Students

ACST8082 – Contingent Payments

2022 – Session 1, In person-scheduled-weekday, North Ryde

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff
Simon Guthrie
simon.guthrie@mq.edu.au
Veronica Chen
veronica.chen@mq.edu.au
Credit points Credit points
10
Prerequisites Prerequisites
(ACST881 or ACST8081) and (STAT810 or STAT8310 or STAT806)
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description

This unit covers the analysis of cash flows dependent on uncertain events due to mortality and other factors. It introduces the concept of the expected present value of payments under various life insurance contracts, including whole life, term and endowment assurances; immediate and temporary annuities; and deferred assurances and annuities. The standard international actuarial notation in life insurance is used extensively. Probability models and life tables are used to calculate the expected present values accurately based on ultimate or select mortality. Furthermore, important concepts of pricing and reserving for future contingent liabilities are discussed. Equations of value are established to calculate net premiums. Prospective and retrospective net premium reserves required to meet future liabilities are determined and compared. Techniques for the valuation of annuity and assurance products involving two lives are developed. Students gaining a credit average in both ACST8081 and ACST8082 (minimum mark of 60 on both units) will satisfy the requirements for exemption from the professional subject CM1 of the Actuaries Institute.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates

Learning Outcomes

On successful completion of this unit, you will be able to:

  • ULO1: Interpret and apply simple survival models as well as ultimate and select mortality rates.
  • ULO2: Apply contingent payment techniques to determine actuarial present values and variances of benefits for simple life insurance contracts and for contracts contingent on two lives.
  • ULO3: Calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • ULO4: Analyse the profit arising from life insurance contracts in simple scenarios.
  • ULO5: Identify key unit concepts and to integrate them to solve and analyse novel problems.
  • ULO6: Explain how the contingent payment techniques can be applied to complex life-contingent problems.

General Assessment Information

Late submissions of assessments Unless a Special Consideration request has been submitted and approved, no extensions will be granted. There will be a deduction of 10% of the total available assessment-task marks made from the total awarded mark for each 24-hour period or part thereof that the submission is late. Late submissions will only be accepted up to 96 hours after the due date and time.

No late submissions will be accepted for timed assessments – e.g., quizzes, online tests.

Table 1: Penalty calculation based on submission time

Submission time after the due date (including weekends)

Penalty (% of available assessment task mark)

Example: for a non-timed assessment task marked out of 30

< 24 hours

10%

10% x 30 marks = 3-mark deduction

24-48 hours

20%

20% x 30 marks = 6-mark deduction

48-72 hours

30%

30% x 30 marks = 9-mark deduction

72-96 hours

40%

40% x 30 marks = 12-mark deduction

> 96 hours

100%

Assignment won’t be accepted

Special Consideration

To request an extension on the due date/time for a timed or non-timed assessment task, you must submit a Special Consideration application. An application for Special Consideration does not guarantee approval.

The approved extension date for a student becomes the new due date for that student. The late submission penalties above then apply as of the new due date.

Assessment Tasks

Name Weighting Hurdle Due
Online Quiz 5% No Week 3
Assignment 15% No Week 8
Class Test 20% No Week 10
Final Exam 60% No University Examination Period

Online Quiz

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 2 hours
Due: Week 3
Weighting: 5%

You should complete the quiz online, available on iLearn.
On successful completion you will be able to:
  • Interpret and apply simple survival models as well as ultimate and select mortality rates.

Assignment

Assessment Type 1: Quantitative analysis task
Indicative Time on Task 2: 15 hours
Due: Week 8
Weighting: 15%

This is an individual assignment which focuses on problem solving using Excel spreadsheet.
On successful completion you will be able to:
  • Interpret and apply simple survival models as well as ultimate and select mortality rates.
  • Apply contingent payment techniques to determine actuarial present values and variances of benefits for simple life insurance contracts and for contracts contingent on two lives.
  • Calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Identify key unit concepts and to integrate them to solve and analyse novel problems.
  • Explain how the contingent payment techniques can be applied to complex life-contingent problems.

Class Test

Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: Week 10
Weighting: 20%

The test will be approximately 90 minutes, to be held during class time.
On successful completion you will be able to:
  • Interpret and apply simple survival models as well as ultimate and select mortality rates.
  • Apply contingent payment techniques to determine actuarial present values and variances of benefits for simple life insurance contracts and for contracts contingent on two lives.
  • Calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Analyse the profit arising from life insurance contracts in simple scenarios.
  • Identify key unit concepts and to integrate them to solve and analyse novel problems.

Final Exam

Assessment Type 1: Examination
Indicative Time on Task 2: 28 hours
Due: University Examination Period
Weighting: 60%

The final examination will be closed book, a three-hour written paper with ten minutes reading time, to be held during the University Examination period.
On successful completion you will be able to:
  • Interpret and apply simple survival models as well as ultimate and select mortality rates.
  • Apply contingent payment techniques to determine actuarial present values and variances of benefits for simple life insurance contracts and for contracts contingent on two lives.
  • Calculate premiums and policy values for various life insurance contracts, both with and without allowance for operating expenses.
  • Analyse the profit arising from life insurance contracts in simple scenarios.
  • Identify key unit concepts and to integrate them to solve and analyse novel problems.
  • Explain how the contingent payment techniques can be applied to complex life-contingent problems.

1 If you need help with your assignment, please contact:

  • the academic teaching staff in your unit for guidance in understanding or completing this type of assessment
  • the Writing Centre for academic skills support.

2 Indicative time-on-task is an estimate of the time required for completion of the assessment task and is subject to individual variation

Delivery and Resources

Classes

Timetable is available at https://timetables.mq.edu.au/2022/. Please see iLearn for further details on class delivery.

Classes on tutorial questions will commence in week 2 of the session. Students are expected to have attempted the previous weeks tutorial questions before coming to this class.

If you are enrolled into the "Online-flexible" attendance mode, you are not required to register into any classes as there is no real-time live online class. A lecture recording will be made available to students after the on-campus class is held.

 

Required and Recommended Texts and/or Materials

No textbooks are prescribed for this unit. Detailed lecture notes, exercises and solutions are available on the unit's iLearn site.

Technology Used and Required

You will require a calculator. For the final exam, you may only use non-programmable calculators which are not able to store text.

You will also need to be able to construct spreadsheets for tutorial exercises. You will also be required to use a spreadsheet for the assignment. We do not prescribe any particular brand of spreadsheet, although materials will be provided in MS Excel.

You require access to a computer to access material on the unit's iLearn web site.

Required unit materials

Course materials, including pre-recorded lectures, are available on the iLearn page.

To access the teaching website, go to http://ilearn.mq.edu.au and login using your usual login and password.

Inherent requirements

Attendence of the weekly lectures and tutorials, either via face-to-face venue or the pre-uploaded recordings.

Unit Schedule

Week

Week Begins

Topics covered in lectures

Assessment

1

21 Feb

Life tables and survival models

 

2

28 Feb

Valuing single payment benefits

 

3

7 Mar

Valuing life annuities

Quiz

4

14 Mar

Select mortality

Net premiums

 

5

21 Mar

Policy values

 

6

28 Mar

Variable benefits

 

7

4 Apr

Operating expenses

Profit testing

 

------      2 week study break      ------

8

25 Apr

Participating policies

Assignment

9

2 May

Analysis of profits

Profit loading

 

10

9 May

Joint life and last survivor statuses (class test)

Class test

11

16 May

Joint life and last survivorship benefits

 

12

23 May

Contingent and reversionary benefits

 

13

30 May

Revision

 

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central (https://policies.mq.edu.au). Students should be aware of the following policies in particular with regard to Learning and Teaching:

Students seeking more policy resources can visit Student Policies (https://students.mq.edu.au/support/study/policies). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.

To find other policies relating to Teaching and Learning, visit Policy Central (https://policies.mq.edu.au) and use the search tool.

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/admin/other-resources/student-conduct

Results

Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au

Academic Integrity

At Macquarie, we believe academic integrity – honesty, respect, trust, responsibility, fairness and courage – is at the core of learning, teaching and research. We recognise that meeting the expectations required to complete your assessments can be challenging. So, we offer you a range of resources and services to help you reach your potential, including free online writing and maths support, academic skills development and wellbeing consultations.

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Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

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IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/. 

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Unit information based on version 2022.04 of the Handbook