This course introduces several of the major mathematical ideas involved in calculating life insurance premiums. Ideas from probability and statistics will be developed from scratch, as needed, through course notes and reference to the Stat 400 text (recommended for this course as well), Introduction to Probability and Statistics by R. Devore will be used.
(If you do not have any background in probability and statistics, there are a number of basic books which contain good basic discussions of random variables and probability at the level of the second Actuarial Exam. A few standard ones are: Ross, S., Introduction to Probability Theory (used for Stat 410); Hoel, Port, and Stone, Introduction to Probability Theory; Larson, R., Intro. to Probability Theory and Statistical Inference; Larsen and Marx (currently used for Stat 400); Hogg, R. and Craig, A., Introduction to Mathematical Stat.; and many others.)
MATH 240 and MATH 241; or MATH 340 and MATH 341. Some Probability at the level of Stat 400 would be helpful.
Compound interest and present valuation of future income streams
Probability distributions and expected values derived from life tables
Interpolation of probability distributions from values estimated at one-year multiples
"Law of Large Numbers" describing the regular probabilistic behavior of large populations of independent individuals
Detailed calculation of expected present values arising in Insurance problems