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This subject provides the groundwork for the capstone subject Life Contingencies. It provides students with a framework for actuarial modelling, and introduces the key ideas of stochastic processes as they apply in actuarial science. The subject also expands students’ existing knowledge of mortality modelling by introducing the important ideas of mortality variation in a population and selection effects, which have implications for the applied topic of pricing life insurance products.
Intended learning outcomes
On successful completion of this subject a student should be able to:
- Describe how to test crude estimates for consistency with a standard table or a set of graduated estimates, and describe the process of graduation;
- Describe the principles of actuarial modelling;
- Describe the general principles of stochastic processes, and their classification into different types;
- Define a Markov chain and apply Markov chains in actuarial problems;
- Describe different forms of selection in insurance.
- Develop a knowledge of actuarial modeling and the application of stochastic processes in insurance settings.
High level of development:
- Written communication;
- Problem solving;
- Statistical reasoning;
- Application of theory to practice;
- Synthesis of data and other information.
Last updated: 29 July 2022