WHAT IS 'Ultimate Mortality Table'

Ultimate mortality tables list the percentage of life insurance purchasers expected to still be alive at each given age, beginning with age 0, which represents 100% of the population, up to age 120. Typically, the data is based on a population of life-insurance policyholders from either a particular insurance company or group of companies, rather than the entire U.S. population.

The information underlying ultimate mortality tables is called survivorship data, and takes into account many risk factors. Insurance companies use the data underlying these tables to price insurance products. The profitability of insurance products depends partly on companies' accurately analyzing the data behind ultimate mortality tables.

To a lesser degree, investment-management companies may use ultimate mortality tables to help their customers make determinations about their own respective life expectancies and how much money they may need in retirement.

BREAKING DOWN 'Ultimate Mortality Table'

Ultimate mortality tables usually remove the first few years of life insurance data from the analysis, in an attempt to more accurately show the rate of mortality after removing so-called selection effects. People who just received life insurance will have usually just had a medical exam and are relatively healthy, and so not including them removes this bias.

Along with death and survival rates among age groups and sexes, mortality tables may also list survival and death rates in relation to weight, ethnicity and region. Some also break out statistics for smokers and non-smokers.

In addition, some may include an aggregate mortality table, with death-rate data on the entire study population that has purchased life insurance, without a categorization based on age or time of purchase. The data in an aggregate table depends on the combined statistics of several, if not many, individual mortality tables.

Accuracy of Ultimate Mortality Tables

As is the case for other types of statistical data, the accuracy of an ultimate mortality depends on the breadth of data in the survey. The accuracy of an insurance company's ultimate mortality table may not be as accurate as one compiled by an organization that's able to compile data sets from multiple insurers.

For example, the Society of Actuaries typically produces an ultimate mortality table each year that is based on a fairly wide data set. It calculates mortalities for both men and women in the U.S., and it also includes a blended table with the ultimate mortality of the entire U.S. population.

  1. Mortality Table

    A mortality table shows the rate of deaths occurring in a defined ...
  2. American Experience Table

    A set of data, presented in table format, showing when Americans ...
  3. Underlying Mortality Assumption

    Underlying Mortality Assumption is a projections of expected ...
  4. Actuarial Life Table

    An actuarial life table is a table or spreadsheet that shows ...
  5. Extreme Mortality Bond - EMB

    Insurers securitize their issued policies in the form of bonds ...
  6. Single Monthly Mortality - SMM

    Single monthly mortality (SMM) is the amount of principal on ...
Related Articles
  1. Insurance

    The Blunt Truth About Marijuana and Life Insurance

    Here's how using marijuana can affect your access to life insurance.
  2. Investing

    Reading Financial Tables Tutorial

    Learn about six common types of financial tables and figure out how to interpret them.
  3. Financial Advisor

    All About Impaired Risk Annuites and Insurance

    What are impaired risk insurance products and understanding life insurance rate classes, table ratings and flat extra premiums.
  4. Insurance

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  5. Insights

    Top 25 Developed and Developing Countries

    The difference between developed and developing countries, along with a list of the status of 25 nations around the world.
  6. Insurance

    What Is the Best Age to Get Life Insurance?

    Learn about the optimal time for purchasing personal life insurance and why delaying the buying decision may have costly consequences.
  7. Insurance

    Whole or Term Life Insurance? The Definitive Guide

    The math is clear, term life insurance is the right choice to protect against economic loss.
  8. Insurance

    How to Pick the Right Life Insurance Plan

    Finding the right life insurance policy - if you need one at all - can be more challenging than it seems. Use this guide to find the right one for you.
Trading Center