Pricing Insurance Policy is a way by which we decide the premium rate that has to be paid for
policy by the policy... moreDefinition:
Pricing Insurance Policy is a way by which we decide the premium rate that has to be paid for
policy by the policy holder.
To have a stable business and for the mutual benefit of both the insurer and policy holder we
have different methods of pricing policies.
Actuaries are responsible for calculating the premium rate.
Importance:
Pricing should be competitive to attract folks to have insured by them.
Both expected and expected claims and expenses must be taken into account.
Experience and statistical records are necessary rather anticipation in making assumptions
about pricing. Funding Methods: There are two types of traditional funding method. Mutual Benefit method: i.Amount is collected from the members after the death of a person. Demerits:
a) As the society cannot force its members to pay the amount, the amount that can be given
to the member cannot be... less
The insurance company must have a legal capacity to issue the policy and the
applicant must have the legal capacity to purchase the... more
The insurance company must have a legal capacity to issue the policy and the
applicant must have the legal capacity to purchase the policy.
a) Contractual Capacity of Individuals:
i. Every individual is presumed to have the legal capacity to enter into a valid
contract.
ii. Some people, who do not have full contractual capacity, enter into either
void or voidable.
iii.The majority of people who have limited contractual capacity are either
minors or lack mental capacity.
iv. A minor is a person who has not attained the age of majority.
b) Contractual Capacity of Organizations:
i. Organizations are generally presumed to have the... less