Consumer Mathematics: Insurance · Form 5
Consumer Mathematics: Insurance: Practice Questions
Original SPM-style practice questions for Consumer Mathematics: Insurance, each with full worked solutions, Paper 1 multiple-choice and Paper 2 structured.
Original practice questions for Consumer Mathematics: Insurance, in the style of Mathematics Paper 1 (Objective) and Mathematics Paper 2 (Subjective). Each answer is worked so you can check your method, not just the result.
Multiple-choice (Paper 1 style)
Question 1
A house is insured for RM250,000. The premium rate is RM4.50 for every RM1,000 of coverage.
What is the annual premium?
- A. RM1,000
- B. RM1,250
- C. RM1,125
- D. RM11,250
Question 2
An annual insurance premium of RM1,440 is paid in 12 equal monthly instalments. How much is each monthly instalment?
- A. RM144
- B. RM120
- C. RM100
- D. RM130
Question 3
A building has a market value of RM300,000 and its policy carries a 90% co-insurance (average) clause. What is the minimum sum insured needed to avoid the average clause?
- A. RM270,000
- B. RM300,000
- C. RM240,000
- D. RM30,000
Question 4
A property with a market value of RM500,000 is insured for RM300,000 under an 80% average clause. A loss of RM100,000 occurs.
How much compensation is paid?
- A. RM60,000
- B. RM80,000
- C. RM100,000
- D. RM75,000
Question 5
A shop is insured for its full market value of RM180,000, satisfying the co-insurance requirement. A fire causes RM50,000 of damage.
How much will the insurer pay?
- A. RM45,000
- B. RM180,000
- C. RM50,000
- D. RM130,000
Question 6
A car worth RM60,000 is insured at a premium rate of 3.25% of its insured value. What is the annual premium?
- A. RM1,950
- B. RM1,800
- C. RM2,000
- D. RM1,560
Question 7
The basic motor insurance premium is RM1,600. A no-claim discount (NCD) of 25% is given.
How much does the policyholder actually pay?
- A. RM400
- B. RM1,400
- C. RM1,000
- D. RM1,200
Question 8
A basic annual insurance premium is RM800. Because of higher risk, a loading of 15% is added.
What is the premium payable?
- A. RM680
- B. RM920
- C. RM815
- D. RM950
Question 9
A building worth RM400,000 is insured at RM2.00 per RM1,000, and its contents worth RM50,000 at RM3.00 per RM1,000. What is the total annual premium?
- A. RM900
- B. RM1,000
- C. RM950
- D. RM850
Structured (Paper 2 style)
Question 1 (5 marks)
Encik Rahman insured his factory building for RM420,000. The building's market value is RM600,000 and the policy contains an 80% co-insurance (average) clause.
A fire caused damage costing RM150,000. (a) Show that the average clause applies.
(b) Calculate the compensation Encik Rahman receives.
- Required sum insured = 80% × RM600,000 = RM480,000.
- The sum insured RM420,000 is less than RM480,000, so the building is under-insured and the average clause applies.
- Compensation = (sum insured ÷ required sum insured) × loss = (420,000 ÷ 480,000) × RM150,000.
- = 0.875 × RM150,000 = RM131,250.
Question 2 (6 marks)
Puan Aisyah insures her house building (worth RM350,000) at a premium rate of RM2.20 per RM1,000, and its contents (worth RM70,000) at RM4.00 per RM1,000. (a) Calculate the total annual premium.
(b) If she pays in 12 equal monthly instalments, find each instalment. (c) A 10% discount is given for installing an approved alarm.
Find the discounted annual premium.
- Building premium = (350,000 ÷ 1,000) × RM2.20 = 350 × RM2.20 = RM770.
- Contents premium = (70,000 ÷ 1,000) × RM4.00 = 70 × RM4.00 = RM280.
- Total annual premium = RM770 + RM280 = RM1,050.
- Monthly instalment = RM1,050 ÷ 12 = RM87.50.
- Discounted annual premium = RM1,050 × (100% − 10%) = RM1,050 × 0.90 = RM945.
Question 3 (5 marks)
Encik Lim's basic annual life-insurance premium is RM1,500. As he is a smoker, a loading of 20% is added.
He also adds a medical card rider costing RM600 per year. (a) Calculate the loading amount.
(b) Calculate his total annual premium. (c) If he pays half-yearly, find each payment.
- Loading amount = 20% × RM1,500 = RM300.
- Premium after loading = RM1,500 + RM300 = RM1,800.
- Total annual premium = RM1,800 + RM600 (rider) = RM2,400.
- Half-yearly payment = RM2,400 ÷ 2 = RM1,200.
Question 4 (7 marks)
A warehouse valued at RM800,000 is insured under a policy with a 90% co-insurance (average) clause. (a) Find the minimum sum insured needed to avoid the average clause.
(b) The owner insured it for only RM540,000. A flood caused RM200,000 of damage.
Calculate the compensation. (c) Without further calculation, explain whether raising the sum insured to RM720,000 would allow the owner to claim the full RM200,000.
- (a) Minimum sum insured = 90% × RM800,000 = RM720,000.
- (b) Sum insured RM540,000 < RM720,000, so the warehouse is under-insured and the average clause applies.
- Compensation = (540,000 ÷ 720,000) × RM200,000 = 0.75 × RM200,000 = RM150,000.
- (c) At RM720,000 the sum insured equals the 90% requirement, so the average clause no longer reduces the claim; since RM200,000 is within the sum insured, the full RM200,000 would be paid.
Source:SPM: Format Pentaksiran mulai 2021, Matematik (1449)
Frequently asked questions
What is included in this insurance practice set?
This set has Paper 1 multiple-choice questions on insurance terms like premium and sum insured, plus Paper 2 structured questions on calculating premiums, no-claim discounts, and compensation. All questions are original practice written for this site, not past SPM papers.
Should I attempt each question before looking at the solution?
Yes. Try the full working first, even if you get stuck, then compare your steps against the worked solution.
This shows you exactly where your method differs from the correct approach, which helps far more than reading a solution before you have tried.
What's a common mistake in insurance calculation questions?
Students often mix up the premium rate with the sum insured, or forget to apply a no-claim discount before adding other charges. Read each question carefully to identify which figure is being asked for, and follow the calculation order shown in the worked solution.