Morality Tables and its kind

A mortality table, also known as a life table or actuarial table, shows the rate of deaths occurring in a defined population during a selected time interval, or survival rates from birth to death. A mortality table typically shows the general probability of a person’s death before their next birthday, based on their current age. These tables are typically used in order to inform the construction of insurance policies and other forms of liability management.

How a Mortality Table Works?

Mortality tables are mathematically complex grids of numbers that show the probability of death for members of a given population within a defined period of time, based on a large number of factored variables. Mortality tables tend to differ in their construction when being catered to men and women are usually constructed separately for men and women.

Other characteristics can also be included to distinguish different risks, such as smoking status, occupation, and socio-economic class. There are even actuarial tables that determine longevity in relation to weight.

The life insurance industry relies heavily on mortality tables, as does the U.S. Social Security Administration. Both use mortality tables in order to best establish details surrounding their coverage policies based on the individuals they will cover.

Types of Morality Tables

Morality tables are of two types:

1. Cohort or Generation Life Table

The Cohort or Generation Life Table “summarises the age specific mortality experience of a given birth cohort (a group of persons all born at the same time) for its life and thus extends over many calender years.”

2. Period Life Table

On the other hand, the “Period Life Table summarises the age specific mortality conditions pertaining to a given or other short time period.”

Importance of Life Table

Life tables have been constructed by Graunt, Reed and Merrell, Keyfitz, Greville and other demographers for estimating population trends regarding death rates, average expectation of life, migration rates, etc.

We detail below the uses of life tables:

1. Life table is used to project future population on the basis of the present death rate.
2. It helps in determining the average expectation of life based on age specific death rates.
3. The method of constructing a life table can be followed to estimate the cause of specific death rates, male and female death rates, etc.
4. The survival rates in a life table can be used to calculate the net migration rate on the basis of age distribution at 5 or 10 year interval.
5. Life tables can be used to compare population trends at national and international levels.
6. By constructing a life table based on the age at marriage, marriage patterns and changes in them can be estimated.
7. Instead of a single life table, multiple decrement life tables relating to cause specific death rate, male and female death rates, etc. can be constructed for analysing socio-economic data in a country.
8. Life tables are particularly used for formulating family planning programmes relating to infant mortality, maternal deaths, health programmes, etc. They can also be used for evaluating family planning programmes.
9. Now a days, life tables are used by life insurance companies in order to estimate the average life expectancy of persons, separately for males and females. They help in determining the amount of premium to be paid by a person falling in a specific age group.

Besides, if an insured person dies before the policy matures, the life table provides economic support to the insurance company without facing financial loss and it is able to give the insured amount to the legal heirs of the deceased.

Assumptions of Morality Table

A life table is based on the following assumptions:

1. A hypothetical cohort of life table usually comprises of 1,000 or 10,000 or 1,00,000 births.
2. The deaths are equally distributed throughout the year.
3. The cohort of people diminish gradually by death only.
4. The cohort is closed to the in-migration and out-migration.
5. The death rate is related to a pre-determined age specific death rate.
6. The cohort of persons die at a fixed age which does not change.
7. There is no change in death rates overtime.
8. The cohort of life tables are generally constructed separately for males and females.

• Mortality tables show the rate of death within a specific population.
• Mortality tables use a large number of factors to predict the likelihood of death in an individual within the current year.
• Mortality tables are used heavily by insurance companies and the U.S. Social Security Administration.
• Mortality tables are generally split into “period” life tables and “cohort” life tables.
• For the purposes of actuaries, “cohort” tables are most often used.