KBAT Problems
KBAT Problem: Choosing an Insurance Coverage
A KBAT consumer-maths problem comparing insurance options on cost and coverage, arithmetic plus a justified choice, not financial advice.
Compare on the numbers
Two policies have different premiums and different coverage. Compute the annual cost and what each pays out in a given claim, using only the arithmetic the chapter covers.
The maths sets up the comparison.
Justify without advising
A full answer states which policy is better value for the stated need and why, based on the figures. This is a maths exercise in comparing numbers, it is general information, not financial or insurance advice.
Understand the problem
Here is an original scenario to work through. Suppose Policy A charges an annual premium of RM540 and pays 90% of any hospital bill, while Policy B charges RM360 and pays 80%.
A bill of RM4000 arises during the year. The real cost of a policy is the premium you pay plus the share of the bill you must still cover yourself, not the premium alone.
Comparing premiums only would pick B out of habit; the question asks for total cost.
Plan and solve
- Total cost = annual premium + the share of the bill you pay yourself.
- Policy A: you pay 10% of RM4000 = RM400. Total = RM540 + RM400 = RM940.
- Policy B: you pay 20% of RM4000 = RM800. Total = RM360 + RM800 = RM1160.
- Compare: RM940 < RM1160, so Policy A costs RM220 less for this bill.
Check and a variant
Check by reading the totals back: A saves RM220, which makes sense because A pays RM400 more of the bill (RM3600 vs RM3200) while costing only RM180 more in premium. A twist the examiner can add: for what bill amount do the two policies cost the same?
Set 540 + 0.10b = 360 + 0.20b, giving 0.10b = 180, so b = RM1800. Above RM1800 Policy A wins; below it, Policy B.
State clearly this is a maths comparison, not financial advice.
Frequently asked questions
Is this the same as real insurance advice?
No. This is a Mathematics 1449 exercise in comparing numbers with hypothetical figures.
It teaches you to compute total cost and justify a choice. Real insurance depends on many factors a maths question leaves out, so treat the working as general information and speak to a licensed adviser for actual decisions.
Why add the premium and the out-of-pocket amount?
Because a policy's true cost to you is everything you hand over in a year, the fixed premium plus whatever share of a claim you still pay. Comparing premiums alone hides the coverage difference, which is exactly the trap the KBAT question sets.
Always total both parts before deciding.
What earns the marks in a question like this?
Show the total cost for each policy on separate lines, use the correct percentage of the bill, and end with a comparison sentence naming the cheaper option and the difference. A justified conclusion based on your figures is what a marker rewards, not a bare answer.