Class Notes (837,000)
Canada (509,985)
MTHEL 131 (111)
David Kohler (106)

Lecture 1: History and Fundamentals of Life Insurance

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Mathematics Electives
David Kohler

History of Insurance 1757, London, England Insure (each other by agreement) income of fathers and husbands against premature death to protect families against poverty. *denied at first, passed in 1762, Old Equitable was founded 3 prime financial concerns of Canadians 1. Dying too soon 2. Living too long 3. Becoming disabled *Life and health insurance provides products to deal with this 1583, London, Richard Martin - Country club regular, self-made - William Gibbins (general manager) is his biggest asset - wager of 383 pounds, term: 12 mths, premium: 8% of 383 - Gibbins died near the end - men argued w/ lunar months - court ruled Martin wins Delay of the beginning of life insurance 1. Lack of mortality table or similar data 2. Plague (stabilized in 1700s) 3. Wager/gamble (religious) vs. insurance Basic Life Insurance Principles 1. Whole of Life 2. Level Annual Premium 3. Age of Entry (younger = cheaper) *biggest asset: trust/credibility *life insured must be healthy (insurable interest = policy holder must care for the healthy life insured) In event of public calamity Reserve the right to pay in full, then insurer can: 1. pay by multiple payments (Old Equitable’s solution) 2. raise premium (Old Equitable’s solution) 3. re-insurer 4. fine print where the calamity is not covered 5. plague protection as plus to normal policy etc. *proven unnecessary when they have 4M face value and 1M reserve Inflation can lead to beneficiaries being under-insured (but hardly the company due to inves
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