Ray's New Higher Arithmetic · Arts. 274–278 · Unit 16: Percentage: Applications without Time (continued)
74. Insurance
Goal: Your student explains policy, premium and rate, and finds the premium, the rate, or the amount insured.
You'll need
- The book
- A slate, small whiteboard or scrap paper
- A notebook and pencil
What's in the book
Section VI, Insurance: kinds of insurance, the policy and premium, notes on how much may be insured, joint-stock and mutual companies, then three cases with examples. Answers are printed.
The lesson, step by step
Warm-up
Ask: Why would someone pay a company a little money every year in case their house burns down?
The idea
Read:
Insurance is indemnity against loss or damage.
Fire Insurance is indemnity against loss by fire.
Marine Insurance is indemnity against the dangers of navigation.
The written contract between the two parties in insurance is called a Policy.
The Premium is the sum paid for insurance.
Two notes from the book
Read:
Only the actual loss can be recovered by the insured, whether there be one or several insurers.
Usually property is insured for about two thirds of its value.
SayInsurance repays a loss. It is not a way to make money from a fire.
The three cases
Read:
The operations in insurance are included under the principles of Percentage.
Amount insured × rate = premium (Case I). Premium ÷ amount = rate (Case II). Premium ÷ rate = amount insured (Case III).
Guided practice
Together:
What is the premium on a cargo of railroad iron worth $28000, at 1¾%?
($28000 × .0175 = $490.) Then a Case II or III example from the page.
Independent practice
Your student works examples from all three cases. Some rates are written as fractions of 1%, like ⅝%. Turn them into decimals first (⅝% = .00625).
Check and wrap-up
Compare with the printed answers. Ask: If a $3000 house is insured for two thirds of its value and burns, how much can the owner collect at most? ($2000.)