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Insurance

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9 views4 pages

Insurance

Uploaded by

kphoa00
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Practice

1. An insurance policy for a $10,000 properly which has:


Insurance amount: $9,000. Deductible: 10% loss but no less than $500. The
deductible rule is applied before the pro data rule.
After an accident, damage is $3,000. How much is the insurer payout?

 Deductible amount = 10% of loss but not less than $500


 Deductible amount = 10% x $3,000 = $300 < $500

 Since $300 < $500, the deductible amount applied is $500.


 Covered loss = Loss amount – Deductible amount = $3,000 - $500 =
$2,500
 Insurer payout = Covered loss x (Insurance amount/Property value) =
$2,500 x ($9,000/$10,000) = $2,250
 Therefore, the insurer will pay $2,250 to cover the property damage.

2. A $20,000 property is insured by an policy which has the limit covered 85%
its value
Deductible: 10% loss but no less than $500. The deductible rule is applied
before the pro rate rule.
After an accident, damage is $8,000. How much is the insurer payout?

 Deductible amount = 10% of loss but no less than $500


 Deductible amount = 10% x $8,000 = $300 < $500

 Since $800 > $500, the deductible amount applied is $800


 Covered loss = Loss amount – Deductible amount = $8,000 - $800 =
$7,200
 Insurer payout = Covered loss x (Insurance amount/Property value) =
$7200 x 85% = $6,120
 Therefore, the insurer will pay $6,120 to cover the property damage

3. An insurance policy for a $500,000 property which has:


Insurance limit: $420,000 (Insurance limit is constant during insurance
period)
Deductible: 10% loss but no less than $2,000
During the validity period of the contract, the following incidents have
occurred (as shown in the table)
Determine the total insurer payout of the year. Calculate in 2 cases: the
deductible rule is applied before the pro data rule, and verse.
Date Damage Property value (before incidents)
Feb 1 100,000 500,000
June 15 10,000 480,000
Sep 20 50,000 480,000

(1) Feb 1. 10% of loss = 100,000 x 10% = 10,000 > 2000


 Deductible is 10,000
420,000
Insurer payout = (100,000 – 10,000) x 500,000 = 75600

 Deductible is 2000
420,000
Insurer payout = (10,000 - 2000) x 480,000 = 7000

Sep 20. 10% of loss = 50,000 x 10% = 5000 > 2000


Deductible is 5000
420,000
Insurer payout (50,000 - 5000) x 480,000 = 39375

Total payout = 75600 + 7000 + 39375 = 121975

Chapter II. Social Insurance


Reasons for Social Insurance
 Social insurance programs are necessary for several reasons:
 To help solve complex social problems
 To provide coverage for perils that are difficult to insure privately
 To provide a base of economic security to the population
Basic Characteristic of Social Insurance:
 Most programs are compulsory
 Programs are designed to provide a floor of income
 Programs pay benefits based on social adequacy rather than individual
equity
 Benefits are loosely related to earnings
 Programs, benefits, and benefit formulas are prescribed by law
 A formal means test is not required
 Programs are designed to be financially self-supporting

What is Social Security?


 People face contingencies during their life cycle, which have financial
consequences
 Social security is provided to members of a society against the economic and
social distress caused by such contingencies

- Definition of Protection Provided by Society


To financially

Social Security/Protection Branches


- Medical care
- Sickness
- Unemployment
- Employment injury
- Old age
- Family benefit
- Maternity benefit
- Invalidity benefit
- Survivor’s benefit
YouTube: How Social Security Works
America social security system:
- Old-age Benefit
- Survivor’s Benefit
- Sickness Benefit
- Maternity Benefit
o Help the mother feel more secure knowing that they are always
protected against any risks that may occur
o Costs of examination and childbirth are covered
o Pregnant mothers enjoy benefits such as no limit on the amount and
number of maternity examinations
o Hospital fee guarantees applicable at all hospitals in Vietnam, quick
compensation services
- Work Injury and Occupation Disease Benefit
- Unemployment Benefit
- Medical Benefit

Example of Life insurance premium computation


- This year, Mr. X, a 35-year-old man is participating in term life insurance
with a term of 5 years. The contract is as follows:
o The face amount is paid at the end of the year of the death event is
50mil VND
o Technical interest rate: 10%/year
o Operation premium: 20% of total premium
o According to the table of men’s mortality, the number of men alive by
age is
Age 35 36 37 38 39 40
Number 97477 97370 97255 97131 96997 96850
alive
- Request:
1. How much is the total premium paid one time? (single premium)
2. How much is the total premium paid periodically? (annual
premium)

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