Page 27 - Spotlight A+ Form 4 & 5 Mathematics KSSM

Form
5
Chapter 3 Consumer Mathematics: Insurance Mathematics
3.1 Risk and Insurance Coverage 10. Compensation that is paid by the insurance
company is based on the principle of indemnity.
Explain the meaning of risk and the According to the principle of indemnity, the
importance of insurance coverage, and insurance company will only recover the
hence determine the types of life insurance policyholder as in the original state, that is,
and general insurance for protecting a the condition before the loss incurred.
variety of risks
11. Compensation can be paid in one of the
1. When an individual experiences an unexpected following ways:
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event or disaster, such a situation is known as • Payment
risk. • Recovery or replacement
12.
2. Risk is the possibility of the occurrence of an Types of insurance
unavoidable disaster.
CHAP.
3. Examples of risks are road accidents, home theft, 3
home fires and so on. Life insurance General insurance

4. Taking out insurance is a measure to protect risk. A Life insurance

5. Insurance is an economic mechanism that 1. Life insurance is an insurance policy that
transfers risk from one party, that is, the provides protection to the policyholder in
insurance policyholder to another party, that is, the event of the occurrence of something
the insurance company. undesirable such as death, critical illness, loss of
ability and hospitalisation.
transfer risk
2. Types of life
insurance Explanation
Pays a premium
Insurance Insurance Whole life Premium has to be paid as
policyholder company insurance long as the policyholder is
Pays compensation still alive.
Endowment Premium must be paid
6. Advantages of taking out insurance to life insurance by the policyholder for
policyholders: a certain period of time
• Receive compensation in the event of the and will be refunded to
occurrence of an insurable risk. the policyholder upon
• No need to withdraw money from own funds reaching maturity together
to cover the risk. with the bonuses collected.
7. The amount of compensation paid by the Term life Premium must be paid
insurance company depends on the total amount insurance by the policyholder for
of insurance taken by the policyholder. a specified duration of
time but does not have a
8. The risk that is insured must occur during the maturity value.
period when the insurance is in force.
B General insurance
9. The compensation that is paid by the insurance
company to the policyholder depends on the 1. General insurance is an insurance policy that
amount of the actual loss and does not exceed protects an individual from any losses and
the amount of the loss. damages incurred such as the loss of property

PB 3.1.1 271

C03 SpotlightA+ Mathematics F5.indd 271 03/03/2021 5:02 PM