Ordinal Logistic Regressionon New Integration Education Plan Takaful

Asaad, Al-Ahmadgaid B.

alstated@gmail.comalstat.blogspot.com

MINDANAO STATE UNIVERSITYILIGAN INSTITUTE OF TECHNOLOGY

Introduction

Insurance is a form of risk management used to minimize loss or riskagainst the risk of a contingent, uncertain loss (1). In Islam, thereis this called Takaful (Islamic Insurance). The central idea of Takaful(Islamic insurance) contract is that it is a financial transaction of amutual co-operation between two parties to protect one of them fromunexpected future material risk.

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Introduction

There are many Family Takaful Companies in Malaysia such as SyarikatTakaful Malaysia, Etiqa Takaful, Ikhlas and others. The businessesin takaful used the takaful operator as the administrator of the fundand manages the fund in trust on behalf of the participants, and thecontract between the participants and the operator is governed underthe contract of Mudharabah (profit-sharing) or Wakalah (agency).

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Definition of Terms

• Riders - A provision of an insurance policy that is purchased sepa-rately from the basic policy and that provides additional benefits atadditional cost. Standard policies usually leave little room for modi-fication or customization, beyond choosing deductibles and coverageamounts. (4)

• Surrender Value - It is the amount the policyholder will get fromthe life insurance company if he decides to exit the policy beforematurity. (5)

• Maturity Value - The amount to be paid to the holder of a financialobligation at the obligation’s maturity. (6)

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Proposed Model

The proposed model of new product of education plan has to combineall the riders in one plan and the name be changed to Economic Educa-tion Plan Takaful. The rider should include health, accident, hospitalcosts, loss an effort to work, critical illnesses, education, death benefit,death coverage and also pension. Life insurance or family takaful isneeded for everyone in the modern, so the product must affordable toevery category of income earners.

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Objectives of the Study

This paper exposes the study of Wan Muhamad Amir W. Ahmad etal on the application of the Ordinary Logistic Regression Model for aNew Intergration Education Plan Takaful. This paper aims to:

• present the Ordinal Logistic Regression Analysis of the new proposemodel;

• present the Correlation Analysis between items of the questionnaireused in the study; and

• Investigate the association between the capabilities of buying takafulinsurance with other related predictors.

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Significance of the Study

This paper will be useful to statisticians and researchers as it addressesissues such as the global concept and interpretation of ordinal logisticregression model, which were applied on the New Intergration Educa-tion Plan Takaful.

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Scope and Limitation

This paper is an expository that focuses on the analysis of OrdinaryLogistic Regression Model applied in the New Integration EducationPlan Takaful on the article by Wan Muhamad Amir W. Ahmad et al.There will be no programming or any statistical software to be usedin this paper. The author will only based on the results of the articlespublished by Wan Muhamad Amir W. Ahmad et al.

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Methodology

The researcher used questionnaire, containing 10 questions which coverthe age, status, level of education, types of jobs, monthly salary, thenumber of children in the household, the cost of the new product ineducation plan takaful, and etc. The required sample size was 385, butthe researchers used 410 respondents. Reliability in the questionnairestudies were also tested repeatedly. In addition, the researchers usedOrdinal Logistic Regression to investigate the association between thecapabilities of buying takaful insurance with other related predictors.

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Questionnaire

Questionnaire answered by 410 respondents.

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Results and Discussion

The data were considered to be ordinal since some of the predictorsare ordinal. Below is the Correlation Analysis between items of thequestionnaire used.

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Results and Discussion

Ordinal Logistic Regression Analysis

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Conclusion

After interviewing the 400 respondents using the questionnaire, almostall the respondents agreed that the integration model of education plantakaful could attract all categories of income earners into buying it. Themost attractive aspect about this model, the plan offers affordable pricefor all categories of income earners and it also includes almost completeriders. This research has proved that the new idea of integration modelin education plan takaful has been accepted by all categories of incomeearners.

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Recommendations

This expository was only dependent on the results obtained by WanMuhamad Amir W. Ahmad et al. Due to that, we recommend us-ing software for confirmation of the computations, and any possiblegraphical illustration.

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References

• (1) Insurance. Wikipedia. Retrieved October 10, 2012, from:http://en.wikipedia.org/wiki/Insurance

• (2) Ahmad , W.M.A. W. et al (2012). Ordinal Logistic RegressionModel for a New Intergration Education Plan Takaful . EuropeanJournal of Scientific Research . Vol.71 No.1 (2012), pp. 109-116

• (3) Rider. The Free Dictionary. Retrieved October 10, 2012, from:http://financial-dictionary.thefreedictionary.com/Rider

• (4) Rider. Investopedia. Retrieved October 10, 2012, from:http://www.investopedia.com/terms/r/

rider.asp#axzz28tkck3kE

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References

• (5) ”What is Surrender Value?”. The Economic Times. RetrievedOctober 10, 2012, from:http://articles.economictimes.indiatimes.com/2009-12-09/

news/28435556_1_surrender-value-policy-premium

• (6) Maturity Value. The Free Dictionary. Retreived October 10,2012, from:http://financial-dictionary.thefreedictionary.com/

maturity+value

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