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𝟏𝟎 π₯𝐞𝐬𝐬𝐨𝐧𝐬 π₯𝐞𝐚𝐫𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐭𝐑𝐞 𝐛𝐨𝐨𝐀 "𝐁𝐞π₯𝐒𝐞𝐯𝐞 𝐈𝐭 𝐭𝐨 π€πœπ‘π’πžπ―πž 𝐈𝐭" by Brian Tracy and Christina Stein is a motivational book that focuses on the power of mindset and belief in achieving goals. Some key lessons from the book include: 1.The Power of Belief: _______ The book emphasizes that your beliefs shape your actions and outcomes. Having a strong belief in your abilities and your goals can drive you towards success. 2.Positive Self-Talk: _____ The authors stress the importance of using positive affirmations and self-talk to overcome self-doubt and build self-confidence. 3. Visualization: ____ The book encourages readers to visualize their goals and desired outcomes. Visualizing success can help in creating a clear mental image of what you want to achieve. 4. Setting Clear Goals: ___ Setting specific, measurable, achievable, relevant, and time-bound (SMART) goals is essential for focused progress and achievement. 5. Perseverance: ______ The book highlights the need to stay persistent in the face of challenges and setbacks. Believing in your goals and maintaining determination can help you push through difficulties. 6. Taking Action: _____ Belief alone isn't enough; taking consistent action towards your goals is crucial. The book emphasizes the importance of continuous effort. 7. Surrounding Yourself with Positivity: _____ Surrounding yourself with supportive and positive influences can help reinforce your beliefs and motivate you to achieve your goals. 8. Mindset Shift: __ The book advocates for shifting from a fixed mindset to a growth mindset, where you believe that your abilities and intelligence can be developed through dedication and hard work. 9. Overcoming Fear: ______ The authors discuss strategies for overcoming fear and doubt, which often hinder progress. Cultivating courage and facing challenges head-on is essential. 10. Learning and Adaptation: ____ Embracing a mindset of learning from failures and adapting your approach can lead to continuous improvement and eventual success. 𝟏𝟎 π₯𝐞𝐬𝐬𝐨𝐧𝐬 π₯𝐞𝐚𝐫𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐭𝐑𝐞 𝐛𝐨𝐨𝐀 "𝐁𝐞π₯𝐒𝐞𝐯𝐞 𝐈𝐭 𝐭𝐨 π€πœπ‘π’πžπ―πž 𝐈𝐭" by Brian Tracy and Christina Stein is a motivational book that focuses on the power of mindset and belief in achieving goals. Some key lessons from the book include: 1.The Power of Belief: _______ The book emphasizes that your beliefs shape your actions and outcomes. Having a strong belief in your abilities and your goals can drive you towards success. 2.Positive Self-Talk: _____ The authors stress the importance of using positive affirmations and self-talk to overcome self-doubt and build self-confidence. 3. Visualization: ____ The book encourages readers to visualize their goals and desired outcomes. Visualizing success can help in creating a clear mental image of what you want to achieve. 4. Setting Clear Goals: ___ Setting specific, measurable, achievable, relevant,

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Dr. Amitabh Mishra
ο‚— An insurance premium is the money charged by
insurance companies for coverage.
ο‚— Premium is the consideration money that a
policyholder has to pay in lieu of the benefit that the
insurer promises to confer on the happening of the
scheduled eventuality.
ο‚— Insurance is a contract and the policyholder /insured.
Premium forms the obligation on the part of the
insured.
Dr. Amitabh Mishra
ο‚— Insurance premiums differ from company to company, so it
is advisable that individuals shop around for insurance
premiums.
ο‚— It is important to note that, sometimes, insurance premiums
quoted are slightly different from the premiums charged.
ο‚— The amount of insurance premiums charged by the
insurance companies is determined by statistics and
mathematical calculations done by
the underwriting department of the insurance company.
Dr. Amitabh Mishra
Dr. Amitabh Mishra
Premiums
Net/Pure
premiums
Net Single
premiums
Net level
premiums
Gross/Office
premiums
Gross Single
premiums
Gross level
premiums
Dr. Amitabh Mishra
ο‚— Net premium: Net premium is based on
β—¦ Mortality &
β—¦ Interest rate
ο‚— Gross premium: Gross premium is based on
β—¦ Mortality
β—¦ Interest rate
β—¦ Expenses &
β—¦ bonus loading
Dr. Amitabh Mishra
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calculationofpremiuminlifeinsurance-191031185930-1-31.pdf

  • 2. ο‚— An insurance premium is the money charged by insurance companies for coverage. ο‚— Premium is the consideration money that a policyholder has to pay in lieu of the benefit that the insurer promises to confer on the happening of the scheduled eventuality. ο‚— Insurance is a contract and the policyholder /insured. Premium forms the obligation on the part of the insured. Dr. Amitabh Mishra
  • 3. ο‚— Insurance premiums differ from company to company, so it is advisable that individuals shop around for insurance premiums. ο‚— It is important to note that, sometimes, insurance premiums quoted are slightly different from the premiums charged. ο‚— The amount of insurance premiums charged by the insurance companies is determined by statistics and mathematical calculations done by the underwriting department of the insurance company. Dr. Amitabh Mishra
  • 6. ο‚— Net premium: Net premium is based on β—¦ Mortality & β—¦ Interest rate ο‚— Gross premium: Gross premium is based on β—¦ Mortality β—¦ Interest rate β—¦ Expenses & β—¦ bonus loading Dr. Amitabh Mishra
  • 7. ο‚— Single premium: The premium can be paid at one time, when it is called a single premium. ο‚— Level premium: Premium can also be paid in instalments i.e. β—¦ Yearly, β—¦ half–yearly, β—¦ quarterly or β—¦ monthly. ο‚— Single premiums are rare except in pension plans. Tabular premiums are given in yearly mode. Half–yearly, quarterly and monthly mode instalment is obtained by dividing the tabular premium by 2 or 4 or 12. However before going for this division, one has to allow for certain rebates which are allowed at different rates for different modes under different plans. Insurers allow some rebate on the premium for yearly and half–yearly mode. However this rebate varies from plan to plan. Dr. Amitabh Mishra
  • 9. ο‚— There are three important elements in the computation of premium. They are Dr. Amitabh Mishra Important elements in the computation of premium Mortality, Expenses of management, Expected yield on its investment.
  • 10. ο‚— The mortality tables are prepared by the insurers on the basis of their experience over a number of years. ο‚— Though the rate of mortality increases with the increase in age, all insurers charge a level premium which remains constant over the entire duration of the policy term. ο‚— It is the actuarial science which provides the method to assess such increasing risk and convert it into a level premium. Dr. Amitabh Mishra
  • 11. ο‚— Any insurer has to incur expenses for conducting the insurance business. ο‚— These expenses are not of constant nature. They keep on increasing due to inflationary market conditions. ο‚— Huge expenses are incurred for β—¦ Procurement of new business, β—¦ Payment of commission to the agent and β—¦ Incidental expenses like preparation of policy document etc. β—¦ Servicing of the policies, e.g. ο‚– Collection of renewal premium, ο‚– valuation to determine bonus payable, β—¦ Payment of Survival Benefit and Death claim and Maturity Benefit etc. Dr. Amitabh Mishra
  • 12. ο‚— As the above two elements go to increase the premium rate, the expected yield on investment of the collected endowment component of premium goes to reduce the premium rate. ο‚— However, as the future yield cannot be determined exactly, it is necessary for a prudent insurer to keep a reserve to take care of unexpected fall in the rate of yield. Dr. Amitabh Mishra
  • 14. ο‚— Net single premium is that premium which is received by the insurer in a lump sum and is exactly adequate, along with the return earned thereon, to pay the amount of claim wherever it arises whether at death or at maturity or even at surrender. ο‚— It does not provide for expenses of management and for contingencies. Dr. Amitabh Mishra
  • 15. 1. Determine what constitutes a claim (a) death, (b) survival or (c) both. 2. Determine when claims are paid (a) at the beginning, (b) at the end, or (c) during the year. 3. Determine the number of insured. 4. Determine the duration of the policy. 5. Determine the probable number of claims per year. Dr. Amitabh Mishra
  • 16. Dr. Amitabh Mishra 6. Determine the value of claims per year. 7. Determine the number of years of interest involved and find the present value of a rupee. 8. Determine the present value of the claim for each year. 9. Determine the present value of all future claims. 10. Determine the net single premium, (i.e., present value of future claims) divided by number assumed for buying policy.
  • 17. ο‚— The following factors are assumed while calculating the net single premium. β—¦ As many policy of a given type is issued as are the no. of person” β—¦ Premiums are collected in advance or in the beginning of the period. β—¦ All collections are immediately invested and will remain invested until money is needed for the payment of claims. Dr. Amitabh Mishra
  • 18. β—¦ The insurer will receive an assumed rate of interest. β—¦ The interest or dividend or any return of the invested funds is immediately invested for re- earning. β—¦ Mortality rate will be the same as given in the mortality table and will he uniformly distributed throughout the year. β—¦ All policies are of the same amount, say, Rs. 5,000. β—¦ Claims will be paid only at the end of the period. Dr. Amitabh Mishra
  • 19. Calculation of net single premium is different in different types of policies Dr. Amitabh Mishra
  • 20. ο‚— This is the simplest type of insurance contract whereby, payment is made only when the life assured dies within the term specified. ο‚— Nothing will be paid if death does not occur during the designated term. This is also called temporary insurance. ο‚— The premium is received in advance and it will not be returned if life assured survives. Dr. Amitabh Mishra
  • 21. ο‚— The premium is paid only once in a single sum at the inception of the policy. ο‚— Death claims will be paid at the end of the year in which they occur and not at the end of the term. ο‚— Thus the probability of death in each year along with the present value, of the claim for each year will be calculated because the death may occur at any moment and the insurer may be required to pay. The term may be one, two, five or seven years. Dr. Amitabh Mishra
  • 22. ο‚— A person wants a term insurance is for a period of 5 years. β—¦ Rate of return on investment is 3 per cent and the mortality experience is like the one shown in the oriental 1953-54 Experience Life Table. β—¦ The person is proposing at the age of 40 for the period of 5 years. β—¦ Each person dead will be paid Rs. 1,000. The number of details can be known from the table. Dr. Amitabh Mishra
  • 23. Dr. Amitabh Mishra Age No. of person living No. of death Mortality rate per 1000 (No. of deathx1000)/ No. of person living 40 96463 273 (273x1000)/96463 = 2.83 41 96190 302 =3.14 42 95888 336 =3.50 43 95552 375 =3.92 44 95177 418 =4.39 45 94759 467 =4.03 Oriental 1953-54 Experience Life Table
  • 24. ο‚— The insurer will earn a fixed return on the investment, therefore, only the present value of the claim should be taken as a premium. Thus, the net single premium for each year will be calculated: Dr. Amitabh Mishra (Number of deaths x Amount of claims x Present value of Re. 1) = Present value of claims
  • 25. ο‚— Where, β—¦ P= The present value, β—¦ S= The amount of which present value is to be calculated β—¦ i = The rate of interest and β—¦ n = The number of years for which present value is to be calculated. Dr. Amitabh Mishra
  • 26. ο‚— The present value of the first year, β—¦ S= Rs. 1, n = 1, & i = .03 ο‚— Present value for the 1st year of insurance P= ο‚— The present value of the 2nd year, β—¦ S= Rs. 1, n = 2, & i = .03 ο‚— Present value for the 2nd year of insurance P= Dr. Amitabh Mishra
  • 27. ο‚— The present value of the 3rd year, β—¦ S= Rs. 1, n = 3, & i = .03 ο‚— Present value for the 3rd year of insurance P= ο‚— The present value of the 4th year, β—¦ S= Rs. 1, n = 4, & i = .03 ο‚— Present value for the 4th year of insurance P= Dr. Amitabh Mishra
  • 28. ο‚— The present value of the 5th year, β—¦ S= Rs. 1, n = 5, & i = .03 ο‚— Present value for the 5th year of insurance P= Dr. Amitabh Mishra
  • 29. Dr. Amitabh Mishra Year of insura nce Age Attain ed No. of person living No. of death Amount claimed per death Present value of Rs1.0 Present Value of claims 4x5x6 1 2 3 4 5 6 7 1 40 96463 273 1000 .971 (273x 1000x .971)= 265083 2 41 96190 302 1000 .943 (302x 1000x .943)= 284786 3 42 95888 336 1000 .915 (336x 1000x .915)= 307440 4 43 95552 375 1000 .888 (375x 1000x .888)= 333000 5 44 95177 418 1000 .863 (418x 1000x .863)= 360734 Present value of all claims 1551043
  • 30. ο‚— Present value of all claims = 15,51,043 ο‚— Total premium charged on all 96,463 policies (no. of living person) = 15,51,043 β—¦ It was assumed that β€œas many policy of a given type is issued as are the no. of person” ο‚— Therefore, premium per policy= 1551043/96463 = Rs. 16.18/ Dr. Amitabh Mishra
  • 31. ο‚— Thus, the present value of claim for the first year will be 273 x 100 x 0.971 = 265083 because the number of deaths are 273 and the total amount of claim, so, would be 2,73,000. If multiplied by factor of present value it gives present value of claim. ο‚— Thus the net single premium will be the same whether it has to be calculated on the basis of group policy or on the basis of single policy; the probability method is generally used for calculation of premium. Dr. Amitabh Mishra