Before we go any further we must explain the role of the Actuary. An actuary is an individual who is an expert in applying the mathematical doctrines or probability and compound interest to the statistics on which life assurance is based. 

The Actuary uses 4 key facts when calculating the premium that needs to be charged for a particular risk.  These are:

  1. Mortality
  2. Expenses
  3. Investment Income
  4. Contingency Factor