4. Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.

Bobby and Chris own a Major Medical Policy for their entire family with RM250 per person/per accident deductible, 80/20 coinsurance, and a stop-loss of RM2,000. Their contract also contains the Carry-Over Provision, the Common Accident Provision, and the Restoration of Benefits Provision.

In June, Bobby and two of his sons were injured in a car accident with a total medical bill of RM2,000. In July, Bobby and his sons were also injured in a different incident for a total of RM4,500 medical expenses.

Chris owns an Accidental Death and Dismemberment Policy with a Principal amount of RM50,000, and a capital amount of RM25,000. After owning the policy for several months, Chris died because of coronary artery disease. Bobby is her beneficiary.

You are required to:

1. Compute how much the insurer must pay for both accidents (i.e., in June and July).

(8 marks)

2. As the beneficiary of Chris, estimate the amount of benefit that Bobby will receive from the death of Chris. Justify your answer.

(2 marks)

3. Chris has the following assets and liabilities before she passed away:
   • Chris has an emergency savings account of RM5,000.
   • She owns a car worth RM10,000.
   • She owes RM20,000 in student loans.
   • She has RM25,000 in a Private Retirement Scheme.
   • Her home is worth RM200,000, but she still owes RM100,000 on the mortgage.

Compute Chriss net worth.

(9 marks)

(d) An insurance agent is approaching Bobby to consider an investment link insurance. List THREE (3) features of investment link insurance.

(6 marks)