23 Contingencies I
Peter McQuire
Remark 23.1 This chapter is one of those recommended at the start of this book which can be used by readers who are already familiar with the mathematical material included in this chapter, but are new to the R language, and who wish to practise a basic level of coding. Much of this chapter takes the form of a set of examples and exercises, with the emphasis on writing code and tackling typical problems.
23.1 Introduction
The objective of this chapter is to develop an understanding of actuarial contingency functions, such as term assurance and permanent annuities, with the use and application of R code. Such functions will lead to the pricing of, and reserving for, typical annuity and life assurance policies, and also the calculation of actuarial liabilities of defined benefit pension schemes. This chapter is followed immediately by the Contingencies II chapter, which develops ideas covered in this chapter.
We will make use of the AM92 and AF92 life tables throughout this chapter, copies of which are included on the website. These tables were chosen as many readers will previously have used these, and already have access to them, allowing convenient verification of many of the calculations in this chapter. (The reader should of course apply the coding in this chapter to a variety of life tables available to them.) We will also introduce the simulation of future lifetimes from life tables which ...
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