NP
By Nathan Paulus
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Director of Content Marketing, MoneyGeek
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
Edited by Rae Osborn
RO
Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.
MoneyGeek is dedicated to providing trustworthy information to help you make informed financial decisions. Each article is edited, fact-checked and reviewed by industry professionals to ensure quality and accuracy.
Updated: November 20, 2023
NP
By Nathan Paulus
NP
Director of Content Marketing, MoneyGeek
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
Edited by Rae Osborn
RO
Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.
MoneyGeek is dedicated to providing trustworthy information to help you make informed financial decisions. Each article is edited, fact-checked and reviewed by industry professionals to ensure quality and accuracy.
Updated: November 20, 2023
Advertising & Editorial Disclosure
An actuarial table, also known as an actuarial life table or mortality table, is a statistical tool used by life insurance companies to calculate policyholders' life expectancies. These tables include data points such as age, gender, mortality rate and lifestyle, which are used to calculate life expectancy, inform life insurance risk assessment and help determine premiums and payouts.
Actuarial tables are also utilized across various other sectors, including social security administration, pension plan management, public health initiatives and demographic studies.
Actuarial tables enable life insurers to price products based on the risk that a given policyholder will pass away during the policy's lifetime. These tables calculate project life expectancies using factors like age, gender, mortality rate and occupation, alongside variable risks such as smoking and socioeconomic status.
Actuaries, professionals who build and interpret actuarial tables, apply these data points and predictive modeling to ensure that insurance premiums and payouts are accurately projected. Actuarial tables are tailored to specific populations, such as men and women, since they have different average life expectancies. Life insurance companies may also interpret actuarial tables differently for term life insurance, which covers a set period, versus whole life insurance, which covers the insured's entire lifespan.
Actuarial tables are key to determining premiums across all policies, from variable life insurance, which combines a death benefit with an investment component, to guaranteed acceptance life insurance for those with significant health issues. They also inform annuities and final expense insurance. In return of premium life insurance, actuarial predictions determine the refund of premiums if the policyholder outlives the policy term.
Actuarial tables may additionally be adjusted for subgroups within a population, such as individuals with certain medical conditions or those engaged in high-risk occupations, to ensure that the premiums charged are commensurate with the risks the insurer assumes.
The calculations of actuarial tables are based on several key data points that quantify life event probabilities.
Data Point DescriptionAge (between x and x+1)
This indicates the one-year age interval referenced in a given table row (for example, between 70 and 71).
Mortality Rate (qx)
The probability that an individual at age (x) will die before reaching age x+1.
Number of Lives (Ix)
The number of individuals out of the initial hypothetical 100,000 that survive to age (x).
Number of Deaths (dx)
The number of individuals out of the initial hypothetical 100,000 who die in each age interval.
Life Expectancy (ex)
The average number of additional years an individual at exact age (x) is expected to live.
This is a snippet of a larger actuarial table found in the National Vital Statistics Reports demonstrating how the key components are used to calculate life expectancy, which is used to gauge insurance risks.
