Students
ACST8082 – Contingent Payments
2025 – Session 2, In person-scheduled-weekday, North Ryde
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Colin Zhang
|
|---|---|
| Credit points |
Credit points
10
|
| Prerequisites |
Prerequisites
ACST8081 and STAT8310
|
| 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.
Assessment Tasks
| Name | Weighting | Hurdle | Due |
|---|---|---|---|
| Professional Practice: Contingent Payments Analysis | 20% | No | 19/9/2025 |
| Formal and Observed Learning: Exam | 60% | No | Final exam period |
| Formal and Observed Learning: Test | 20% | No | 14/10/2025 |
Professional Practice: Contingent Payments Analysis
Assessment Type 1: Quantitative analysis task
Indicative Time on Task 2: 15 hours
Due: 19/9/2025
Weighting: 20%
The purpose of this assessment is for you to demonstrate your problem solving skills using Excel for actuarial applications.
You will complete an individual assignment focusing on survival models, mortality rates, actuarial present values, and policy calculations.
Skills in focus:
- Digital skills
- Discipline knowledge
- Work readiness
Deliverable: Assignment - completed Excel worksheet/s.
Individual assessment
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.
Formal and Observed Learning: Exam
Assessment Type 1: Examination
Indicative Time on Task 2: 28 hours
Due: Final exam period
Weighting: 60%
The purpose of this assessment is for you to formally demonstrate the expertise you have gained in this unit.
You will participate in a 3-hour exam with 10 minutes reading time held during the University Examination period. Important information about the exam will be made available on the unit iLearn page. You should also review the MQ Exams website for general tips.
Deliverable: Formal exam.
Individual assessment
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.
Formal and Observed Learning: Test
Assessment Type 1: Quiz/Test
Indicative Time on Task 2: 10 hours
Due: 14/10/2025
Weighting: 20%
The purpose of this assessment is for you to demonstrate your application of actuarial modelling techniques, including survival models, mortality rates, contingent payment calculations, premium and policy value derivation, and profit analysis.
You will participate in a formal test (approximately 90 minutes) during class time related to topics learnt in the semester.
Skills in focus:
- Discipline knowledge
- Critical thinking and problem solving
Deliverable: Class test demonstrating responses to problem scenarios and discipline related questions.
Individual assessment
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
Delivery and Resources
Classes
Classes: 4 hours of teaching per week consisting of: 3 hours lecture and 1 hour tutorial/practical 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 | Topics covered in lectures |
| 1 | Life tables and survival models |
| 2 | Valuing single payment benefits |
| 3 | Valuing life annuities |
| 4 | Select mortality |
| Net premiums | |
| 5 | Policy values |
| 6 | Variable benefits |
| 7 | Operating expenses |
| Profit testing | |
| 8 | Participating policies |
| 9 | Analysis of profits |
| Profit loading | |
| 10 | Joint life and last survivor statuses (class test) |
| 11 | Joint life and last survivorship benefits |
| 12 | Contingent and reversionary benefits |
| 13 | Revision |
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Changes since First Published
| Date | Description |
|---|---|
| 15/07/2025 | Modified assessment deadline to a specific date. |
Unit information based on version 2025.05 of the Handbook