This subject is designed to develop mathematical techniques which are used to model and value cash flows that are dependent on events such as death, survival, illness and retirement. The breadth of topics covered provides students with the principles and practical skills required for a variety of life insurance applications, including pricing of life Insurance, assurance and annuities, reserving, assessment of profitability and defined benefit pensions.
|Academic unit:||Bond Business School|
Delivery & attendance
|Attendance and learning activities:||Attendance at all class sessions is expected. Students are expected to notify the instructor of any absences with as much advance notice as possible.|
|Prescribed resources:||No Prescribed resources. After enrolment, students can check the Books and Tools area in iLearn for the full Resource List.|
|[email protected] & Email:||[email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.|
To access these services, log on to the Student Portal from the Bond University website as www.bond.edu.au
Assumed knowledge is the minimum level of knowledge of a subject area that students are assumed to have acquired through previous study. It is the responsibility of students to ensure they meet the assumed knowledge expectations of the subject. Students who do not possess this prior knowledge are strongly recommended against enrolling and do so at their own risk. No concessions will be made for students’ lack of prior knowledge.
Possess demonstrable knowledge in the mathematics of finance to the level of a unit such as ACSC12-201 Financial Mathematics.
Students must have completed 120 credit points prior to enrolling.
Assurance of learning
Assurance of Learning means that universities take responsibility for creating, monitoring and updating curriculum, teaching and assessment so that students graduate with the knowledge, skills and attributes they need for employability and/or further study.
At Bond University, we carefully develop subject and program outcomes to ensure that student learning in each subject contributes to the whole student experience. Students are encouraged to carefully read and consider subject and program outcomes as combined elements.
Program Learning Outcomes (PLOs)
Program Learning Outcomes provide a broad and measurable set of standards that incorporate a range of knowledge and skills that will be achieved on completion of the program. If you are undertaking this subject as part of a degree program, you should refer to the relevant degree program outcomes and graduate attributes as they relate to this subject.
Subject Learning Outcomes (SLOs)
On successful completion of this subject the learner will be able to:
- Demonstrate knowledge of simple assurance and annuity contracts, and develop formulae for the means and variances of the present values of the payments under these contracts, assuming constant deterministic interest.
- Compute net premiums and net premium reserves, using ultimate or select mortality, for simple insurance contracts, increasing and decreasing benefits and annuities.
- Calculate gross premiums and reserves of assurance and annuity contracts.
- Apply appropriate methods to value or project cash flows that are contingent upon multiple transition or decrement events.
- Apply projected cash flow techniques for pricing, reserving, and assessing profitability.
- Demonstrate the ability to produce a written report that communicates ideas clearly, cogently and thoroughly communicates, using a professional style and format.
|Written Report||Prepare written, short answer responses to a set of questions addressing content to date.||10%||Week 4||1, 2, 3, 6.|
|Written Report||Prepare written, short answer responses to a set of questions addressing content since the mid-semester examination.||10%||Week 9||4, 5, 6.|
|Computer-Aided Examination (Limited Open) ^||Comprehensive Final Examination Students may bring the Formula and Tables book and a non-programmable calculator into the exam Students get access to a computer with Excel 2010 or above, but with no internet connection||45%||Final Examination Period||1, 2, 3, 4, 5, 6.|
|Computer-Aided Examination (Limited Open)||Examination covering material related to SLO 1 through 3. Students may bring the Formula and Tables book and a non-programmable calculator into the exam Students get access to a computer with Excel 2010 or above, but with no internet connection||35%||Week 7 (Mid-Semester Examination Period)||1, 2, 3, 6.|
Students must earn a mark of 50% or better in the final exam in order to pass this subject.
- ^ Students must pass this assessment to pass the subject
- * Assessment timing is indicative of the week that the assessment is due or begins (where conducted over multiple weeks), and is based on the standard University academic calendar
- C = Students must reach a level of competency to successfully complete this assessment.
|High Distinction||85-100||Outstanding or exemplary performance in the following areas: interpretative ability; intellectual initiative in response to questions; mastery of the skills required by the subject, general levels of knowledge and analytic ability or clear thinking.|
|Distinction||75-84||Usually awarded to students whose performance goes well beyond the minimum requirements set for tasks required in assessment, and who perform well in most of the above areas.|
|Credit||65-74||Usually awarded to students whose performance is considered to go beyond the minimum requirements for work set for assessment. Assessable work is typically characterised by a strong performance in some of the capacities listed above.|
|Pass||50-64||Usually awarded to students whose performance meets the requirements set for work provided for assessment.|
|Fail||0-49||Usually awarded to students whose performance is not considered to meet the minimum requirements set for particular tasks. The fail grade may be a result of insufficient preparation, of inattention to assignment guidelines or lack of academic ability. A frequent cause of failure is lack of attention to subject or assignment guidelines.|
For the purposes of quality assurance, Bond University conducts an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Students must check the [email protected] subject site for detailed assessment information and submission procedures.
Policy on late submission and extensions
A late penalty will be applied to all overdue assessment tasks unless an extension is granted by the subject coordinator. The standard penalty will be 10% of marks awarded to that assessment per day late with no assessment to be accepted seven days after the due date. Where a student is granted an extension, the penalty of 10% per day late starts from the new due date.
Policy on plagiarism
University’s Academic Integrity Policy defines plagiarism as the act of misrepresenting as one’s own original work: another’s ideas, interpretations, words, or creative works; and/or one’s own previous ideas, interpretations, words, or creative work without acknowledging that it was used previously (i.e., self-plagiarism). The University considers the act of plagiarising to be a breach of the Student Conduct Code and, therefore, subject to the Discipline Regulations which provide for a range of penalties including the reduction of marks or grades, fines and suspension from the University.
Feedback on assessment
Feedback on assessment will be provided to students within two weeks of the assessment submission due date, as per the Assessment Policy.
If you have a disability, illness, injury or health condition that impacts your capacity to complete studies, exams or assessment tasks, it is important you let us know your special requirements, early in the semester. Students will need to make an application for support and submit it with recent, comprehensive documentation at an appointment with a Disability Officer. Students with a disability are encouraged to contact the Disability Office at the earliest possible time, to meet staff and learn about the services available to meet your specific needs. Please note that late notification or failure to disclose your disability can be to your disadvantage as the University cannot guarantee support under such circumstances.
Additional subject information
This subject is designed as a possible exemption for the CT5 Life Contingencies course from the Institute of Actuaries of Australia. Students earning a satisfactory result (at least 65%) from this subject may be eligible for exemption from the Institute for the CT5 course. As part of the requirements for Business School quality accreditation, the Bond Business School employs an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Develop formulae for the means and variances of the present values of the payments under these contracts, assuming constant deterministic interest.
Explain why it is necessary to have different mortality tables for different classes of lives. Explain the theoretical basis of the use of risk classification in life insurance.
Describe and use practical methods of evaluating expected values and variances of the simple contracts defined in objective 1.
Describe and calculate, using ultimate or select mortality, net premiums and net premium reserves of simple insurance contracts.
Extend the techniques of Objective 4 to calculate the expected present value of an annuity, premium, or benefit payable on death, which increases or decreases by a constant compound rate. Calculate net premiums and net premium reserves for contracts with premiums and benefits which vary as described.
Define the gross future loss random variable for the benefits and annuities. Calculate gross premiums using the equivalence principle. Define and calculate the gross premium reserve.
Extend the techniques of objectives 1-6 to deal with cash flows dependent upon the death or survival of either or both of two lives.
Construct formulae for the expected present values of cash flows that are contingent upon multiple transition events, including simple health insurance premiums and benefits, and calculate these in simple cases. Regular premiums and sickness benefits are payable continuously and assurance benefits are payable immediately on transition.
Use multiple decrement tables to evaluate expected present values of cash flows dependent upon more than one decrement, including those of pension schemes.
Describe and use projected cash flow techniques, where and as appropriate for use in pricing, reserving, and assessing profitability.