Essay ASC2024: Life Contingencies II – Management Assignment Help

Assignment Task:

Task 1: Insurance Product 

Select one n-year term or n-year endowment insurance product (at least 20-year term) available in Malaysia which at least covers for total and permanent disability (TPD) and death benefits, by providing a summary as follows: 

(1) Name of the product and the insurance company; 

(2) The entry ages and the coverage term; 

(3) The death and TPD benefits/ the maturity benefits; 

(4) The premiums (if is given); 

(5) Additional benefits. 

(a) Share the summary of your insurance product in the “Discussions” platform of eLearn, before 17 June 2020, 11.59pm, by replying to my thread and rename the subject of your post as your group number. 

Kindly attach the product brochure or print screen of the website for verification purposes. You are required to highlight the key information in the attached document. 

(b) Tabulate your insurance product in (a) with other similar products from other groups. Compare and discuss on your results. Send in your summary in PDF (in standard format for maximum of 2 pages) via eLearn before 21 June 2020, 11.59pm, saving the file as “group_[number]” (e.g. group 1 will be “group_1”). 

Task 2: Profit Test 

Based on the insurance product that you have selected in Task 1(a), you intend to issue an insurance policy to a life aged x (will be assigned to each group), which covers for total and permanent disability (TPD) and death benefits only (also maturity benefit if any). You are given the following information: 

Premiums (if is given), death benefit and TPD benefit (also maturity benefit if any) follows your insurance policy. Premiums are payable at the beginning of each year; Benefit is payable at the end of the year of death or at the end of the year of TPD or upon maturity. First year expense is 25% of premium; Renewal year is 2.5% of premium. The prospective reserves are calculated based on the reserve basis (see below). The probability of surrender is 10% for year 1, 5% for year 2, 1% thereafter. The probability TPD follows 10% of q xin “Mortality”. The mortality assumption follows 100% of q xin “Mortality”. The settlement expenses of RM 500 is assumed to be incurred upon a death claim only. The cash surrender values are 50% of total premiums paid to date and will be paid at the end of the year of surrender. 

Mortality basis – see tab “Mortality” in the “Assignment_Workbook”. 

Reserve basis: Mortality 110% of q xin “Mortality” Interest 4% per annum Surrender None Expenses None 

(a) The life insurance company carries out a profit test on this policy, assuming a 6% per annum investment yield. Calculate the profit margin for this policy by using a risk discount rate of 7% per annum. 

(b) Comment on your profit margin: 

(i) If reserves are excluded;

(ii) If withdrawals are excluded.