Definition of Mortality Table
A mortality table (also known as a life table or actuarial table) is a statistical table that shows the rate of deaths occurring in a defined population during a selected time interval. It provides insight into survival rates from birth to death and typically details the general probability of a person’s death before their next birthday based on their current age.
Mortality Table vs Life Table Comparison
| Feature | Mortality Table | Life Table |
|---|---|---|
| Purpose | To show rates of death over a time period | To show survival probabilities over a lifespan |
| Usage | Primarily used in insurance | Used in demographics and statistical analysis |
| Structure | Contains probabilities divided by age | Considers time until death and life expectancy |
| Common Usage | Actuaries and insurers | Researchers and public health officials |
How Mortality Tables Work
Mortality tables function as a compass guiding actuaries in their calculations of risk. Here’s how they typically work:
-
Data Collection: Gather extensive data from a population concerning deaths and survival rates.
-
Statistical Analysis: Analyze this data to identify patterns and death probabilities at various ages.
-
Construction of the Table: Create a formatted table that includes probabilities for each age segment, often separated by gender or health factors.
-
Applications: Use the constructed table to inform decisions on insurance policy premiums, pension plan liabilities, and other financial products.
graph TD;
A[Data Collection] --> B[Statistical Analysis]
B --> C[Construction of the Table]
C --> D[Applications in Insurance and Finance]
D --> E[Determining Risk and Rates]
Examples and Related Terms
-
Life Expectancy: The average period that a person may expect to live. It is derived from mortality tables.
-
Cohort Life Table: A type of life table that follows a specific group (or cohort) over time.
-
Period Life Table: A life table that assumes a certain mortality pattern over a specific period rather than over an individual’s lifespan.
Fun Facts & Insights
-
Did you know? The first documented mortality table was created in the late 17th century by the mathematician John Graunt! He was like the original “life insurance actuary,” only without Google or Excel!
-
Mortality tables anticipate the likelihood of survival not just based on age alone, but gender, health metrics, and even lifestyle factors! So… maybe it’s time to hit the gym? 🏃♂️
Humorous Quote
“The only thing certain in life is death… and taxes! As every good financier knows!” - Unknown
Frequently Asked Questions
What is a mortality table used for?
Mortality tables are primarily used by insurance companies to determine premium rates and to assess the financial risks associated with life insurance and pension schemes.
How accurate are mortality tables?
While not foolproof, mortality tables are based on extensive statistical analysis and provide a reasonably accurate prediction of life expectancy and risks within defined populations.
Are there different kinds of mortality tables?
Yes! There are period life tables and cohort life tables, each serving distinct purposes based on the data segment and time frame they cover.
Who uses mortality tables?
Main users of mortality tables include actuaries, insurance companies, healthcare planners, and public health officials.
References to Online Resources
Suggested Books for Further Studies
- “Actuarial Mathematics” by Bowers, et al.
- “Life Insurance Mathematics” by P. G. Kahn and M. Stott
- “An Introduction to Risk Theory” by David V. Sweeney
