In this Chapter we discuss models involving two lives. Actuarial present values for basic benefits are derived by applying the concepts and techniques developed in Chapter 3 through 5. Models built on the assumption that two future life-time random variables are independent constitute most of the chapter. Section 9.6 introduces special models in which the two future lifetime random variables are dependent. Annual benefit premiums, reserves, and models involving three or more lives are covered in Chapter 18.
A useful abstraction in the theory of life contingencies, particularly as it is applied to several lives, is that of status for which there are definitions of survival and failure. Two elements are necessary for a status to be defined. The general term entities is used in the definition because of the broad range of application of the concept:
1 There must be a finite set of entities, and for each member it must be possible to define a future lifetime random variable.
2 There must be a rule by which the survival of the status can be determined at any future time.