What is 'Yearly Probability Of Living '

Yearly probability of living is a numerical figure that represents the likelihood of a person living and surviving for a given year.

BREAKING DOWN 'Yearly Probability Of Living '

The yearly probability of living is determined by consulting a mortality table, which shows the rate of death at each age, as expressed in terms of the number of deaths per thousand. The data in the chart is determined by dividing the number of people alive at the end of a given year by the number of people alive at the beginning of that same year. Mortality tables are sometimes also known as “life tables” or “actuarial tables.” By checking the section of a morality table for your current age, you can see what your chances are, statistically speaking, of dying before your next birthday.

Mortality tables are broken down by gender. Frequently, they will also list more detailed data separated out according to other categories or characteristics. This may even include lifestyle attributes, economic class and habits such as smoking. These factors are considered statistically relevant because they can influence a person’s life expectancy.

Yearly Probability of Living in Determining Risk

Thinking about the yearly probability of living, and the concept of mortality tables in general, can be a somewhat morbid prospect. Even though this is just impersonal data and statistics and not related to any one specific individual, it can be unsettling to contemplate the likelihood that one will die before their next birthday. For many people, facing their own mortality in any way can be distressing, and seeing their lifespan expectancy expressed in clear numerical documentation is an unusual situation. Even more distressing, if you track this data over a period of time, you can clearly see a trend where your odds of surviving another year continuously decline as you age.  

However, from a financial perspective, this type of data is impossible to avoid because it is critical in evaluating risk, which is an important part of trying to anticipate the likelihood of claims. These formulas are generally used by insurance companies to help determine premiums for a cohort or group. By viewing the people in this category as one group, the insurance company can estimate the number of claims that are likely to be submitted from that group in a given year.

Yearly probability of living is also referred to as the probability of survival, meaning the probability that individuals of the same birth group will be alive a certain number of years later.

  1. Ultimate Mortality Table

    Ultimate mortality tables list the percentage of people that ...
  2. American Experience Table

    A set of data, presented in table format, showing when Americans ...
  3. Select Mortality Table

    A select mortality table outlines life contingency statistics ...
  4. Underlying Mortality Assumption

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

    An actuarial life table is a table or spreadsheet that shows ...
  6. Commissioners Standard Ordinary ...

    The commissioners standard ordinary mortality table is an actuarial ...
Related Articles
  1. Investing

    Financial Forecasting: The Bayesian Method

    This method can help refine probability estimates using an intuitive process.
  2. Retirement

    5 of the Biggest Retirement Mistakes People Make

    Five of the top 10 mistakes people make as they approach retirement.
  3. Retirement

    Living Trusts vs. Simple Wills: A Comparison

    A look at wills versus living trusts and when to choose one over the other.
  4. Managing Wealth

    Life Expectancy: It's More Than Just A Number

    Find out how life expectancy determines your life insurance premiums and affects your payout.
  5. Insurance

    The Blunt Truth About Marijuana and Life Insurance

    Here's how using marijuana can affect your access to life insurance.
  6. Personal Finance

    New Grads: 4 Reasons to Not Leave the Nest

    Learn how for new graduates, living with parents may be the best way to get a sound financial footing.
  7. Insurance

    How to Cover Your Assets With Life Insurance

    Here's why it's so important to cover your assets in case of an unexpected death—and how to do so.
  8. Insurance

    A Cost-Benefit Analysis of Long-Term Care Insurance

    Is it a good idea to have a long-term care policy? Here is some data to help you decide.
  9. Retirement

    Why Procrastination Will Steal Your Future Wealth

    Putting off saving for retirement might feel like your only option right now, but this kind of procrastination can wreak havoc down the road.
Trading Center