Life Insurance Theory

This is a first class in life insurance theory. As such, it covers only part of the syllabus of SOA exam MLC. Quoting excerpts from this syllabus, the student attending this class will be able to:  “Explain and interpret the effects of transitioning between states, the survival models and their interactions. Calculate and interpret standard probability functions including survival and mortality probabilities, force of mortality, and complete and curtate expectation of life.  For models dealing with multiple lives and/or multiple states, explain the random variables associated with the model; calculate and interpret marginal and conditional probabilities, and moments. Using the factors mentioned above, construct and interpret survival models for cohorts consisting of non-homogeneous populations, for example, smokers and non-smokers or ultimate-and-select groups. Describe the behavior of continuous-time and discrete-time Markov chain models, identify possible transitions between states, and calculate and interpret the probability of being in a particular state and transitioning between states. Apply to calculations involving these models appropriate approximation methods such as uniform distribution of deaths, constant force, Woolhouse, and Euler. “

Also in accordance with the syllabus of SOA exam MLC, the class enables the student to: “Calculate and interpret probabilities, means, percentiles and higher moments of present values random variables. Calculate and interpret probabilities, means, percentiles and higher moments of random variables associated with these premiums, including loss-at-issue random variables. Using any of the models mentioned above, calculate and interpret the effect of changes in policy design and underlying assumptions such as changes in mortality, benefits, expenses, interest and dividends.”