Last Spring, I wanted to give back to my Alma Mater, so I agreed to help teach an Actuarial Independent Study. The topics were entirely based on Exam 3/MLC, Actuarial Mathematics, where the first goal was to create a mortality table. Before creating such a table, my students and I needed some data. Luckily we came across virtual island data. This data simulated the lives of hundreds of individuals. Eventually, the virtual island individuals reached their death and we were supplied with important information about their death.
As the students went about creating the mortality table, Excel skills became very important for their efficiency. They had to calculate how long somebody lived by taking the difference of two dates. Excel functions came into play here. Then the students had to group individuals together by different age brackets, which Pivot tables came into play. At this point, they started to calculate the probability of death within the next year.
After a week of hard work, the mortality table was developed. But the fun didn’t stop there! From Exam 3/MLC, the students knew that with a mortality table, they could use it to theoretically price Life insurance. To make this leap though, knowing how to use Lookup functions based on various categories made the students very efficient. Better yet, with Excel VBA, they were able to run a few hundred simulations!
At the end of the Actuarial Independent Study, the students created a mortality table, knew how to set a theoretical price based on the mortality table, and could now price a premium for hundreds of virtual individuals wanting to buy Life insurance using Simulation. But just as important, they learned valuable skills in Excel and VBA that made them more marketable as an aspiring Actuary.