A Comparison between Establishment of a Private Insurance Fund and contracting of Group Policy :"Actuarial Study" (To be applied on the staff of a private higher education institution)

Document Type : Original Article

Authors

1 Mathematics and Statistics Actuary Department Faculty of Commerce Cairo University Cairo Egypt

2 Economics and Finance Department Faculty of Business Administration Taif University Saudi

Abstract

     Comparing establishment of a Private Insurance Fund and Purchase of Group Policy requires further study and analysis. Both of the two insurance systems are seeking to attract larger numbers of Institutions working at the same institution to provide them with insurance protection  related to death, retirement, and total disability. In both systems, amounts of insurance are paid to all insured and that's why competition in this field  is severe between life insurance companies and private insurance funds
     This study aims at  holding a comparison between a Private Insurance Fund and Purchase of Group Policy by applying the two systems to the staff of a private higher education institution. The study deals with designing a private insurance fund and setting its annual contributions (premiums) for the group of the study. Meanwhile, the study sets  group policy cost for the same group .The cost of a private insurance fund is less than the cost of purchasing a group policy as paid annual contributions in case of private insurance fund are less if being compared with purchase of group policy contract for the group of the study.This is especially clear in minor (young) age categories as annual premium of insurance fund up to the age of  (55) is less than group policy premium. Consequently, if a group's age structure is dominated by young age categories, it's better to establish insurance fund but if age structure is dominated by adult age categories, group policy is preferred here
Recommendations: The two Researchers herein recommend the establishment of a private insurance fund; Despite the fact that both insurance systems have the same insurance benefits, the cost of  a private insurance fund is less than the cost of group policy

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