Pricing of an Education and unemployment insurance policy

Abstract

The purpose of this project is to price an education and unemployment insurance cover. The idea was informed by the high demand for higher education and the high unemployment rates in Kenya. This culminates the financial distress associated with the effects of unemployment. The first phase of the project involves an overview of the education system in Kenya as well as the nature of the existing education and unemployment insurance covers. Chapter two is on literature review which outlines the previous work and research done concerning both education and unemployment insurance covers. Chapter three outlines the methodology used. It also outlines the assumptions used in the model. The distribution used is a 3-parameter Frechet distribution which was settled for after carrying out statistical tests on the data. We relate the properties of the distribution of choice to our data in order to evaluate the parameters. In this case the easy fit software will be used. The fourth chapter involves the data and results analysis. It analyzes all the results obtained from the proposed model and shows their relation to the underlying data and at the same time carrying out statistical tests necessary to ascertain the appropriateness of our model. The chapter further introduces the actuarial concept of benefit valuation and shows how we incorporate the concept to our model in order to come up with an acceptable pricing model for our policy cover.