claims are made and expenses incurred in varying amounts day by day.
However, as a model, continuous functions might easily be an excellent
approximation of the actual operations and might be much easier to use.
The life insurance industry needs these models to calculate premiums and
policy reserves. These calculations require projections of future values, which
in turn require assumptions about future interest rates, future mortality rates,
and future insurance company costs. These must be put in mathematical form.
Continuous functions make the job of creating these mathematical models
much easier for the insurance company and for the entire insurance industry.
People who work extensively with these models are called actuaries. We’ll
discuss some of ...