STAT 4004 Actuarial Science

Wednesday 9:30 a.m. 12:15 p.m.

LSB LT2

Teachers or TAs contact details

Instructor
Name: Chan Ping Shing
Office Location: Rm. 109 Lady Shaw Building
Telephone: 3943-7920
Email: benchan@cuhk.edu.hk

Teaching Assistant
Name: Ng Wai Leong
Office Location: Rm. G30 Lady Shaw Building
Telephone: 3943-8534
Email: s1009613922@link.cuhk.edu.hk

1. Description

This course deals with the calculations of the premiums of various basic life insurance products. Since the
premiums are the expected present values of some future payments, the calculations depend on the occurrence
of some random events and interest earned till the events occurred. Theories of interest and probability are
essential in this course. We will discuss measurements of interest, survival probability and life table,
introduction of basic insurance plans, life annuities and level premium in this course.

2. Course Content

Topic Contents/ concepts

Theory of interest Effective rate of interest and discount

Nominal rate of interest and discount
Force of interest
Annuity-due and Immediate
Perpetuities
Continuous annuity
Survival Probabilities and Life Table Probability for the Age-at-Death
Force of Mortality
Life Tables
Assumptions for Fractional Age
Select and Ultimate Tables
Life Insurance Term Insurance
Whole Life Insurance
Pure Endowment
Endowment Insurance
Increasing and Decreasing Insurance
Relationship between insurance payable at the moment of death and
the end of the year of death
Life Annuity Continuous annuity
Discrete annuity
Life annuity with m-thly payments
Net Annual Premiums Fully continuous annuity
Discrete continuous annuity
Truly m-thly Payment Premium

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3. Learning outcomes

After taking this course, the students are expected to

understand the characteristics of various basic insurance products and the calculations of the premiums
design insurance products which satisfied the needs
tackle the Exams MF and MLC offered by of the Society of Actuaries

4. Reference Books

The Theory of Interest, 2nd Edition, 1991, Kellison, S.G., Irwin/McGraw-Hill. [Chapters 1-4]

Actuarial Mathematics for Life Contingent Risks, 2nd Edition, 2013, Dickson, D., Hardy, M., Waters, H.,
Cambridge University Press. [Chapters 1-6]

5. Course schedule

Class/ week Topic Requirements

1-2 Measurement of Interest K: Ch. 1-4

3-4 Survival Probability and Life D: Ch. 2-3

Table

5-7 Life Insurances D: Ch4

8 Mid-term Test Theory of interest, Survival Probability and Life

Table will be tested

9-11 Life Annuities D: Ch. 5

12-13 Annual Premiums D: Ch. 6

6. Assessment Scheme

Type Description Weight

Assignments Assignments will be given after each section 15%

4-5 assignments
Mid-term Examination October 18, 2017 35%

Theory of interest and Survival Probabilities will be tested

Final Examination To be arranged by University 50%

Life Insurance, Life Annuities and Annual Premiums will be

tested

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7. Feedback for evaluation

A mid-term course evaluation will be conducted at the end of Week 4. Comments and feedback are
welcome to improve the quality of the course
Term end course evaluation will be conducted by the department.

8. A facility for posting course announcements

The lecture notes can be downloaded from CU e Learning System

Academic honesty and plagiarism

The Chinese University of Hong Kong places very high importance on honesty in academic work submitted by
students, and adopts a policy of zero tolerance on cheating and plagiarism. Any related offence will lead to
disciplinary action including termination of studies at the University. Relevant information can be allocated via:
http://www.cuhk.edu.hk/policy/academichonesty/.

END

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