What is ‘Ultimate Mortality Table’
A mortality table that lists the death rates of insured persons of each sex and age group and excludes data from policies that have been recently underwritten. An ultimate mortality table also lists the proportion of individual survival from birth to any given age. Insurance companies use these tables to price insurance products and ultimately the profitability of these insurance companies depend upon correct analysis of the table.
Explaining ‘Ultimate Mortality Table’
By removing the first few years of life insurance data from the table, the ultimate mortality table more accurately shows the rate of mortality after removing selection effects. People who just received life insurance will have usually just had a medical exam and are relatively healthy and so this table attempts to remove that effect.
The calculation of an ultimate mortality table affects insurance requirement reserves and proper pricing by insurance companies. Along with death and survival rates amongst age groups and sexes, mortality tables can also list survival and death rates in relation to weight, ethnicity and region.
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