Actuarial Life Table
Candlefocus EditorThe main purpose of an actuarial life table is to help insurance companies determine their risk exposure. Based on the mortality rate of a certain age and birth year, insurance companies can decide how much to charge for a certain type of policy. In the same way, individuals can use the data to understand their risk when considering a life insurance policy, or to understand their longevity chances.
Actuarial life tables are based on the mortality experience of a large population of people. This experience is used to calculate probability of survival for a specified age and birth year. Data for these calculations is compiled from aggregate data from death certificates, census data, and other sources. Variations among countries, gender, health and lifestyle all contribute to the data that goes into an actuarial life table.
The two types of life tables used by actuarial science are conventional or static life tables and period life tables. A static life table assumes that the death rate will remain constant and does not consider changing mortality conditions. By contrast, a period life table takes into account changing mortality conditions such as advances in medicine, changing lifestyles, etc.
Overall, actuarial life tables are invaluable tools used by insurance companies and individuals to assess risk and determine probability of living to a certain age based on a wide range of factors. They are based on large sample sizes, which ensures their accuracy, and they help to make insurance policies available to a larger number of people, making coverage more affordable.