## What Is the Yearly Probability of Living?

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

### Key Takeaways

- The yearly probability of living is a number that reflects the probability of a person living for a particular year.
- The figure is calculated by using mortality tables that look at the statistical likelihood of death at a certain age, based on various factors such as lifestyle, economic class, and health.
- While morbid for individuals to consider, the yearly probability of living is a useful figure for insurance companies that are assessing risk and looking to set premiums for a specific group.

## Understanding 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 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.