Class: Senior Secondary School 1 (SS1, SS 1, SSS1, SSS 1)
Term: 3rd Term
Week: 9
Age: 15 years
Duration: 45 minutes
Subject: Insurance
Curriculum Theme: Insurance
Previous Lesson: Insurance Claims.
Topic: Insurance premium
Subject Matter: meaning of premium, premium in life insurance, premium in non life insurance, premium loading, factors considered before loading a premium, how premium can be returned

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Define insurance premium.
Differentiate between premium in life insurance and non-life insurance.
Explain the concept of premium loading.
List factors considered before loading a premium.
Describe ways in which premium can be returned.

Affective Domain:

Appreciate the importance of timely premium payments.
Develop an understanding of how insurance costs are determined.

Psychomotor Domain:

Participate actively in discussions about insurance premium calculations.
Illustrate the factors affecting premium with relevant examples.

Collaborate with peers to discuss different scenarios of premium payment and return.

Reference Materials

The following resources were used in planning this lesson:

9 Years Basic Education Curriculum for Senior Secondary Schools.
State Unified Scheme of Work for Insurance SSS 1.
Akinwumi, A. (2018). Comprehensive Insurance for Senior Secondary Schools 1-3. Lagos: Learnwell Publishers.

Instructional Materials

The teacher will teach this lesson with the aid of:

Charts illustrating premium calculation components.
Tables showing examples of premium rates.
Whiteboard and markers.

Rationale for the Lesson

This lesson helps pupils understand the concept of insurance premium, which is the amount paid for insurance coverage. Understanding premiums enables pupils to grasp how the cost of insurance is determined and the factors that influence these costs in everyday life, whether for personal or property insurance.

Prerequisite/Previous Knowledge

Pupils have basic knowledge of insurance, including its meaning and importance, from previous lessons.

Lesson Content/Board Summary

Insurance Premium

Meaning of Premium

An insurance premium is the amount of money an individual or company pays to an insurance company in exchange for insurance coverage. It is the consideration for the insurer’s promise to pay compensation in the event of a covered loss.

Premium in Life Insurance

In life insurance, the premium is a regular payment (e.g., monthly, quarterly, annually) made by the policyholder to the insurer to maintain the life insurance policy. This premium ensures that a sum of money will be paid to the beneficiaries upon the death of the insured, or at the end of a specified term.

Factors that influence life insurance premiums include:

Age of the insured.
Health status (medical history, lifestyle).
Occupation (risk level).
Sum assured (amount of coverage).
Type of policy (e.g., term, whole life).

Premium in Non-Life Insurance

In non-life insurance (e.g., motor, fire, marine, accident), the premium is typically paid annually or for a specific short term to cover risks related to property or liability. The premium amount depends on the perceived risk associated with the insured item or activity.

Factors that influence non-life insurance premiums include:

Value of the insured property.
Location of the property.
Type of risk being covered.
Past claims history of the insured.
Security measures in place.

Premium Loading

Premium loading refers to an additional charge added to the basic insurance premium. This extra charge is applied to cover specific risks or administrative costs that are not part of the standard premium calculation.

Reasons for premium loading include:

To cover higher-than-average risks associated with the insured.
To account for administrative expenses.
To provide for profit margins for the insurer.

Factors Considered Before Loading a Premium

The following factors are considered by insurers before loading a premium:

**Moral Hazard:** The risk of dishonesty or carelessness by the insured.
**Physical Hazard:** The physical characteristics of the risk that increase the chance of loss (e.g., building structure, location).
**Occupational Hazard:** Risks associated with the insured’s profession (e.g., working in dangerous environments).
**Health Conditions:** Pre-existing medical conditions or lifestyle choices that increase health risks.
**Special Features:** Additional benefits or riders requested by the policyholder.

How Premium Can Be Returned

Generally, premiums are not returned once paid, as they cover the risk for the period. However, there are specific situations where a premium or a portion of it may be returned:

**Cancellation of Policy:** If a policy is cancelled before its expiry, a pro-rata (proportional) refund of the unexpired premium may be given.
**Overpayment:** If the policyholder accidentally pays more than the required premium.
**No Risk Incurred:** In rare cases, if the risk never attached (e.g., an insured event that was impossible from the start), the premium might be returned.
**”Return of Premium” Rider:** Some life insurance policies offer a special rider that returns all or a portion of the premiums paid if the insured outlives the policy term.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and asks them what they remember about the previous lesson on the meaning and types of insurance. The teacher then introduces the topic of “Insurance Premium” by asking pupils if they know what an insurance company receives for providing coverage.
Pupils’ Activity: Pupils respond to the teacher’s questions, recalling previous knowledge and attempting to define premium.
Learning Point: Pupils are engaged and link new learning to existing knowledge about insurance.

Step 2: Meaning of Premium and its Types

Time: 8 minutes
Teaching Skill: Explanation/Illustration
Teacher’s Activity: The teacher defines insurance premium, using charts and tables to illustrate how it is the payment made for coverage. The teacher then explains the concept of premium in life insurance and non-life insurance, highlighting the differences and factors influencing each.
Pupils’ Activity: Pupils listen attentively, take notes, and ask questions for clarification. They observe the charts and tables.
Learning Point: Pupils understand the definition of premium and differentiate its application in life and non-life insurance.

Step 3: Premium Loading

Time: 8 minutes
Teaching Skill: Explanation/Discussion
Teacher’s Activity: The teacher explains premium loading, defining it as an additional charge. The teacher discusses various reasons for loading a premium, such as high risk or administrative costs, using practical examples.
Pupils’ Activity: Pupils listen and contribute to the discussion by suggesting scenarios where extra charges might be necessary.
Learning Point: Pupils grasp the concept of premium loading and its rationale.

Step 4: Factors Considered Before Loading a Premium

Time: 7 minutes
Teaching Skill: Enumeration/Elaboration
Teacher’s Activity: The teacher lists and explains the factors insurers consider before loading a premium, such as moral hazard, physical hazard, occupational hazard, and health conditions. The teacher uses examples related to the pupils’ environment.
Pupils’ Activity: Pupils listen, take notes, and ask questions to understand each factor better. They may provide examples.
Learning Point: Pupils identify and understand the various factors that lead to premium loading.

Step 5: How Premium Can Be Returned

Time: 7 minutes
Teaching Skill: Explanation/Questioning
Teacher’s Activity: The teacher explains the circumstances under which a premium or a portion of it can be returned, such as policy cancellation, overpayment, or specific policy riders. The teacher clarifies that full premium return is not common.
Pupils’ Activity: Pupils listen and ask questions regarding the conditions for premium return.
Learning Point: Pupils learn about the specific situations where a premium might be returned.

Step 6: Class Activity/Discussion

Time: 5 minutes
Teaching Skill: Group Work/Collaboration
Teacher’s Activity: The teacher divides pupils into small groups and gives them a short scenario (e.g., “A person with a dangerous job wants life insurance”). Each group discusses how the premium might be affected and presents their ideas.
Pupils’ Activity: Pupils discuss in groups and present their findings to the class.
Learning Point: Pupils apply their understanding of premium factors and loading to practical scenarios.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Define insurance premium.
State two differences between premium in life insurance and non-life insurance.
What is premium loading?
List three factors considered by an insurer before loading a premium.
Mention two situations where a premium can be returned.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 2 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key points of the lesson, reiterating the definition of premium, its types, premium loading, and conditions for return. The teacher encourages pupils to read more on the topic.
Pupils’ Activity: Pupils listen and make final notes.
Learning Point: The lesson is concluded with a recap of important points.

Lesson Keywords

Premium – The amount paid by the insured to the insurer for coverage.
Life Insurance – Insurance that pays a sum upon the death of the insured or after a specified period.
Non-Life Insurance – Insurance covering property, liability, and other risks not related to life.
Premium Loading – An additional charge added to the basic premium due to higher risk or administrative costs.
Return of Premium – Conditions under which a portion of the premium may be refunded to the policyholder.

Differentiation

For pupils who grasp concepts quickly, the teacher can provide additional complex scenarios for premium calculation or ask them to research specific types of premium loading. For pupils who need more support, the teacher will use simplified language, provide more direct examples, and offer one-on-one guidance during activity time.

Note for teachers using this lesson plan

Teachers should ensure the use of clear and relatable examples, especially when explaining premium loading and factors influencing premiums, to make the concepts concrete for pupils. Encouraging active participation through questions and discussions helps reinforce understanding.