IIQE Paper 5 Investment-linked Long Term Insurance Policies question: single premium ILAS policy (premium HK$300,000) within the cooling-off period

Answer: C. HK$292,500

Answer: HK$292,500. The MVA may reflect only the loss on realising the assets bought with the premium, HK$7,500, so the refund is at least HK$300,000 - HK$7,500 = HK$292,500.Working:• MVA allowed = asset-realisation loss only = HK$7,500• Expenses (HK$2,000) and commission (HK$9,000) are excluded• Refund = 300,000 - 7,500 = HK$292,500Why not the others:• HK$283,500: This also deducts the commission, which an MVA must not include.• HK$290,500: This also deducts the issue expenses, which an MVA must not include.• HK$300,000: For investment-linked and single premium policies the insurer may apply an MVA, so a full refund is not the minimum.Watch out: Deducting the insurer's expenses or commission as part of the MVA.Rule: An MVA reflects only the loss on realising assets bought with the premium; it excludes any allowance for expenses or commissions.Source: IA Investment-linked Long Term Insurance Examination Study Notes, 2024 Edition (7th ed., Nov 2024; for exams from 17 Feb 2025), 4.13.4(b), p. 4/38