The Power of Taylor and McLaurin

Series in Actuarial Mathematics:

Solving Complex Problems
with Ease

Submitted to:
Yolanda Roberto, MAT
Mathematics Department
College of Science
Bulacan State University

in partial fulfillment of the requirements for

the course MAT 403 – Numerical Analysis
of the program BS Mathematics
with specialization in
Computer Science

by

SURE VIBES
Alejandro, Kristian James M.
Dela Cruz, John Martin Vincent R.
Galvez, Larjanne Adrielle F.
Gregorio, Anthony Mico B.
Javier, Rjay S.
Pascual, Jhon Honesto T.

2nd Semester, AY 2022-2023

 Abstract

1. Introduction

Calculus has fundamentally changed how we think about and perceive

mathematical functions. The concept of series, which enables us to estimate functions

using an infinite sum of simpler terms, is a great calculus tool. The Taylor and

Maclaurin series stand out among the numerous forms of series as essential

instruments for extending functions into power series representations. These series

offer effective techniques for estimating functions and analyzing their characteristics

in a variety of mathematical and scientific fields.

1.1 Background of Taylor and McLaurin Series

A strong mathematical technique called a Taylor series is used to describe

complex functions as an infinite sequence of smaller functions. In the 18th century,

British mathematician Brook Taylor made the first mention of it. The Taylor

expansion or Taylor polynomial is another name for the series, which bears his name.

There are several uses for the Taylor series in a variety of disciplines, including

physics, engineering, economics, and finance. It is especially helpful in numerical

analysis, which is used in scientific and engineering applications to approximate

functions, assess integrals, and solve differential equations.

The Maclaurin series is a special case of the Taylor series, where the expansion

point is set to zero. Named after the Scottish mathematician Colin Maclaurin, this

series enables us to approximate functions around the origin. By simplifying the

Taylor series expansion, the Maclaurin series provides a convenient framework for

analyzing functions with manageable calculations, especially when higher-order

derivatives are involved.

The basic idea behind the Taylor and McLaurin series is to approximate a

complicated function by a series of polynomials that become increasingly accurate as

more terms are added. The polynomials are centered around a single point, called the

expansion point, and are constructed using the derivatives of the function evaluated at
that point. The coefficients of the polynomial are determined by the values of the

derivatives, and the higher-order derivatives contribute increasingly smaller terms to

the polynomial.

The convergence of the Taylor and McLaurin series depends on the behavior of

the function and the expansion point, and some functions may require an infinite

number of terms to achieve a desired level of accuracy. However, for many functions,

the Taylor series provides a simple and efficient way to approximate the function and

obtain useful insights into its behavior.

Overall, the Taylor and McLaurin series is a fundamental tool in mathematics that

allows us to approximate complex functions using simple polynomials. Its wide range

of applications and versatility make it an essential concept for anyone interested in

mathematical analysis or numerical methods.

2. Discussion

2.1 Taylor Series (Taylor’s Formula)

If the function y = f(x) and its (n + 1) derivatives are continuous on an interval

containing

a and x, then the value of the function at x is given by:

n
f (k ) (a)
f ( x )=∑ ( x−a )k + Rn ( x)→(EQ 1)
k=0 k!

where f (k )(a) is the value of the kth derivative of f ( x ) at x−a and Rn (x ) stands for the

remainder after expanding the function up to the nth-order.

Its expanded form ( Eq 2) is:

' '' (n )
f ( a) f (a ) 2 f ' ' ' (a) 3 f (a ) n
f ( x )=f ( a ) + ( x−a ) + ( x−a) + (x−a) +⋯+ ( x−a ) + R n( x)
1! 2! 3! n!

Where f ' (a) is the value of the first derivative of f (x) at x=a .

f ' ' (a) is the value of the second derivative of f (x) at x=a .

f ' ' ' (a) is the value of the third derivative of f (x) at x=a .
 f (a)(n) is the value of the nth derivative of f (x) at x=a .

and Rn(x), the remainder term.

The point a is usually chosen at the discretion of the user and is often taken to be 0 .

When the number a in Eq 2 is chosen to be 0 , that is when a=0, the resulting series is

called the Maclaurin’s series for the function f ( x). The series is named after the Scottish

mathematician Colin Maclaurin (1698 – 1746). When a=0, Eq 2 of the Taylor’s series

becomes:

2.2 Maclaurin’s Series:

f ' (0 ) f ' ' ( 0 ) 2 f ' ' '(0) 3 f (n ) ( 0 ) n

f ( 0 )=f ( 0 )+ x+ x+ x +⋯ + x + R n (x)
1! 2! 3! n!

If the remainder is omitted, the right side of Eq 2 is the Taylor polynomial approximation

to f ( x). In essence, the theorem states that any smooth function can be approximated as a

polynomial.

f (x)=e x , when a=0

x
f (x)=e --- f ( a )=f ( 0 )=e 0=1

x
f ' (x)=e --- f ' ( a )=f ( 0 )=e0=1

f ' ' (x)=e x - - - f ' ' ( a )=f ( 0 )=e =1

0

: :

(n) x
f (x )=e - - - f n (a)=f n (0)=e0 =1

Thus the Taylor Polynomial of degree n for e x is :

f ' (0 ) f ' ' ( 0 ) 2 f ' ' '(0) 3 f (n ) ( 0 ) n

f ( 0 )=f ( 0 )+ x+ x+ x +⋯ + x
1! 2! 3! n!

x 1 1 2 1 3 1 n
e =1+ x + x + x +⋯ + x
1! 2! 3! n!

Since a=0, the work will become easier if the Maclaurin’s series will be used

directly. Leave the answer as it is written above to emphasize the pattern.

f ( x)=sin x
f(x) = sin x --- f (0)=sin 0=0

f’(x) = cos x --- f ’ (0)=cos 0=1

f ’ ’(x )=−sin x --- f ’ ’(0)=−sin 0=0

f ’ ’’( x)=−cos x - - - f ’ ’’(0)=−cos 0=−1

(4 ) (4 )
f (x)=sin x --- f (0)=sin 0=0

(5) (5)
f ( x )=cos x --- f (0)=cos 0=1

Plug in the values found to the terms of the Maclaurin’s series for the function f (x),

with

f ( x)=sin x .

f ' (0 ) f ' ' ( 0 ) 2 f ' ' '(0) 3 f (n ) ( 0 ) n

f ( 0 )=f ( 0 )+ x+ x+ x +⋯ + x
1! 2! 3! n!

1 1 −1 3 0 4 1 5 (−1)(n)
sin x=0+ x + x 2+ x + x + x + ⋯+ ! ¿ x 2n +1
1! 2! 3! 4! 5! 2 n+1¿

1 3 1 5 (−1)(n)
sin x=x− x + x + ⋯+ !¿ x 2 n+1
3! 5! 2 n+1 ¿

Note that the terms of the series contained odd powers of x with alternating signs

beginning from positive x. The nth term of the series can be obtained from the pattern

(−1 )(n )
thus observed. Hence, the nth term is ! ¿ x2 n +1.
2n+ 1¿

f (x)=cos x

f (x)=cos x --- f (0)=cos 0=1

f ’ ( x)=−sin x --- f ’ (0)=−sin 0=0

f ’ ’(x )=−cos x --- f’’(0) = - cos 0 = -1

f ’ ’’( x)=sin x --- f ’ ’’(0)=sin 0=0

f (4 ) (x)=cos x --- f^((4)) (0) = cos 0 = 1

Substituting the above values to the terms of the Maclaurin’s series for the function

f ( x), we have:

' '' ( n)
f ( 0) f ( 0 ) 2 f ' ' '(0) 3 f ( 0) n
f ( x )=f ( 0 ) + x+ x + x + ⋯+ x
1! 2! 3! n!

0 −1 2 0 3 1 4 (−1)(n) 2 n
cos x=1+ x + x + x + x +⋯ + x
1! 2! 3! 4! (2 n)!

(n )
1 2 1 4 (−1) 2 n
cos x=1− x + x + ⋯+ x
2! 4! (2 n)!

Note: that the terms of the series contained even powers of x with alternating signs
(n )
(−1) 2 n
beginning from positive x 0 which is equal to 1. The nth term of the series is x
( 2n) !

, obtained from observing the pattern.

2.3 Actuarial Mathematics

Actuarial mathematics is the branch of mathematics that deals with the

application of mathematical and statistical methods to assess and manage risks. It is a

complex and highly specialized field that has its roots in the insurance industry.

Actuaries use mathematical models to analyze the likelihood of future events and

their potential risk impact. They use this information to help businesses and

organizations make informed decisions about managing risk, especially in the areas of

insurance, pensions, and investments.

The actuarial mathematics has a long history, dating back to the 17th century

when actuaries were first employed by insurance companies to calculate the

premiums that customers should pay based on their risks. Today, actuaries work in a

wide range of industries, including finance, healthcare, and government.

Actuarial mathematics requires a strong foundation in calculus, probability theory,

and statistics. Actuaries must also be skilled in financial analysis, computer

programming, and risk management. They use these skills to develop and maintain

mathematical models that predict future events and assess their impact on financial

systems.
 In conclusion, actuarial mathematics plays a vital role in modern financial

systems, enabling businesses and organizations to manage risks and make informed

decisions. The field requires a high level of mathematical expertise, analytical skills,

and professional ethics, making it an exciting and challenging career path for those

interested in finance, statistics, and mathematics.

2.3.1 PARAMETRIC SURVIVAL MODELS

Parametric survival models are models for which the survival function s(x) is

given by a mathematical formula.

THE EXPONENTIAL MODEL

In this survival model, the age-at-death random variable follows an exponential

distribution with survival function given by

S ( X )=e−μx , x ≥ 0 , μ>0.

This is an example of one-parameter model. This model is also known as the

constant force model since the force of mortality is constant as shown in the next

example.

Consider the exponential model as defined earlier.

Find F(x), f(x), and μ(x).

F ( x )=1−S ( x )=1−e−μx

−d −μx
f ( x )=−S ' ( x )= ( e ) =μ e−μx
dx

f (x) μ e−μx
μ ( x )= = =μ
S ( x) e−μx

Then, solve for E( X) and V ( X)

∞ ∞
E ( X ) =∫ S ( x) dx=∫ e
− μx
dx
0 0

∫ eu du=eu +C
 du
Let u=−μx , du=−μdx , dx=
−μ

( )[ ]
∞ ∞ ∞
du 1 − μx −1 −μ ∞ 1 −μ (0 ) 1
∫e −μx
dx=∫ e
u
−μ
=
−μ
e =
μ
e + e =
μ μ
0 0 0

∞ ∞
E ( X ) =2∫ xS (x )dx=∫ x e dx
2 −μx

0 0

IBP :uv−∫ vdu

−μx 1 − μx
Let u=x , du=dx , dv=e , v= e
−μ

[ ]
∞ ∞
uv−∫ vdu=2 x
1 −μx
−μ
e
0
−2∫
0
1 −μx
−μ
e dx=0+
2 1
μ μ
2
= 2
μ ()
()
2
2 2 1 1
V ( X )=E ( X 2 )−( E ( X ) ) = − = 2
μ
2
μ μ

3. Real Life Application of Taylor and McLaurin Series in Actuarial

Mathematics

Many insurance policies provide a benefit on the death of the policy holder. When

an insurance company issues such a policy, the policyholder's date of death is

unknown, so the insurer does not know exactly when the death benefit will be

payable. In order to estimate the time at which a death benefit is payable, the insurer

needs a model of human mortality, from which probabilities of death at particular

ages can be calculated.

One way of describing a random variable is through the use of a survival

distribution function, also known as reliability function, wherein it gives the

probability that a patient, device, or other object of interest will survive beyond any

given specified time.

Here's a sample problem that involves the exponential parametric survival function:

Problem:
 A manufacturing company produces electronic devices. The time (in hours) until a

device fails follows an exponential distribution with a parametric survival function

given by S(x )=e− μx, where μ is the failure rate parameter.

Suppose the failure rate parameter for a particular type of device is μ=0.02.

Calculate the following probabilities:

a) What is the probability that a device will fail within the first 50 hours of

operation?

To find the probability that a device will fail within the first 50 hours, we need to

calculate 1 minus the survival function at 50 hours:

−μx − ( 0.02∗50 )
P ( failure within50 hours )=1−S ( 50 )=1−e =1−e

−1
¿ 1−e

We know that the McLaurin Polynomial of degree n for e x is :

f ' (0 ) f ' ' ( 0 ) 2 f ' ' '(0) 3 f (n ) ( 0 ) n

f ( 0 )=f ( 0 )+ x+ x+ x +⋯ + x
1! 2! 3! n!

x 1 1 2 1 3 1 n
e =1+ x + x + x +⋯ + x
1! 2! 3! n!

Using 8 terms of McLaurin Series we can estimate the value of e−1.

2 3 4 5 6 7 8
−1 1 (−1 ) (−1 ) (−1 ) (−1 ) (−1 ) (−1 ) (−1 )
e =1− + + + + + + +
1! 2! 3! 4! 5! 6! 7! 8!

2 3 4 5 6 7 8
−1 1 (−1 ) (−1 ) (−1 ) (−1 ) (−1 ) (−1 ) (−1 )
e =1− + + + + + + +
1 2 6 24 120 720 5040 40320

−1
e =1−1+ 0.5−0.16666667+ 0.04166667−0.00833333+ ¿

0.00138889−0.00019841+ 0.0000248

−1
e ≈ 0.3678794412

−1
1−e =1−0.3678794412 ≈ 0.63211205588

b) What is the probability that a device will survive for more than 100 hours?

−μx − ( 0.02∗100 ) −2
P ( survival >100 hours )=S ( 100 )=e =e =e ≈ 0.1353
Using 8 terms of McLaurin Series we can estimate the value of e−2.

2 3 4 5 6 7 8
−2 2 (−2 ) (−2 ) (−2 ) (−2 ) (−2 ) (−2 ) (−2 )
e =1− + + + + + + +
1! 2! 3! 4! 5! 6! 7! 8!

2 3 4 5 6 7 8
2 (−2 ) (−2 ) (−2 ) (−2 ) (−2 ) (−2 ) (−2 )
e−2=1− + + + + + + +
1 2 6 24 120 720 5040 40320

−2
e =1−2+2−4/ 3+2 /3−4 / 45+1 /90−1/630+1/5040

−2
e ≈ 0.1353352832

c) If a device has already survived for 200 hours, what is the probability that it will

fail within the next 50 hours?

P( failure within 50 hours∨survival >200 hours )

( S ( 200 )−S ( 250 ) ) ( e−μx −e− μ (x +50) ) e−(0.02∗200 )−e−0.02 (250 ) e−4 −e−5
¿ = = =
S ( 200 ) e− μx e−( 0.02∗200 ) e−4

Using 8 terms of McLaurin Series we can estimate the value of e−40 .

2 3 4 5 6 7 8
4 (−4 ) (−4 ) (−4 ) (−4 ) (−4 ) (−4 ) (−4 )
e−4 =1− + + + + + + +
1! 2! 3! 4! 5! 6! 7! 8!

2 3 4 5 6 7 8
4 (−4 ) (−4 ) (−4 ) (−4 ) (−4 ) (−4 ) (−4 )
e−4 =1− + + + + + + +
1 2 6 24 120 720 5040 40320

e−4 =1−4+8−42.66667+113.7778−187.7333+218.5667−190.1095+122.2156

e−4 ≈ 0.01831564

Using 8 terms of McLaurin Series we can estimate the value of e−5 0.

2 3 4 5 6 7 8
−5 5 (−5 ) (−5 ) (−5 ) (−5 ) (−5 ) (−5 ) (−5 )
e =1− + + + + + + +
1 ! 2! 3! 4! 5! 6! 7! 8!

2 3 4 5 6 7 8
5 (−5 ) (−5 ) (−5 ) (−5 ) (−5 ) (−5 ) (−5 )
e−5=1− + + + + + + +
1 2 6 24 120 720 5040 40320

−5
e =1−5+12.5−20.83333+ 26.04167−26.04167+ 21.70139−15.57201+9.732507

−5
e ≈ 0.006737947
 −4 −5
e −e 0.01831564−0.006737947
−4
= ≈ 0.63212058
e 0.01831564

Note: In the exponential distribution, the survival function gives the probability of

survival beyond a certain time point. The failure rate parameter μ is the reciprocal of

the mean time to failure.

Let the age-at-death be exponential with density

function f(x) = 0.01 e−0.02 x . Find P(1< x <2).

2 2
P(1< x <2)=∫ f ( x ) dx=∫ 0.01 e dx=0.01∫ e
−0.01 x −0.01 x
dx
1 1

−−du
u=−0.01 x du=−0.01 dx dx=
0.01

[ ]
2
−1 −0.01 x
¿ ¿e =−e−0.01 (2 )−(−e−0.01(1))=e−0.01−e−0.02Using 8 terms of McLaurin
0.01 1

Series we can estimate the value of e−0.01.

2 3 4 5 6
0.01 (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 )
e−0.01=1− + + + + +
1! 2! 3! 4! 5! 6!

+ (−0.01 )7 (−0.01 )8
+
7! 8!

2 3 4 5 6 7 8
−0.01 0.01 (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 )
e =1− + + + + + + +
1 2 6 24 120 720 5040 40320

2 3 4 5 6 7 8
−0.01 0.01 (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 ) (−0.01 )
e =1− + + + + + + +
1 2 6 24 120 720 5040 40320

e−0.01=1−0.01+5 ( 10−5 ) −1.67 ( 10−7 ) + 4.17 ( 10−10 )−8.33 ( 10−13 ) +¿

 1.39(10−15)−1.98 ( 10−18 ) + 2.48(10−21)

−0.01
e ≈ 0.9900498333

And x = 0.02 we get,

2 3 4
0.02 (−0.02 ) (−0.02 ) (−0.02 )
e−0.02=1− + + + +⋯ +¿ ¿Using 8 terms of McLaurin Series
1! 2! 3! 4!

we can estimate the value of e−0.02.

2 3 4 5 6 7 8
−0.02 0.02 (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 )
e =1− + + + + + + +
1! 2! 3! 4! 5! 6! 7! 8!

2 3 4 5 6 7 8
−0.02 0.02 (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 )
e =1− + + + + + + +
1 2 6 24 120 720 5040 40320

2 3 4 5 6 7 8
−0.02 0.02 (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 ) (−0.02 )
e =1− + + + + + + +
1 2 6 24 120 720 5040 40320

e−0.02=1−0.02+2 ( 10−4 ) −1.33 ( 10−6 ) + 6.67 ( 10−9 ) −2.67 ( 10−11 ) +8.89 ( 10−14 ) −2.54 ( 10−16) + 6.35(10

e−0.02 ≈ 0.980198673

Therefore,

−0.02
e - e−0.01 ≈ 0.9900498333 - 0.980198673 ≈ 0.00989966

P (1 < x < 2) ≈ 0.00989966 or .99 %

5. Summary, Conclusion & Recommendation

5.1 Summary

5.2 Conclusion

5.3 Recommendation

References

Anton, H., Bivens, I., & Davis, S. (2013). Calculus: Early Transcendentals. John Wiley &

Sons.
.Stewart, J. (2015). Calculus: Early Transcendentals. Cengage Learning.

Apostol, T. M. (1976). Mathematical Analysis. Addison-Wesley.

Arfken, G. B., Weber, H. J., & Harris, F. E. (2012). Mathematical Methods for Physicists:

A Comprehensive Guide. Elsevier.

Kreyzig, E. (2018). Advanced Engineering Mathematics. Wiley.

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