Ultimate Mortality Table

What Does Ultimate Mortality Table Mean?

An ultimate mortality table is a table that shows the death rates for policyholders in each age group and gender, excluding data from recently underwritten policies. It also lists the proportion of individuals expected to be alive at each age. Insurance companies use this data to price their policies, and as a result, their profitability depends on how effectively they analyze the table. Because the table feeds directly into premium calculations, it is one of the factors behind the average cost of life insurance at any given age.

Insuranceopedia Explains Ultimate Mortality Table

An ultimate mortality table excludes recent insurance data to avoid statistical bias. Since life insurance policies require health exams, those who are approved are typically healthier and less likely to die compared to a random sample of people. As a result, excluding the first few years of life insurance data leads to more accurate mortality rates. Additionally, mortality tables may include death rates based on factors such as region, weight, and ethnicity.

Policies sold without a medical exam skip that initial health screening, so the insurer cannot assume the same low mortality risk during the early policy years. That difference in selection is part of why no-exam policies tend to carry higher premiums.