Chapter 3 Flashcards
The insured lives mortality table used to establish life insurance policy reserves is:
standard and ordinary
The most common life table and underwriter will encounter:
general population life tables and basic select and ultimate life tables
general population life tables
tabulate the average annual mortality rates across large segments of the general population without regard to socioeconomic status, health, or tobacco use
basic select and ultimate tables
tabulate annual mortality rates for persons insured at standard or better rates by age, sex, policy duration and frequently, by tobacco use.
On what principles are life tables based?
annual mortality rates tabulated by age, sex, and other factors
How are mortality rates for different ages calculated?
By observing the number of deaths occurring in the population over a specified period of time and determining the number of individuals exposed to the risk of dying during that interval.
Excess Death Rate
The difference in death rates observed in the population having the impairment compared to the death rates expected in an otherwise matched population.
Relative Mortality Ratio
Ratios between observed mortality rates and expected mortality rates
Substandard ratings
25% of extra risk is referred to as one table.
Flat Extra
Used if the excess mortality risk is thought to remain constant.
Temporary Flat Extra
Used when excess mortality risk decreases with time
Erodes the future value of fixed death benefits
Inflation
The insured lives mortality table that will typically have the lowest mortality rate is:
individual annuity
In calculating mortality rates, the symbol “dx” refers to :
the number of individuals dying during a specified interval
Period life table
death rates are calculated for data collected over a relatively short period (1-3 years)
Cohort life table
report the actual death rates for a group, or cohort, of individuals born around the same time.
Limitation of all life tables, both cohort and period
they report only historical death rates and do not predict future death rates.
Population life tables
based on death rates calculated for large segments of the population without regard for individual health, socioeconomic, or employment status.
I(x)
Number of individuals alive at the beginning of an interval (x)
E(x)
Exposure during an interval (number of individuals exposed to the risk of dying during the interval)
q(x)
interval mortality rate (probability of death during the interval)
disabled lives life table
a life table tabulating the mortality rates of persons no longer able to work due to a disability
Select factors
scalar factors applied to life tables to reduce projected mortality rates
Select period
the period from life insurance policy issue to the time at which the effect of underwriting is assumed to no longer be effective (20-25 years)
Social Security (pension) life tables
type of population life table tabulating the mortality rates of individuals who were actively employed at some time
Table rating
method used in underwriting to account for extra mortality risk by charging extra premium based on a multiple of the base premium.
Ultimate period
The period after the select period when underwriting no longer has any effect (after 20 to 25 years)
p(x)
Interval probability of survival (probability of survival during the interval)
edr(x)
interval excess death rate (excess death rate during the interval)
mr
interval mortality ratio (the ratio of the observed death rate to the expected death rate)
l(x)
number of lives entering interval x (number of individuals exposed to the risk of dying at the beginning of the interval)
L(x)
average number of individuals alive during the interval, x
w(x)
number of withdrawals during the interval
E(x)
exposure in person years (number of individuals exposed to the risk of dying during the interval x
Interval, as in p or q
One of a series of successive periods of time during which mortality is studied
Expected, as in p(x) or q(x)
The expected probability of survival or death during the interval x
Aggregate annual average interval
the average annual probability of survival or dying over the interval
D
cumulative deaths from beginning to end of interval of interest
Q
cumulative overall probability of death from beginning to end of interval of interest
P
Cumulative probability of survival from beginning of study to the end of interval of interest
