Accounting and Finance: Policy and Investment Analysis Report

This report analyzes key aspects of accounting and finance, focusing on policy features, investment strategies, and premium calculations. The assignment addresses the factors influencing insurance premiums, such as age, health history, smoking habits, occupation, and the policy terms themselves. The report further explores investment opportunities, specifically comparing the benefits of current deposits versus fixed deposits. It concludes with a calculation of the maximum borrowing capacity for an individual and their spouse based on their combined monthly income. This assignment provides a practical application of financial concepts, offering insights into insurance premiums and investment decisions.

Running head: ACCOUNTING AND FINANCE
ACCOUNTING AND FINANCE
Name of the Student
Name of the University
Author Note:

1ACCOUNTING AND FINANCE
Table of Contents
Answer to Question 2(c)..................................................................................................................2
Answer to Question 3a(i).................................................................................................................2
Answer to 3a(ii)...............................................................................................................................3

2ACCOUNTING AND FINANCE
Answer to Question 2(c)
The five policy features that influences or may influence the premium rates of policies
are:
 Age: The age factor influences the premium rates since the life cycle is unpredictable for
the senior citizens and much beyond the prediction for the younger citizens. Hence, with
high risk of life cover of the senior citizen high premium is charged while younger
citizens are charged with lower premiums.
 Health History: The health history plays a chief role in determining the rates of premium.
Therefore, person suffering from disease is likely to be charged with high premiums.
 Smoking: The health risk linked with the smoking risk is quite high which includes risk
of cancer and other heart diseases, therefore higher premium is charged from the one who
smokes a lot.
 Occupation: Pilots and loggers faces high risk of others. Hence the life insurance will
charge higher premium considering your occupation.
 The policy: The policy that are issued to offer great benefits will shadow high premiums
and vice-verse.
Answer to Question 3a(i)

3ACCOUNTING AND FINANCE
In the given case, Gigglebone has better investment opportunities in current deposit
although the dollar value is tumbling. This is because investing in current deposits will produce
greater returns as equated to interest earned from fixed deposits.
Answer to 3a(ii)
Supposing that the maximum amount an individual can borrow is 60 times the salary of
that individual in a month, so the maximum borrowing that GiggleBone and his wife can borrow
is $(155100/12)*60 is = $775500.