V_Payment_Protection function

Reserve valuation for Payment Protection

Calculates the reserve for the loan insurance up to the moment t.

V_Payment_Protection(
  px,
  x,
  n,
  k = 1,
  cantprem = 1,
  premperyear = 1,
  i = 0.04,
  ip = 0.04,
  data,
  prop = 1,
  type = "outstanding_debt",
  method = "interest_only",
  V0,
  t
)

Arguments

• px: A numeric value. The value of the premium paid in each period.
• x: An integer. The age of the insuree.
• n: An integer. Loan term (in years).
• k: An integer. Number of payments per year.
• cantprem: An integer. The total number of premiums.
• premperyear: An integer. The number of premiums to be paid per year.
• i: The interest rate. A numeric type value.
• ip: The interest rate of the loan. A numeric type value.
• data: A data.frame of the mortality table, with the first column being the age and the second one the probability of death.
• prop: A numeric value. It represents the proportion of the mortality table used (between 0 and 1).
• type: A character string. The type of loan protection/reimburstment ("outstanding_debt" or "payments").
• method: A character string. Amortization scheme ("constant_instalment", "interest_only" or "constant_principal").
• V0: A numeric type value. Loan value.
• t: An integer. The moment of valuation (in months if it is a fractional coverage or in years if it is not).

Returns

Returns the actuarial present value of the loan protection.

Examples

px1<-31.6216618772779
c1<-10500
V_Payment_Protection(px1,30,25,1,10,1,0.06,0.07,CSO80FANB,1,"payments","constant_instalment",c1,25)