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Life Insurance Products Valuation in R

Learn the basics of cash flow valuation, work with human mortality data and build life insurance products in R.

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Course Description

Understanding the basic principles of life insurance products is essential for your personal financial planning, ranging from taking out a mortgage to designing your retirement plan and seeking financial protection for the risk of dying early. In this course, you'll study the time value of money and you’ll work with human mortality data to derive demographic markers (such as the life expectancy). Combining the basics of cash flow valuation with the calculation of survival and death probabilities in R will allow you to construct insightful tools to design life insurance products. You'll come out of this course understanding the valuation of life contingent claims: life annuities, which provide an income upon survival, and life insurance products, which pay a benefit upon death of the policyholder.
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  1. 1

    Valuation of Cash Flows

    Free

    Learn the basics of cash flow vectors and their valuation with discount factors. You will then evaluate investments based on their net present value and build your own mortgage calculator. Finally, you will learn about fixed and variable interest rates; and annual and monthly rates.

    Play Chapter Now
    Cash flows and discounting
    50 xp
    Present value of a cash flow
    100 xp
    Net present value of investments
    100 xp
    Valuation
    50 xp
    Anywhere, anytime?
    100 xp
    Actuarial equivalence
    50 xp
    Saving for university
    100 xp
    Deposits of the saving plan
    100 xp
    Change of period and term structure
    50 xp
    The interest rates they are a-changin'
    100 xp
    From yearly to monthly interest rate
    100 xp
    Monthly mortgage loan payments
    100 xp
  2. 2

    Life Tables

    Life tables play a vital role in life insurance products. In this chapter you will work with data sets from the Human Mortality Database by building meaningful visualizations to study the evolution of mortality data over age and time. You will also use survival and death probabilities.

    Play Chapter Now
    Random future lifetime
    50 xp
    Like it's 1999!
    100 xp
    Visualizing one year of mortality data
    100 xp
    Men versus women
    50 xp
    Binomial experiments
    50 xp
    How likely is Cynthia to live to 100?
    100 xp
    The number of deaths
    100 xp
    Calculating probabilities
    50 xp
    Multiplication rules!
    100 xp
    Deferred mortality probabilities
    100 xp
    Calculating life expectancies
    50 xp
    Curtate vs complete life expectancy
    100 xp
    Plotting life expectancies by age
    100 xp
    Dynamics
    50 xp
    Mortality rates over time
    100 xp
    Cohort survival probabilities
    100 xp
  3. 3

    Life Annuities

    You will now act as an actuary working in a life insurance company. Learn about the basics of life annuity products and their valuation by working on cases ranging from simple life annuities to retirement plans.

    Play Chapter Now
    The basics
    50 xp
    To survive or not to survive
    100 xp
    Short- and long-term
    100 xp
    The whole, temporary and deferred life annuity
    50 xp
    Ages, interest rates and the whole life annuity
    50 xp
    A function to price a life annuity
    100 xp
    Immediate vs due
    100 xp
    Temporary vs lifelong
    100 xp
    Guaranteed payments
    50 xp
    Pension calculations ignoring mortality
    100 xp
    Pension calculations accounting for mortality
    100 xp
    On premium payments and retirement plans
    50 xp
    A retirement plan for Miss Cathleen
    100 xp
    From single to annual premium
    100 xp
    A good deal? Outliving your life expectancy
    100 xp
  4. 4

    Life Insurances

    You will now deal with life insurance contracts. Learn how these products are relevant in your financial planning by designing whole life, temporary and endowment insurances.

    Play Chapter Now
    The basics
    50 xp
    Lucy and Kevin’s mortgage protection
    50 xp
    Take it easy: a simple life insurance
    100 xp
    The whole, temporary and deferred life insurance
    50 xp
    Life annuity vs life insurance
    50 xp
    Whole life insurance
    100 xp
    Temporary life insurance
    100 xp
    Deferred life insurance
    100 xp
    Combined benefits
    50 xp
    A life insurance plan for Miss Cathleen
    100 xp
    Best of both worlds – the endowment insurance
    100 xp
    Wrap-up
    50 xp
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datasets

Life table for females in Belgium, 1999Life table for females in Belgium, 1841 to 2015

collaborators

Collaborator's avatar
Lore Dirick
Collaborator's avatar
Sumedh Panchadhar

prerequisites

Intermediate RFoundations of Probability in R
Katrien Antonio HeadshotKatrien Antonio

Professor, KU Leuven and University of Amsterdam

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