Life Insurance and Superannuation Models
Week 1: Life Insurances (Single Life)

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Week 1: Life Insurances (Single Life)
Summary
Life insurance.
Benefits payable contingent upon death; payment made to a designated beneficiary.
Actuarial present values (APV )
Actuarial symbols and notation

Insurance payable at the moment of death
Continuous
Level benefits, varying benefits (e.g. increasing, decreasing) Insurances payable at the end of year of death
Discrete
Level benefits, varying benefits (e.g. increasing, decreasing) References
Chapter 4 (Bowers, et al.) or Chapter 3 (Gerber)
ACTL3002: Week 1

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Life Insurance Contracts

Made between a life insurance company and one or more persons called the policyholders
Policyholders agree to pay an amount or series of amounts to the life insurance company called premiums.
In return the life insurance company agrees to pay an amount or amounts called benefit(s), to the policyholder on the occurrence of a specific event.
Benefits payable under two main types:
On or following the death of the policyholder,
Payable provided the life survives for a given term e.g. annuity. ACTL3002: Week 1

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Types of Life Insurance Contracts
Whole life insurance contract
Benefits are paid on the policyholder’s death

Term assurance contract
A contract to pay a sum assured on or after death provided death occurs during a specified period, called the term of the contract.

Pure endowment contract
Provides a sum assured at the end of a fixed term, provided the policyholder is then alive.

An endowment contract
This is a combination of a term assurance and a pure endowment assurance.

ACTL3002: Week 1

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The Present Value Random Variable

Denote by Z , the present value, at policy issue, of the benefit payment.
In the case where the benefit is payable at the moment of death, Z