Ultimate Mortality Table
- A mortality table that omits data from the first few years after an individual has been approved for a life insurance policy. Because of the health exams required prior to a life insurance application, those approved for life insurance policies are statistically healthier, and by extension less likely to die, than those from a random cross-section of people. Over time, the average heath of an individual approved for life insurance will normalize, but including data from those in the first few years of a life insurance policy will create a statistical selection bias, so to avoid skewing the data, they are omitted when making an ultimate mortality table.
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Related Terms and Acronyms
- Actuarial Table — Definition,
- A table used in actuarial science that outlines the statistical probability that an individual of a specific age and sex will die within a year.
- Actuary — Definition,
- An individual who assesses the mechanisms, mathematics and complexities of risk and uncertainty.
- Incontestability Clause — Definition,
- A clause that places a time limit on how long an insurer has to void a policy due to a policyholder's accidental misstatement in his or her life insurance application.
- Insurance Score — Definition,
- A score used by those in the insurance industry to determine how likely a claim will need to be paid out for an individual or entity.
- Selection Bias — Definition,
- A statistical error made when non-random data is added into a dataset.
- Self-Selection Bias — Definition,
- A selection bias that occurs when individuals join a sample group voluntarily.
- Survival Analysis — Definition,
- A statistical analysis of how likely someone or something will survive to a set date.
- Yearly Probability of Dying — Definition,
- The likelihood that an individual of a certain age and gender will die within a year.
- Yearly Probability of Living — Definition,
- The likelihood that an individual of a certain age and gender will still be alive after a year has passed.