Traditional actuarial analysis of life insurance contracts focuses on calculation of expected values of various discounted random cashflows; the fundamental principle of equivalence states that discounted premiums

A unlt-hnked hfe insurance contract ~s a contract where the insurance benefits depend on the price of some specific traded stocks We consider a model describing the uncertainty of the financial market and a portfoho of insured individuals simultaneously. Due to incompleteness the insurance claims cannot be hedged completely by trading stocks and bonds only, leawng some risk to the insurer. The theory of risk-mlmmization Is briefly reviewed and apphed after a change of measure. Risk-minimizing trading strategies and the associated intrinsic risk processes are determined for different types of umt-hnked contracts By extending the model to the situation where certain reinsurance contracts on the insured lives are traded, the d~rect insurer can ehmlnate the risk completely The corresponding selffinancing strategies are determined.