### Role of Generalised Linear Model in non-life pricing Phase3

Phase1: http://www.actuarysense.com/2018/10/role-of-generalised-linear-model-in-non.html
Phase2: http://www.actuarysense.com/2018/11/role-of-generalised-linear-model-in-non.html So we know that the purpose of GLM is to find the relationship between mean of the response variable and covariates.

Linear Predictor: Let’s denote it with, “η” (eta). So, linear predictor is actually a function of covariates. For example, in the normal linear model where function is Y = B0 + B1x. So linear predictor will be η = B0 + B1x. Always note that linear predictor has to be linear in its parameter. In this case parameters are B0 and B1. But still the question is how I came up with B0 + B1x as a function? First of all, note that broadly there are two types of Covariates. 1. Variables: It takes the numerical value. For example: age of policyholder, years of ex…

### Endowment Plans Vs Term Insurance - Which insurance plan is better?

Both Term Insurance and Endowment plans are traditional life insurance plans. Both offer comprehensive life coverage and are good tax-saving instruments.

Which one is better will be concluded at the end but note the differences:
• If you buy a term plan, the beneficiaries will receive the guaranteed death benefit only in case of your death within the stipulated time. But in case of an endowment plan, you will receive the entire sum assured along with bonuses that you have built over time, once the policy tenure is over. Under Endowment if you died in between the time your beneficiary get the payment. So Term is a pure life insurance policy an endowment plan, on the other hand, is a combination of investment and insurance
• Insurance agents are not much inclined to sell a term plan because the sales of endowment plans get them higher profits.A term plan offers comprehensive life coverage at very low premium rates. For the same amount of coverage, an endowment plan will charge higher and if you add riders with your basic plan, the premiums will increase.
• Example: If you are 20 Year old , non smoker and earn between 3-5 Lacs per annum then
Endowment plan- 24,000 annual premium for 30 years gives you sum assured of 24 lakhs (PNB Metlife )
Term Plan - you can get insurance for 2 crores for 40 year term at just rs.14000 per  annum (ICICI PRUDENTIAL )

• So, an endowment plan is more beneficial if taken mainly for the purpose of saving, but the better alternative is to invest in mutual funds or any other financial instrument. On the other hand, term plans are beneficial for those who want higher coverage at low premium rates, providing financial protection for their family in case they die.
So Term insurance is the better Option.