| Abstract [eng] |
In actuarial practice, a common challenge is the accurate calculation of life insurance premiums when mortality data are available in discrete life tables, while insurance benefits are modelled in continuous time. In addressing this problem, this master’s thesis examines the calculation of net single premiums for life insurance under the Uniform Distribution of Deaths (UDD) assumption. The theoretical part reviews the mathematical foundations of life insurance, survival and death probability modelling, and fractional age assumptions, with particular emphasis on the role of the UDD assumption. In the practical part, the UDD assumption is applied to whole life and n-year term life insurance using period life tables. The analysis investigates the dynamics of net single premiums over time for Lithuania, performs an international comparison, and conducts an interest rate sensitivity analysis for whole life insurance. For term life insurance, a comparison with whole life insurance is provided in order to assess structural differences in net single premiums across different insurance products. The thesis demonstrates how the UDD assumption materially affects the level of single premiums when period life tables are used and enables an empirical evaluation of its suitability for practical calculations. The results confirm that the UDD assumption is appropriate for practical life insurance calculations when discrete mortality data are applied within continuous-time models. |
