Question from Licentiate exam.

[anurodhj_77]

Sum Insured under fire reinstatement policy = 100 lakhs.
Premium rate= 2.25 per mille (Can someone explain me what this mille is)
Calculate: Premium chargeable at beginning of the policy.
Calculate refund if policy was canceled after 6 months (180 days)
(Note: Short period rate for 6 months= 70%)

Please help me find the answers with the explanation. This is a question from licentiate exam in May 2007.

[MTG]

You have mentioned in the intro that you are working as BA - Insurance. Because these are very basic questions and you must have used them some or the other way. Anyway - Mille is the term used in insurance for per thousand. E.g. fire insurance rate is 0.50 paise per milli means for if sum insured is Rs. 1000 than premium would be 50 paise. So if the sum insured of a building is Rs.10,00,000 than premium would be = 0.50/1000 X 10,00,000 = Rs.500

Sum Insured under fire reinstatement policy = 100 lakhs.
Premium rate= 2.25 per mille (Can someone explain me what this mille is)
Calculate: Premium chargeable at beginning of the policy.
= 2.25/1000 X 100,00,000
= Rs.22,500

Calculate refund if policy was cancelled after 6 months (180 days)
(Note: Short period rate for 6 months= 70%)
Short Period Rate Calculation = 70% of 22,500
= 15,750
Refund = Annual Premium - Short Period Premium
= 22,500 - 15,750
= 6750

[Rahul]

These questions are being explained with examples in Licentiate books. Go and buy licentiate books from local Insurance institutes, read them and then try past years papers, you would find them easy.

[anurodhj_77]

Thanks for the reply MTG & Rahul. My background is US health care Insurance. Also, the licentiate book does not have the explanations you talked about. Trust me else, I would not have hand typed such a long question. I have the IC11, 12 & 01 book but there are no examples in that book.

I am really greatful to you folks for still taking the time to help me understand this.