Expectation Of Life

What Does Expectation Of Life Mean?

The expectation of life refers to the number of years a person is expected to live, based on calculations from mortality tables.

Calculations of the expectation of life are often used in life insurance to assess the risk associated with issuing a policy to an applicant.

Insuranceopedia Explains Expectation Of Life

The fewer years a person is expected to have remaining, the higher the perceived risk of insuring them. Life insurance companies must pay substantial death benefits when policyholders pass away, so they must balance this potential expense against the premiums they will likely collect. Because a shorter life expectancy means fewer premium payments before a likely claim, it is one of the biggest factors that affect life insurance premiums.

Several factors can reduce a person’s life expectancy, including advanced age, a family history of heart disease, and unhealthy habits such as smoking. Tobacco use in particular can cut years off an applicant’s expected lifespan, which is why insurers charge significantly higher rates for tobacco users and why life insurance for smokers costs two to three times more than comparable coverage for non-smokers.