Risk and Insurance Sample Essay

( a ) James should buy a flexible premium deferred rente because that would let him alterations in the sum of payments and besides the frequence of payments. He has the option of choosing the flexible premium rente which is either fixed rente or a variable rente. ( B ) Nancy should buy a fixed rente and choose a life income rente option that will vouch her a lifetime income irrespective of how long she lives. Depending on her demands and aims. the life income option can be selected with a certain figure of guaranteed payments. ( degree Celsius ) Jennifer should choose a life rente income option with either an installment refund characteristic or hard currency refund characteristic. Under the installment refund option. if the annuitant dies before having entire income payments equal to the purchase monetary value of the rente. the payments continue to a designated donee until they equal the purchase monetary value.

Under the hard currency refund option. if the annuitant dies before having entire payments equal to the purchase monetary value of the rente. the balance is paid in a ball amount to the donee. ( vitamin D ) Fred should buy a variable rente. which is designed to supply an rising prices hedge after retirement. ( vitamin E ) Mary should buy a fixed rente. She should choose the life income rente option with no refund characteristic. This option provides a life income to the annuitant merely while the annuitant is alive. No extra payments are made after the annuitant dies. A life income option with no refund pays the highest sum of periodic income payments because it has no refund characteristic. ( degree Fahrenheit ) Kathy should buy an equity-indexed rente. An equity-indexed rente is a fixed. deferred rente that allows the rente proprietor to take part in the growing of the stock market and besides provides downside protection against the loss of chief and anterior involvement if the rente is held to term.

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Chapter 15 CASE STUDY:
( a ) Since Lorri can non work as a nurse. she meets the definition of entire disablement. After a 90-day riddance period. she would have $ 2800 monthly for the balance of the period of disablement. ( B ) The policy contains a residuary disablement benefit. Since Lorri’s net incomes are reduced 50 per centum. she would have a pro rata disablement income benefit or $ 1400 monthly. ( degree Celsius ) After two old ages of benefit payments. the 2nd portion of the definition of disablement becomes operational. A occupation as a lab technician is moderately consistent with Lorri’s instruction. preparation. and experience. Lorri would be considered capable of working as a lab technician. Therefore. disablement benefits would non be collectible. ( vitamin D ) Since Lorri has a guaranteed renewable policy. it can non be cancelled. Lorri entirely can non be singled out for a premium addition. However. premiums for the underwriting category in which Lorri is placed could be increased if premiums for the category are unequal.


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