Life Insurance Mathematics

This introduction to the theory of life contingencies makes consistent use of the probabilistic model. A survey of the mathematics of compound interest is given, and the numerical evaluation of the distribution of aggregate claims as well as the statistical problem of estimating death rates and other probabilities are discussed.

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This concise introduction to life contingencies, the theory behind the actuarial work around life insurance and pension funds, is written for the reader who likes applied mathematics. In addition to the model of life contingencies, the theory of compound interest is explained and it is shown how mortality and other rates can be estimated from observations. The probabilistic model is used consistently (and the traditional deterministic model avoided). Emphasis is put on the general ideas, which are illustrated by means of examples and interpretations. Recursive formulae and reasoning are discussed in detail.