Basic Life Insurance Mathematics

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BasicLifeInsuranceMathematicsRagnarNorbe rgVersion:September 2002Contents1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . tcontracts:Surplusandbonus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172 Payment nitionsandrelationships.

1.1 Banking versus insurance A. The bank savings contract. Upon celebrating his 55th anniversary Mr. (55) (let us call him so) decides to invest money to secure himself economically in his old age. The rst idea that occurs to him is to deposit a capital of S0 = 1 (e.g. one hundred thousand pounds) on a savings account today and draw the

  Capital, Insurance