ACTSC232 Lecture Notes - Life Annuity, Equivalence Principle, Term Life Insurance

• School: University of Waterloo
• Department: Actuarial Science
• Course: ACTSC232
• Professor: Jun Cai

Document Summary

Summary of lecture notes actsc 232, winter 2010. Part 4 bene t premiums: the loss random variable l for an insurance or annuity is de ned as. L = the pv of bene ts the pv of premiums: the expectation of the loss random variable is. E[l] = the apv of bene ts the apv of premiums: equivalence principle (ep): set premiums such that e[l] = 0 or. The apv of bene ts = the apv of premiums: percentile principle (pp): set premiums such that pr{l > 0} = . Note that we assume the equivalence principle throughout this courses unless otherwise stated. 2 ax ( ax)2 (cid:32) ( ax)2. P (b) a fully continuous h-payment whole life insurance of 1 on (x) with an annual pre- mium rate of p : 1 (c) a fully continuous n-year term insurance of 1 on (x) with an annual premium rate of p :