Class Notes (808,123)
Canada (493,018)
MTHEL 131 (105)
David Kohler (100)

Lecture 2

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University of Waterloo
Mathematics Electives
David Kohler

Lesson 2 The contract third party contracts consist of: - Policy owner * Beneficiary is not part of the contract - The insured  they have no rights - The insurer (firm)  they can be replaced at any time Life insurance contract is a unilateral contract (one party can get out of the deal). The policy owner can withdraw at any time. Features of the contract: - It is valid for the whole of life - The premiums are level - Premiums vary based on age of entry - In the case of public calamity, premiums could be increased, payout could be done in installments Life insurance industry in Canada 1. The industry offers a wide range of financial products on insurance: Living benefits:  disability  health  critical illness  long term care  disability Investment:  annuities Etc. 2. The life and health insurance industry in Canada protects more than 26 million Canadians. Pays out 1.1 billion dollars every week. - 19% is paid to the living policy owner (annuity, disability, healthcare, etc.) - 10% is paid as death benefits 3. The industry plays a big role in meeting the financing needs of all levels of government - the taxes that government collects aren’t enough - governments create bonds ($100 000) that last 20 years at a rate of 1.8% - insurance companies purchase those bonds (invest) 20% of insurance industry assets are invested in government bonds 40% of assets are corporate bonds and stock 20% of assets are mutual funds 15% of assets invested in mortgages 5% of assets are invested in other things 4. The insurance industry is a financially strong and secure industry 5. The insurance industry is internationally successful - 50% of Canadian revenue is from outside the country 6. It is a highly competitive domestically industry - 87% of insurance policies purchased in Canada were created by Canadian firms  have large market share 7. The industry contributes to small businesses - are a source of financing (provide mortgages) - provide important products that attract, retain, employees (benefits, pension plans) - agents affiliated with insurance companies provide consulting services (
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