A mortality table is a statistical tool used in the insurance industry to estimate the probability of death for a group of people. It is commonly used in the pricing of life insurance policies to determine the premiums that should be charged to policyholders.
Mortality tables are based on data from large groups of people over a specific period of time, and they show the probability of death at each age. They are typically divided into two types:
Actual mortality tables: These tables are based on data from actual deaths that have occurred in a specific population. They are considered to be the most accurate, but they may not be representative of all populations.
Standard mortality tables: These tables are based on data from large groups of people, and they are used as a standard for pricing life insurance policies. They are often used as a benchmark for determining premiums, since they are more widely applicable than actual mortality tables.
Mortality tables are important for life insurance companies, as they help them to determine the risks associated with insuring different individuals or groups. By using mortality tables, insurers can better understand the likelihood of a policyholder dying and adjust premiums accordingly. This helps to ensure that the insurer is able to pay out claims to policy beneficiaries when needed.