Yearly Probability of Dying
Candlefocus EditorA mortality table is a tool typically used by insurers to help determine yearly probability of dying. A mortality table is essentially a data table set up by actuaries to estimate the probability of death, taking into account factors such as gender, age and lifestyle. The table can be used to calculate the expected probability of a person’s death in one year, as well as in the next five years, 10 years and so on. Death rates in the mortality table are expressed as per 1,000 individuals.
The concept of yearly probability of dying has several practical applications. Insurers can use the concept to help them come up with proper life insurance premiums. For example, if a particular person is identified as having a comparatively high yearly probability of dying, his/her premiums are likely to be higher than that of someone with a lower yearly probability. Similarly, the life expectancy of an annuity can be estimated by tallying up the individual’s yearly probability of dying and translating it into a set number of years.
Besides being used for pricing life insurance and annuities, the data from mortality tables can also be used in other areas of healthcare and finance. For instance, data from a mortality table can be used by doctors to determine a patient's risk for certain diseases or conditions. Pension funds may also make use of mortality tables to help make decisions regarding their investments.
Yearly mortality data is essential to giving an accurate picture of an individual’s life-span. Knowing the yearly probability of dying, along with related stats such as mortality rates and life expectancy, can help individuals make informed decisions when it comes to health, insurance, and pension matters. It can also help companies make better decisions when pricing their life insurance and annuity products.