Ray's New Practical Arithmetic · Arts. 203–205 · Unit 20: Insurance
98. Fire, marine and life insurance
Goal: Your child knows policy, premium and the kinds of insurance, and computes premiums as a per cent of the amount insured.
You'll need
- Paper and pencil, or a slate or small whiteboard
What's in the book
Page 265 gives the definitions (Art. 203) and Fire and Marine Insurance (Art. 204). Pages 266–267 have fire insurance problems. Page 267 begins Life Insurance (Art. 205), and page 268 has its problems. Answers are printed.
The lesson, step by step
Warm-up
Ask: Why would many people each pay a little money so that one person whose house burns gets a lot?
The words
The policy is the written contract given by the company.
The premium is the sum paid to the company for insurance.
Fire Insurance is indemnity for a certain amount in case of loss by fire.
Marine Insurance is indemnity for a certain amount in case of loss by the dangers of navigation.
"Indemnity" means making good a loss.
Fire insurance
The premium in fire and marine insurance is a certain percentage of the amount insured
Ray notes that
Insurance companies will seldom insure property at its full value.
The book's example: a house worth $3375 insured for 2/3 of its value, $2250. The premium is $33.75; adding $1 for the policy, the insurance costs $34.75.
Life insurance
A life policy is payable at the death of the person insured.
An endowment policy is payable at a specified time, or at death if it occurs within this time.
The book's example: a man of 40 insures for $5000 at $31.30 a year per $1000. That is $156.50 a year, and over 30 years, $4695.
Guided practice
Do this one together:
At the age of 21, a young man takes out a life policy for $5000, upon which the annual premium is $19.89 on $1000: if he lives to the age of 75, how much will it cost him to keep up his insurance?
Then one fire insurance problem from page 266.
Independent practice and check
Your child works two or three more from pages 266–268. Skip the ones "allowing interest at 6%" unless your child is confident. The book prints the answer at the end of each problem line. Have your child cover the answers with a strip of paper, work the problem, then slide the strip down to check.