Consumer Mathematics: Insurance · 3.1.2
Insurance rates and premiums
Students investigate how insurance premiums are determined from a given rate, such as a rate per RM1,000 of sum insured or a percentage rate, interpret information from a rate table, and calculate the premium payable for a chosen sum insured, including comparing premiums for different amounts of coverage.
The official learning standard (3.1.2)
“Investigate, interpret and perform calculations involving insurance rates and premiums.”
What it means
Students investigate how insurance premiums are determined from a given rate, such as a rate per RM1,000 of sum insured or a percentage rate, interpret information from a rate table, and calculate the premium payable for a chosen sum insured, including comparing premiums for different amounts of coverage.
How it is examined
This is tested in Paper 2 with structured calculation questions: students are given a premium rate (often as a table or a rate per RM1,000) and a sum insured, then asked to calculate the total premium, sometimes across more than one coverage type, and interpret what the result means for the policyholder.
Worked example
A fire insurance company charges a premium rate of RM2.50 for every RM1,000 of sum insured. Calculate the annual premium for a house insured for RM250,000.
- Sum insured = RM250,000
- Number of RM1,000 units = RM250,000 ÷ RM1,000 = 250
- Premium = 250 × RM2.50 = RM625
Source:DSKP KSSM Mathematics Form 4 and 5 (Versi English)
Frequently asked questions
What exactly is a premium?
A premium is the amount of money a policyholder pays, usually regularly, to the insurance company in exchange for coverage against a specified risk. It is calculated from the sum insured and the rate the insurer charges for that type of protection.
How is an insurance rate usually written in questions?
It is often expressed as a fixed amount per RM1,000 (or sometimes RM100) of sum insured, such as 'RM2.50 per RM1,000', or as a percentage of the sum insured. Always read the question carefully to see which form the rate is given in.
Does a higher sum insured always mean a higher rate?
Not necessarily, the rate itself (the price per RM1,000, for example) is usually fixed by the insurer for a given type of risk, while the total premium increases because it is multiplied by a larger sum insured, not because the rate itself changes.