The Actuarial Principle of Life Insurance
The actuarial side of life insurance is the function of mathematicians.
An actuary or mathematician with the help of mortality table can calculate
the probabilities of death and survival. The actuary, by assuming a future
rate of interest, calculates the present monetary value. This enables him to
calculate the amounts required for reserves under various types of life
insurance policies against future requirements. If the risk of death, within
one year is known and then it is multiplied by the sum assured, the net
premium requirements can be ascertained. The life insurance companies,
makes a continuous mortality investigations so that mortality trends are
always known to give proper guidance for premium calculations and
keeping appropriate reserve fund.