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Modelling Whole Life Assurance Values Using Life Tables

Abstract

Whole life assurance is a long-term life insurance contract that provides benefits upon the death of the insured, making accurate valuation essential for determining premiums and measuring future financial obligations. Life tables provide actuarial information on mortality and survival patterns at different ages and are widely used in estimating the probabilities required for life assurance calculations. Modelling whole life assurance values using life tables therefore provides an important basis for evaluating the present value of future death benefits. The study examines the modelling of whole life assurance values using life tables. It will assess how mortality and survival information contained in life tables can be applied to estimate the actuarial value of whole life assurance contracts. The study will focus on age-specific mortality probabilities, survival probabilities, interest rate assumptions, policy duration, and the timing of expected benefit payments. The study will further develop actuarial models for estimating whole life assurance values under selected life table and interest rate assumptions. Commutation functions, actuarial present value techniques, and life expectancy measures will be considered in modelling the expected value of future death benefits. Sensitivity analysis will also be used to examine how changes in mortality and interest rate assumptions influence whole life assurance values. A quantitative research approach will be adopted for the study. Appropriate life table data and selected whole life assurance contract assumptions will be used to construct and evaluate the actuarial models. Descriptive analysis, actuarial present value calculations, mortality probability analysis, comparative analysis, and sensitivity analysis will be employed to examine variations in whole life assurance values across different ages and assumptions. The study is expected to reveal that life table mortality and survival probabilities have a substantial effect on whole life assurance values. Differences in mortality experience across ages may produce corresponding variations in the expected timing of benefit payments and their present values. The findings may also indicate that changes in interest rate assumptions can alter the valuation of future death benefits and the resulting whole life assurance values. The study will provide useful information to actuaries, life insurance companies, pricing analysts, and students of actuarial science. The findings may support more accurate application of life tables in life assurance valuation and improve understanding of the relationship between mortality assumptions, interest rates, and actuarial values. The study may also contribute to improved premium calculation, reserve estimation, and financial planning for whole life assurance products. The study concludes that life tables provide an important actuarial foundation for modelling whole life assurance values because they supply the mortality and survival information required for estimating future benefit payments. It is therefore recommended that insurers use appropriate and regularly reviewed life table assumptions when valuing whole life assurance contracts. Proper application of life table data and actuarial valuation techniques may improve valuation accuracy, premium determination, and the management of long-term life assurance liabilities.

Keywords: Whole life assurance, life tables, actuarial valuation, assurance values, mortality probabilities, survival probabilities, actuarial present value, commutation functions, life expectancy, interest rate assumptions, death benefits, life insurance valuation, premium calculation, actuarial modelling, insurance liabilities.