The Social Security Personal Retirement Accounts - Term Paper Example

The best solution to this is a substantial personal account option and not only Social Security.

2. Formulate a risk management proposal for a fictitious potential client. Using that same proposal, augment your offering to this client. Elaborate about a proposed health insurance plan, pension plan alternatives, etc. If appropriate for your fictitious client, include a section regarding alternative risk transfer techniques and bond offerings.
An important trend in recent years has been the increased use of derivatives. A derivative is any of your financial assets whose value is derived from the value of some other “underlying” asset. These derivatives can be used either to reduce risks or as a speculative investment also. In theory, the use of these derivatives should allow one to manage risk better.
Some premiums can be added to lessen one’s burden of risks. This includes the inflation premium to compensate for the expected loss of purchasing power, the default risk premium just in case there will be a default in the borrower, and the maturity risk premium compensating for the interest rate risk.

3. There are three rate-making methods in Property & Casualty Insurance: Judgment, Class, and Merit Rating. Discuss these methods in detail including the subcategories under a merit rating

Judgment Rating is used when potential losses are difficult to quantify. In this case, statistics are not a reliable source to determine possible losses. In judgment rating, the underwriter must use his experience and intuition to individually evaluate each potential client. A good example of this includes ocean marine insurance.
Class Rating is used when losses are quantifiable or statistics are reliable. Here, there is a manual rating where it is classified into brackets which makes it easy to determine the price of insurance proposals that are offered to customers. It is the established people of parallel situations and the great number of available statistics which permit the effectiveness of this rate-making method. There are two most common methods under this category, the pure premium method, and the loss ratio method. The pure premium method is computed simply by adding actual losses to loss-adjusted expenses and dividing it by the total number of exposure units. In loss ratio, rate exchange is derived by subtracting the actual loss ratio from the expected loss ratio and then subtracting it from the expected loss ratio.
Merit Rating is similar to class rating but there is an adjustment relative to each customer. It determines commercial insurance premiums and control is delineated to the consumer about losses. It is through the diverse factors that losses spread rather than through the class rating previously set. There are three methods in merit rating, schedule rating, experience rating, and retrospective rating.
Schedule rating uses a base which is in essence a class rating and from there the premium is adjusted accordingly. Credits and debits are added to the average premium within the class to come up with the final premium. Experience rating utilizes past policy periods, usually the preceding 3 years, and compares it to the succeeding one. The credibility factor is used to adjust the premium. It is commonly used for group insurance, automobile insurance, general liability insurance, etc. The retrospective rating includes a minimum and maximum amount to be paid through periods and the amount is determined by actual losses within the period (This matter, 2010).
4. Describe the Obama administration's stance on the healthcare system reform. What are the pros and cons of the proposed plan and express your perspective?

The law will only start to take effect in 2014 and is expected to reduce the deficit to $124 billion within the succeeding decade. It seeks to address the problem of health care which is two times the rate of inflation and continues to rise. On the bright side, this reform opens up medical attention to be available even to the uninsured and figures for new alternative ways to address comprehensive health care. States see this as a load to carry as they will have to subsidize about 16 million more people to Medicaid. But the biggest question lies in the relationship between states to health insurance exchanges and how to attract more insurance companies to offer affordable yet quality health insurance (Tumulty, Pickert, & Park, 2010).
Healthcare system reform is considered as Pres. Obama’s milestone in his term of office. He labored profusely to ensure that the bill gets passed by Congress. The good that this will bring, if implemented correctly would affect millions of lives.

Part 2
1. Tuition at Home State University is currently $10,000 per year. It is increasing on an average of 6% per year. What will be the anticipated tuition 10 years from now?
$16, 895. 146

2. If tuition continues to rise at the rate of 6% per year, what will be the amounts needed for each of years 2 thru 4?
Year 2: $10, 600 Year 3: $11, 236 Year 4: $11, 910.16

3. If savings are started now and the after-tax rate of return is 7%, what would be the lump sum needed today to fund Year 1?
$9, 300

4. If savings occurred every month and were to begin now, how much would be needed per month to fund Year 1?
$833.33 Read More