grounds that =
the text says that "prudence suggests that the carrier financially =
underwrite the policyholder on an ongoing basis, to ensure the ability =
to pay the terminal premium." This logic is flawed. Just because =
prudence suggests that a risk should be underwritten on an ongoing =
basis, doesn't suggest that the renewal underwriting is as significant. =
And although the text is silent on the issue of which is more =
significant - new business unederwriting or renewal biz underwriting - =
common sense dictates that New Biz u/wing is more significant. For =
example, if an insured is financially secure at year 1 it is less =
necessary to be as rigorous the following year. Arguably still =
important "for prudence sake", but not *as* important. =20
2.=20
3. "Reserveless plans usually provide only a one-time premium reduction. =
Renewal premiums in the 2nd year will most likely be substantially =
higher than those in the 1st year.". The CAS (or at least CSM) says =
this is true. This should be false. Although it's true that the =
reserveless plans provide a one-time premium reduction, it's not because =
the *renewal* premiums are *substantially* higher in the second year, =
but because the terminal premium from the prior year and the renewal =
premium are due during the same year.
<< File: ATT00001.html >>