discrete_wl_reserves: Discrete Whole Life Insurance Reserve Calculator

In cowandalton/MA585.Functions: Finds Parameter that Gives Desired Value for Function

Description

This function calculates reserves for discrete whole life insurance that pays death benefits at the end of the year of death.

Usage

discrete_wl_reserves(prem = 5000, interest, mortality,
  number_alive = 10000, benefit = 4e+05, seed_deaths = 462,
  seed_rates = 873, start_age = 50)

Arguments

prem	is the premium paid by each policyholder that is alive at the start of each year (default = 5000).
interest	should be a vector of interest rates expressed as decimals.
mortality	should be a vector of mortality rates given as decimals starting from birth.
number_alive	is the number of policyholders alive when the life insurance first took effect.
benefit	is the death benefit paid at the end of the year to each policyholder who dies.
seed_deaths	is a seed for the normal distribution used when generating the number of policyholders who die each year (default = 462).
seed_rates	is a seed for the normal distribution used when generating an interest rate for each year (default = 873).
start_age	is the age of policyholders at when the life insurance first takes effect.

Value

A dataframe will be returned containing the time, policyholders' age, the number of policyholders alive, the number of policyholders who died during that age, the insurance company's total premiums received for the year, the insurance company's claims for the year, and the interest rate applicable from time t to time t-1.

Examples

rates <- c(0.01, 0.02, 0.025, 0.021, 0.03)
mortality_probs_young <- seq(from = 0.0002, to = 0.01, length.out = 61)
mortality_probs_middle_age <- seq(from = 0.011, to = 0.06, length.out = 20)
mortality_probs_old <- seq(from = 0.065, to = 0.165, length.out = 10)
mortality_probs_older <- seq(from = 0.17, to = 0.85, length.out = 30)
mortality_probs <- c(mortality_probs_young, mortality_probs_middle_age, mortality_probs_old, mortality_probs_older)
results <- discrete_wl_reserves(prem = 10000, interest = rates, mortality = mortality_probs, start_age = 40)

cowandalton/MA585.Functions documentation built on June 16, 2019, 4:13 a.m.