What does a mortality table represent?

A mortality table represents the probability of death at various ages within a certain population. It is a statistical tool used in the insurance industry to estimate the likelihood of death occurring at different ages, which allows insurers to assess risk and determine appropriate premium rates for life insurance policies. By understanding these probabilities, insurers can more accurately calculate how much they need to charge policyholders to cover the costs associated with claims when a policyholder passes away.

In essence, mortality tables help insurers predict the expected lifespan of a group of people, assisting in the overall assessment of financial risk in life insurance underwriting. The focus on the probability of death is crucial for developing insurance products that align with the true risk of insuring individuals at various stages of life.