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Introduction to Term Life modelling

Hi there! I'm very happy to see you taking our course. I hope you will learn something new and have some fun on the way. This course will focus on cashflow modelling in Python. It's a fascinating topic that combines financial theory, actuarial science and programming. Let's get started!

During the course, we will use the cashflower package. You can learn how to set it up here: cashflower.acturtle.com.

In case of any problems, don't hesitate to ask for support! We will be happy to help.

In this chapter, you will build a simple actuarial model to calculate the net single premium for a term life insurance policy.

Term life insurance is a contract in which the insurer agrees to pay a benefit if the insured person dies during a specified coverage period. If the insured survives the entire insurance term, no benefit is paid and the coverage expires.

In the model, we assume:

  • no expenses, commissions, or reinsurance (i.e. we calculate the net premium),
  • a constant interest rate (technical interest rate),
  • a constant monthly probability of death (to simplify the model).

Let's create a new model.

Create a new model

Your first step is to create a new model. To do this:

  1. Open the Python shell.
  2. Use the following command to create a new model called exercise_1:
    3. from cashflower import create_model
create_model("exercise_1")
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