Students
ACST2055 – Contingent Payments
2024 – Session 2, In person-scheduled-weekday, North Ryde
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Unit convenor
Colin Zhang
Lecturer
Kenneth Wong
|
|---|---|
| Credit points |
Credit points
10
|
| Prerequisites |
Prerequisites
(ACST202 or ACST2002) and (STAT272 or STAT2372)
|
| 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 ACST2002 and ACST2055 (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.
General Assessment Information
Late Assessment Submission Penalty (written assessments)
Unless a Special Consideration request has been submitted and approved, a 5% penalty (of the total possible mark) will be applied each day a written assessment is not submitted, up until the 7th day (including weekends). After the 7th day, a grade of ‘0’ will be awarded even if the assessment is submitted. Submission time for all written assessments is set at 11.55pm. A 1-hour grace period is provided to students who experience a technical concern.
For any late submissions of time-sensitive tasks, such as scheduled tests/exams, performance assessments/presentations, and/or scheduled practical assessments/labs, students need to submit an application for Special Consideration.
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 | Final exam 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.
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: Final exam 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.
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
It is intended that learning this session will be a combination of pre-recorded online and face-to-face.
The timetables for classes can be found on the University website at: Timetable 2023
Pre-recorded lectures will be made available early in the week and students are expected to have watched/listened to them prior to attending any live or face-to-face classes.
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.
Required and Recommended Texts and/or Materials
No textbooks are prescribed for this unit. Detailed notes, exercises and solutions are available on the unit's web 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.
Unit Webpage
Course materials, including pre-recorded lectures, are available on the iLearn page.
To access the teaching website, go to iLearn and login using your usual login and password.
Unit Schedule
| Week | Week Begins | Topics covered in lectures | Assessment |
| 1 | 22-Jul | Life tables and survival models | |
| 2 | 29-Jul | Valuing single payment benefits | |
| 3 | 5-Aug | Valuing life annuities | Quiz |
| 4 | 12-Aug | Select mortality | |
| Net premiums | |||
| 5 | 19-Aug | Policy values | |
| 6 | 26-Aug | Variable benefits | |
| 7 | 2-Sep | Operating expenses | |
| Profit testing | |||
| 8 | 9-Sep | Participating policies | Assignment |
| ------ 2 week study break ------ | |||
| 9 | 30-Sep | Analysis of profits | |
| Profit loading | |||
| 10 | 7-Oct | Joint life and last survivor statuses (class test) | Class test |
| 11 | 14-Oct | Joint life and last survivorship benefits | |
| 12 | 21-Oct | Contingent and reversionary benefits | |
| 13 | 28-Oct | Revision | |
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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 connect.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au
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Unit information based on version 2024.02 of the Handbook