Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam

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In Australian retail life insurance product design, what was the primary driver of the severe multi-billion dollar industry losses in 'Individual Disability Income Insurance' (IDII / Income Protection) over the decade leading up to 2020?

Flawed product design featuring loose 'own occupation' disability definitions to age 65, high replacement ratios (>75-85%), agreed-value benefits, and generous ancillary add-ons that created significant moral hazard and disincentives to return to work A sudden catastrophic doubling of mortality rates among young drivers A complete collapse in the Australian commercial property market A statutory ban by APRA on charging annual premiums

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