Mortality Table
A statistical table showing the probability of death at each age, used by actuaries to price life insurance and annuities.
What is Mortality Table?
A mortality table, also called a life table or actuarial table, is a statistical tool that shows the probability of dying within a given year at each age, based on data collected from large population samples. Life insurers use mortality tables to calculate expected claim frequencies, set premium rates, and reserve for future liabilities. Annuity issuers use them to price lifetime income products — the longer annuitants are expected to live, the lower the monthly payout for a given premium. The U.S. Society of Actuaries publishes widely used mortality tables such as the 2017 CSO (Commissioners Standard Ordinary) tables, and regulators require insurers to use approved tables for statutory reserving purposes.
Example
According to the 2017 CSO mortality table, a healthy 40-year-old male has a probability of dying within one year of approximately 0.24%. An insurer selling $500,000 of 20-year term coverage to 10,000 such men expects roughly 24 death claims in the first policy year, and prices the annual premium to collect enough to cover those claims, administrative expenses, and a profit margin.