Survival Analysis

AAA

DEFINITION of 'Survival Analysis'

A branch of statistics which studies the amount of time that it takes before a particular events, such as death, occurs. However, the same techniques can be used to study the time until any event. While a time-to-event study is theoretically simple to undertake, in practice there are a number of problems if the event being studied is relatively rare or takes a long time to occur. For instance, a study of death rates might be highly difficult to undertake if most subjects outlive the term of the study, or drop out of the study while it is in progress. Results from such analysis are used to help calculate insurance premiums.

INVESTOPEDIA EXPLAINS 'Survival Analysis'

Within finance, survival analysis has applications to several areas, particularly insurance. For instance, a study of death rates would be directly applicable to the calculation of life insurance premiums. Given a large enough data set, statisticians can develop a hazard function, which outlines the incidence of death at different ages given certain health conditions. From this function, it is simple to compute the probability that the insured will become deceased during the term of the life insurance policy. Factoring in the value of the potential payouts under the policy, an appropriate insurance premium can be calculated for any policy.

RELATED TERMS
  1. Ultimate Mortality Table

    A mortality table that lists the death rates of insured persons ...
  2. Random Factor Analysis

    A statistical analysis performed to determine the origin of random ...
  3. Mortality Table

    A table that shows the rate of deaths occurring in a defined ...
  4. Life Insurance

    A protection against the loss of income that would result if ...
  5. Hazard Insurance

    Insurance that protects a property owner against damage caused ...
  6. Named Perils Insurance Policy

    A home insurance policy that only provides coverage on losses ...
RELATED FAQS
  1. How are contingent beneficiaries informed of a payout?

    One of the greatest tools in estate planning is beneficiary designation. Listing primary and contingent beneficiaries is ... Read Full Answer >>
  2. How does life insurance help high net worth individuals protect their businesses ...

    Life insurance protects the businesses and personal wealth of high-net-worth individuals, or HNWI, by guaranteeing their ... Read Full Answer >>
  3. What is the usual profit margin for a company in the insurance sector?

    The best estimates of the average insurance company net profit margin are between 3 and 8%, with a likely median average ... Read Full Answer >>
  4. In what ways does government regulation impact the insurance sector?

    Regulation is not consistent among all forms of insurance. The kinds of regulations imposed on AIG for guaranteeing credit ... Read Full Answer >>
  5. What are the benefits of high net worth insurance?

    High-net-worth individuals (HWNI) face unique insurance challenges and tend to gravitate towards different insurance products. ... Read Full Answer >>
  6. What is a "linear" exposure in Value at Risk (VaR) calculation?

    A linear exposure in the value-at-risk, or VaR, calculation is represented by positions in stocks, bonds, commodities or ... Read Full Answer >>
Related Articles
  1. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  3. Options & Futures

    How To Avoid Taxation On Life Insurance Proceeds

    Decrease the value of your taxable estate and prevent the tax man from getting you one last time.
  4. Options & Futures

    Getting Started On Your Estate Plan

    With some preparation, you can save your heirs from paying a hefty estate tax. Here are some tips.
  5. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  6. Insurance

    Understanding Cash Surrender Value

    The amount of money an insurance company pays the owner of an insurance policy if the policy is voluntarily surrendered prior to the event that is insured
  7. Fundamental Analysis

    What is a Representative Sample?

    In statistics, a representative sample accurately represents the make-up of various subgroups in an entire data pool.
  8. Fundamental Analysis

    How to Calculate a Turnover Ratio

    A turnover ratio measures a mutual fund’s level of trading activity in a given time period, usually a year.
  9. Investing

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.
  10. Fundamental Analysis

    How to Calculate a Coverage Ratio

    In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center