Valuation Mortality Table

Posted in Statistics, Total Reads: 366

Definition: Valuation Mortality Table

Valuation Mortality Table is a statistical table that shows the death rate for a given age in terms of number of deaths that occur per thousand individuals of that age. In other words it shows possibility of a person of a particular age living up to those many number of years.

It is used by insurance companies to evaluate the cash surrender values and statutory reserves of life insurance plans. With the help of valuation mortality table, insurance companies can determine the amount that they are required to set aside as liquid assets for claims and benefits. It is to make sure that an insurance company will receive enough premiums to cover the face value of the policies that it sells.

Valuation mortality tables are calculated based on characteristics like male, female, smokers, non-smokers, occupation, socio economic class and it usually covers a time frame of 120 years. As the age increases, the probability of death also increases.

In a mortality table, the mortality rate for a person of age X in the year (2012+N) is calculated as shown below

q_x^(2012+N)-q_x^2012 (1-〖G2〗_x )^N


For example,

For a male of age 30, if q_x^2012= 0.741

q_x^2013= 0.741 * (1-0.010)^1 = 0.751



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