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Mathematics of Insurance (DR Nada)
Mathematics of Insurance (DR Nada)
Bus. Administration
Target Students
Level 3
Groups
- Accounting (B) & (D)
- Statistics
- Business Administration (C)
1
1) The terms peril and hazard are commonly used interchangeably with each
other and with risk. However, it is important to distinguish these terms. A
peril is a cause of a loss. A hazard, on the other hand, is a condition that
may create or increase the chance of a loss arising from a given peril.
- Distinguish between the terms risk, peril, and hazard. Explain and give
examples
- Identify different classifications for each term.
- What risks do you face as an individual? Which of these risks have you
elected to retain and which have you transferred?
- Illustrate your discussion through the process of risk management.
3) The probability of loss and its potential severity affect the intensity with
which risk is felt by an individual. Would you find a 10 percent chance of
losing $100 or a 1 percent chance of losing $1000 more distasteful? Why?
- Explain how both factors (The probability of loss and its potential
severity) are very important to a risk manager.
- Identify the different statistical measures that could be used to quantify
risk, and compare between them.
- Illustrate your discussion through examples.
2
- Illustrate the type of risk.
- What are the possible suitable reactions to this risk?
- Discuss the principles of insurance and illustrate to what extend these
principles are applicable to that risk.
7) Annuity is one of the life insurance products. It has been stated that an
annuity is “upside-down” life insurance.
- Explain what this means (the difference between annuities and
insurance policies).
- Identify the various ways in which annuities may be classified and list
the different types of annuities in each classification.
- Suppose you want to purchase an annuity, determine its type, value, type
of premium and how to compute the value of premium(s).
10) Whole life policies are one of the types of cash value policies.
- Discuss this statement
- Distinguish whole life polices from other cash value policies.
- Conduct a case study to compare between single and level premiums for
whole life policies.
11) Term policies are life policies that provide death protection only.
- Discuss this statement
- Distinguish between Term polices and cash value policies.
- Conduct a case study to compare between single and level premiums for
Term policies.
4
14) A policyholder would wish to bundle death protection coverage with
savings accumulation in a life insurance contract. Do you agree or disagree
with this statement.
- Discuss this statement.
- Distinguish between level premiums and renewable term insurance
premiums.
- Conduct a case study to illustrate your computations.
- Explain what you would recommend to purchase. Why?