What Does Ultimate Mortality Table Mean?
An ultimate mortality table is a mortality table that indicates the death rates for policyholders of each age group and sex and excludes 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; therefore, their profitability ultimately depends on how well they analyze the table.
Insuranceopedia Explains Ultimate Mortality Table
An ultimate mortality table does not take into account recent insurance data to avoid a statistical bias in the data. Because life insurance policies require health exams, those who have been approved are generally healthier and thereby less likely to die in comparison to a random sample of people. Therefore, excluding the first couple of years of life insurance data results in more accurate mortality rates. Lastly, mortality tables may include death rates in terms of region, weight, and ethnicity.