What is the AXIS Participating (Par) Products Module used for?
It is used to design and model traditional participating (with-profits) life insurance policies, including how dividends are declared, distributed, and applied to the policy.
What is a participating (par) insurance product?
A life insurance policy where the policyholder shares in the insurer’s surplus (profits) through dividends or bonuses that depend on the insurer’s actual experience (investment returns, mortality, expenses).
How does AXIS handle participating product modeling?
AXIS projects dividends and bonuses based on declared formulas, company experience, or dynamic surplus assumptions, and applies the selected dividend options to modify cash flows and policy values.
What are dividends in a participating policy?
Distributions of surplus to policyholders, usually paid annually, reflecting favorable experience relative to the policy’s guaranteed assumptions.
What dividend options can AXIS model?
AXIS supports dividends that are: Paid in cash; Applied to reduce premium; Accumulated on deposit; Used to buy term bonus additions; Used to buy paid-up additions or reversionary bonuses; Used to enhance face amount via combinations of term and paid-up additions.
What does the “Paid in Cash” dividend option mean?
The policyholder receives the dividend as a cash payment each year instead of applying it to the policy.
How does AXIS model cash dividends?
As an annual outgoing cash flow from the insurer to the policyholder, reducing the insurer’s surplus and reserves.
What does the “Applied to Reduce Premium” dividend option mean?
The dividend amount offsets future premium payments, lowering or eliminating the next premium due.
How does AXIS model reduced-premium dividends?
The model reduces gross premium inflows by the amount of the dividend applied, keeping total policy value consistent.
What does “Accumulated on Deposit” mean for dividends?
Dividends are left on deposit with the insurer, earning interest at a declared rate, and can later be withdrawn or used to enhance benefits.
How does AXIS model accumulation on deposit?
AXIS maintains a separate accumulation fund within the policy, credits interest, and tracks withdrawals or balance at termination.
What are term bonus additions?
Temporary (term) increases in insurance coverage purchased using the dividend, usually lasting for one year.
How does AXIS model term bonus additions?
The model uses the dividend to purchase additional one-year term coverage, adjusting death benefits dynamically each policy year.
What are paid-up additions or reversionary bonuses?
Dividends used to buy small additional amounts of permanent insurance that are fully paid-up and increase the policy’s total face amount and cash value.
How does AXIS model paid-up additions?
AXIS treats them as miniature whole life policies added to the base policy, growing cumulatively and generating their own dividends.
What are face amount enhancements in participating policies?
Dividends can be applied in combinations of term and paid-up additions to increase total coverage.
How does AXIS model face amount enhancements?
By allowing user-defined allocation rules (e.g., 50% to term, 50% to PUAs), AXIS recalculates coverage and cash value accordingly.
How are dividend amounts determined in participating policies?
Based on company experience versus policy guarantees — typically using dividend scales that depend on investment return, mortality, and expense assumptions.
How does AXIS support dividend determination?
AXIS can use declared dividend scales, formulas, or experience-based projections, and update them dynamically by scenario or assumption changes.
Why is modeling participating products important for actuaries?
Because participating policies form a large part of many insurers’ portfolios, and actuaries must model surplus sharing, reserve movements, and dividend projections for valuation, pricing, and capital purposes.
What makes the AXIS Par Products Module comprehensive?
It can model all major dividend options (cash, premium reduction, deposit, term/paid-up additions), bonus enhancements, and dynamic dividend formulas, giving actuaries full control over participating product behavior.
