Question $4(20$ Marks$)$

Underwriting may appear to be a rather prosaic endeavor, but getting it wrong can have

dramatic effects. Insurance is highly regulated and policy changes might have unexpected

results. Assume that the government suddenly enact "unisex" insurance rates, i$.$e$.,$ an insurer

may not use gender for underwriting purposes which effectively lump men and women into the

same risk pool. Please briefly discuss what we would expect for the change in premiums for

men and women at age $25$ respectively and the possible consequences: a$)$ whole life insurance

products; b$)$ health insurance covering medical expenses including maternity costs. Note to

use the normal assumption including mortality rate assumption and expected utilization of

health services at the certain age.