insurance

Mortality Table

A statistical chart that shows the probability of death for individuals at each age, gender, and sometimes other demographic factors. Insurance companies use mortality tables to calculate life insurance premiums, annuity payments, and pension benefits by predicting life expectancy.

Example

“The insurance company consulted the latest mortality table and determined that a healthy 35-year-old male has a 99.85% chance of surviving the next year when setting his life insurance premium.”

Memory Tip

Think 'Mortality Table = Death Probability Chart' - it's like a roadmap showing the statistical likelihood of death at different ages.

Why It Matters

Mortality tables directly determine your life insurance premiums and annuity payments, with more favorable mortality trends leading to lower life insurance costs and higher annuity payouts. These tables also influence pension calculations and retirement planning, affecting your long-term financial security.

Common Misconception

Some people think mortality tables predict exactly when they'll die or that they're discriminatory tools. Actually, mortality tables are statistical averages that apply to large groups - they can't predict individual outcomes, and they're based on objective health data to ensure fair pricing for everyone.

In Practice

According to the 2017 CSO Mortality Table, a 40-year-old male has a 0.179% chance of dying within one year (1.79 deaths per 1,000 men). If an insurance company needs to pay $500,000 in death benefits per death, they expect to pay $895 per policy ($500,000 × 0.179%). Adding administrative costs and profit margins, they might charge a $1,200 annual premium for a $500,000 term life policy for healthy 40-year-old males.

Etymology

The concept dates back to 1662 when John Graunt created the first life table using London death records. The term combines 'mortality' (death rates) with 'table' (organized data chart), becoming standard in actuarial science by the 18th century.

Common Misspellings

mortalty tablemortality tabelmortalaty tablemortality tavle

Related Terms

Actuarial Table underwriting

More in insurance

Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…