L. Timothy Giles
Abstract
This paper discusses several practical applications of recursive formulas: a) Traditional whole life: As an introduction, the well-known relationship between successive terminal reserves is reviewed. Recursive formulas are developed to calculate the reserves and the premiums; b) Universal life: Recursive formulas are used both for the calculation of target premiums and reserves. Consideration is given to the TEFRA corridor; c) Paid-up rider: A participating single premium rider that provides a level death benefit can be devised using an inherent one year term benefit. Recursive functions are used to determine the premium that precisely matures the rider.
Because the APL programming language is particularly amenable to recursive formulas, a few sample APL programs are provided.
Key words and phrases: APL, TEFRA corridor, universal life, paid-up rider
L. Timothy Giles