Spaghetti Group incurred the following insured losses, in the order given,

during the current policy year:

Loss Amount of loss

Feb $$5,500$

July $$7,000$

October $$15,500$

How much would the insurance company pay for each loss if Spaghetti Group$$s

policy contained the following types of deductible?

i$.$ $$5,000$ straight deductible;

ii$.$ $$20,000$ annual aggregate deductible

$6$ marks

c$.$ Lucas has a major medical insurance policy with a $$8,000$ deductible and a $75$

$-25$percentage participation clause$.$

A week ago, Lucas suffered severe abdominal pain and was rushed to the

hospital where an appendix surgery was performed. The covered medical

expenses for this surgery were $$120,000.$

i$.$ How much of the $$120,000$ covered medical expenses will be paid by Lucas$$s

insurer? How much will Lucas have to pay himself?

$4$ marks

ii$.$ From the perspective of insurers, explain the purpose of a $$percentage

participation clause$$ in medical health insurance.