Definition
Mortality Table
A mortality table shows the probability of death at each age, used by actuaries to price life insurance and value liabilities.
Built from large datasets of population or insured-lives experience, a mortality table gives the expected death rate per 1,000 lives at each age, from which actuaries derive premiums and reserves. Indian insurers historically referenced LIC-based tables and now use updated Indian Assured Lives Mortality tables.
Separate tables exist for annuitants, who tend to live longer (an example of self-selection), so annuity pricing uses annuitant mortality assumptions. Improvements in life expectancy mean tables are periodically updated, affecting both term-cover pricing and annuity payouts.
Related terms
- Mortality ChargeThe mortality charge is the cost an insurer deducts to provide pure life cover, based on the insured's age, health and the sum at risk.
- ActuaryAn actuary is a professional who applies mathematics, statistics and financial theory to price insurance, value liabilities and assess long-term risk.
- Morbidity TableA morbidity table shows the probability of falling ill, being injured or becoming disabled at each age, used to price health and disability insurance.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.