Underlying Mortality Assumption
 |
Definition of 'Underlying Mortality Assumption'Projections of expected death rates used by actuaries to estimate insurance premiums and pension obligations. Underlying mortality assumptions are based on mortality tables, which are statistical tables of expected annual mortality rates. Because of the critical importance of the underlying mortality assumption, actuaries have to follow guidelines set by pension and insurance regulators in deciding on an appropriate assumption.Also called the mortality assumption. |
 |
Investopedia explains 'Underlying Mortality Assumption'The underlying mortality assumption is a key variable in estimating life expectancies, which in turn determines the cost of insurance for an insurer and the long-term obligations of a pension fund. If the underlying mortality assumption is too low, a life insurer may underestimate the actual cost of insurance and may have to pay out more death benefit claims than it had forecast. Conversely, if the underlying mortality assumption is too high, the actuary may underestimate life expectancies of the pension-plan members and hence the long-term obligations of the pension fund. |
Related Definitions
Articles Of Interest
-
The Investing Risk Of Underfunded Pension Plans
Determine the risk to a company's EPS and financial condition resulting from an underfunded pension plan. -
Operational Risk: A Must-Know For Investors
This type of risk is often overlooked, but it can mean the downfall of a company - and its investors. -
How To Evaluate Pension Risk By Analyzing Annual Costs
Learn how to assess whether a company's pension plan is posing more risks than what the footnotes indicate. -
The Demise Of The Defined-Benefit Plan
Experts are making bleak predictions for your post-work years. Be prepared and plan for your future. -
Insure Your Future With A Career As An Actuary
If you've got excellent math skills, they can add up to a lucrative career as an actuary. -
5 Things You Should Know About The New Health Insurance Marketplace
Here are five things you should know about the new Health Insurance Marketplace (AKA Health Insurance Exchange), which launches on October 1. -
Regression Basics For Business Analysis
This tool is easy to use and can provide valuable information on financial analysis and forecasting. Find out how. -
Get An Academic Finance Career
Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by. -
Breaking Down The Geometric Mean
Understanding portfolio performance, whether for a self-managed, discretionary portfolio or a non-discretionary portfolio, is vital to determining whether the portfolio strategy is working or ... -
Tracking Volatility: How The VIX Is Calculated
When market volatility spikes or stalls, newspapers, websites, bloggers and television commentators all refer to the VIX®. Formally known as the CBOE Volatility Index, the VIX is a benchmark ...
Free Annual Reports