Question

1. discuss the factors that an investor should look at when deciding on choosing an insurance plan.
2. discuss the factors that actuaries look at when designing the level of premium for insurance companies.
3. choose five different investment opportunities in Fiji, where one of the investment should be an insurance policy (other investments but not limited to could include; savings account, term deposits, ordinary annuities, share market, real property etc.).

• Briefly discuss the investments of your choice.
• Take a notional amount of $100 000 each, where preferable, for your investments and choose a notional maturity period, keeping it same for all the investment opportunities. Calculate the future value of your five different investments, over your chosen period.
• To obtain your other variables, you will have to use either the RBF documents, financial intermediaries releases or particular indexes, for your calculations. These needs to be referenced properly and where possible a copy needs to be placed in the appendix section.
• As this Unit deals with Actuaries, you are to present your data in analytical form using proper tools such as Excel, Tables, and Mathematical applications. Marks will be based on how well you are able to present the variables like rate/ interest, n=period, t=time, etc. To prove your results, you are to then re-calculate the future values of these investments using the formulas that you have learnt in your course.
• d.From the data obtained in the previous parts, do a comparative analysis and determine which investment opportunity, you will invest in if you had to choose one. Provide proper reasoning to your choice.
• e. Write a proper conclusion with strong recommendations.

Answer 1

a. Factors to be considered while choosing a insurance plan are:

• Need Based investment: Insurance is a protection-cum-long term investment and savings tool, therefore before choosing a insurance plan you should definey our need and accordingly buy a policy that will help you meet you requirements in future.
• Background check and due dilligence:After choosing a policy we shoukd conduct the necessary background check of the company concerned. Insurance companies provide comprehensive disclosures on their website so we can look for all the required information like policy structure,customer services, scope of network,etc
• Fund performance : when buying a particular plan which involves risk we can look after the past performance of the company and choose a company which have good fund performance and constant track record .
• Claim settlement Ratio: We should look for the company which has healthy claim settlement ratio
• Understanding the policy: After considering the above points you should understand the features of the policy rekated to premium and paying terms.

b. Factors to be considered while designing the level of insurance premium are:

• Age: Premiums increses as the age increases.Premiums can be upto 3 times higher for older people than for ypunger ones.
• Type of coverage:The more coverage you get more expemsive the premium would be,thatmeans if the insurance covers more types of threats then the premium will be higher.
• Amount of coverage : Lower amount of coverage will have low premiums.Premium varies with the amount of coverage.
• Personal imformation:Following information can be looked for-claims history,credit history,marital status,gender,lifestyle,health,etc