Pure Premium Sums

1. A town has 4000 houses. Experience of past ten years shows that over a period of one year, one
in every thousand houses get burnt by fire. If the expected loss is Rs. 2,00,000/- per house, what
would be annual premium to cover each house?

2. A town has 1,000 houses. If a house is fully damaged, compensation is Rs. 50 lakh and for
partially damage, the compensations Rs. 10 Lakh. it is estimated that 3 houses would be fully
damaged, and 7 houses would be partially damaged. What is the pure premium?

3. Mortality rate is 0.1%. A group of 10,000 persons aged 50, who are normal healthy lives. If
each person's family is to be given a sum of Rs. 10,00,000/- as death claim amount, what
would be the share of each person towards this loss?

4. There are ten thousand employees aged 50 and have similar prospects of longevity.
Experience shows that over a period of one year, ten persons out of thousand persons die. If
the economic value of a deceased person is assumed to be Rs. 5,00,000/- what would be the
share of loss of each person
Office Premium
STEPS involved in calculating the premiums
Step 1 : Find out the tabular premium for given age (nearer or last birthday) for relevant plan
and term. This will be in, rupees per thousand Sum Assured.

Step 2: Adjustment for Large Sum Assured.

Step 3: Mode Rebate (Yearly → Half Yearly→Quarterly) (Monthly + additional)

Step 4: Find out premium for SA

Step 5: Rider Benefit – supplement for SA with any condition on maximum of SA

Step 6: ROUND OFF to nearest Rupee - if 50 paise and below makes decimal

Step 7:

(a) If the mode is yearly then answers obtained is the premium rounded off to nearest rupee.
(b) If the mode is Half Yearly then divide the answer obtained by 2 and round off to nearest
rupee to obtain the half yearly premium.

(c) If the mode is quarterly then divide the answer obtained by 4 and round off to nearest rupee
to obtain the Quarterly Premium

(d) If the mode is monthly divided the answer obtained by 12 and round off to nearest rupee.
Premium Calculation Sums

1. Tabular premium Rs. 55. No rebate for mode. Rebate for SA above Rs. 50,000 Rs. 2.00 per
thousand. DAB @ Rs. 1.50 per thousand. Occupation extra Rs./ 2.50 per thousand. Calculate
the half yearly premium for SA Rs. 1,50,000.

2. On the basis of the following data. S.A. Rs. 1,00,000 tabular premium Rs. 33.10
Rebate Rs. 2/- per thousand for yearly mode. Rs. 1/- for half yearly, none for quarterly.
Rebate Rs. 3/- per thousand for Rs. 1,00.000 and above.
DAB Re. 1/- per thousand. Occupation extra Rs. 4/- per thousand.
Calculate the yearly premium.

3. Calculate quarterly premium (rounded off to the next higher rupee) on the basis of the
following data. S.A. Rs. 50,000/- Date of maturity 24.12.2036. term 30 years. Date of birth -
28.06.1979.
Mode rebate for yearly. Rs. 1.50 per thousand, for half yearly Rs. 1.00, for quarterly nil and
monthly 5% extra.
S.A. Rebate Rs. 1.50 per thousand for S.A. Rs. 50,000/- and above.
Tabular premium. For age nearer birthday 26. Rs. 26.46; 27 Rs. 27.08; 28 - Rs. 28.15

4. Calculate half yearly premium on the basis of the following data.

Date of birth 22-06-1978. Date of maturity 24-12-2041, S.A. Rs. 1,00,000 term 35 years.
Tabular premium for age next birthday - age 27 years. 27.46, for age 28, Rs. 27.83 and for
age 29, Rs. 28.37.
Rebate 5% extra for monthly, less Rs. 1/- for half yearly Rs. 1.50 for yearly
Rebate S.A. Rs. 1.50 for SA Rs. 50,000/- and above.

5. A policy for Rs. 12 lakhs are taken on 14-July-2007 for 20 years with DAB.
Date of Birth is 12-nov-1980. DAB is Rs. 1.50 per thousand (maximum 10 lakhs).
Occupational Extra is Rs. 2.75 per thousand. SA Rebate Rs. 1.50. Yearly mode is Rs. 2.
Tabular premium for age next birthday
Age 25 years. Rs. 48.20
Age 26 years. Rs. 48.40
Age 27 years. Rs. 49.10
Age 28 years. Rs. 49.80
Calculate yearly premium.

6. A policy for Rs. 1 lakh is taken.

Date of Maturity - 24-Dec-2037
Date of Birth - 28-jun-1974
Term 35 years
SA Rebate Rs. 1.00 till Rs. 50,000 and Rs. 1.50 for Rs. 1 lakh above
Mode Rebate – Yearly Rs. 1.50; Half Yearly Rs. 1.00; Monthly 5% extra
Tabular premium for age next birthday
Age 27 years. Rs. 27.46; Age 28 years. Rs. 27.83; Age 29 years. Rs. 28.37
Calculate half yearly premium.
7. A policy for Rs. 40,000 is taken.
Date of Maturity - 24-Dec-2037
Date of Birth - 28-Jun-1974
Term 35 years
SA Rebate Rs. 1.00 till Rs. 50,000 and Rs. 1.50 for Rs. 1 lakh above
Mode Rebate – Yearly Rs. 1.50; Half Yearly Rs. 1.00; Monthly 5% extra
Tabular premium for age next birthday
Age 27 years. Rs. 27.46
Age 28 years. Rs. 27.83
Age 29 years. Rs. 28.37

Calculate half yearly premium.

8. A policy for Rs. 40,000 is taken.

Date of Maturity - 24-Dec-2037
Date of Birth - 28-Jun-1974
Term 35 years
SA Rebate Rs. 1.00 till Rs. 50,000 and Rs. 1.50 for Rs. 1 lakh above
Mode Rebate – Yearly Rs. 1.50; Half Yearly Rs. 1.00; Monthly 5% extra
Tabular premium for age next birthday
Age 27 years. Rs. 27.46
Age 28 years. Rs. 27.83
Age 29 years. Rs. 28.37

Calculate half yearly premium and monthly premium.