What Is an Aggregate Mortality Table?

An aggregate mortality table is a tool that helps actuaries and other insurance professionals accumulate and anal﷽yze key data regarding death rates.

To 𝓀properly price insurance products and ensure that life insurance companies maintain adequate reserves, actuaries develop projections of future insured events that may lead to a payout, such as death, sickness, or disability. Mathematical models provide the𝓰 frequency and timing of such events.

Understanding Aggregate Mortality Tables

A mortality table, also known as a life tabl🉐e or an actuarial table, shows the statistical rate of deaths occurring in a defined population during a selected time interval. It may also indicate survival rates from birth to death. A mortality table provides the probability of a person's death before their next birthday, based on their current age. These tables are typically used to provide guidance for setting the premium and value of insurance policies and other forms of liability management. 

Aggregate mortality tables compile data on the 澳洲幸运5官方开奖结果体彩网:incidence rate and severity of events in the recent past, but average all demographics from the population into a single figure. From this, actuaries develop expectations about how the drivers of past events will change over time. They can also project whether an increase or decrease in 澳洲幸运5官方开奖结果体彩网:life expectancy from generation to generation will continue.

Aggregate mortality tables are comparable to 澳洲幸运5官方开奖结果体彩网:select mortality tables, which provide data on the death rate of specific individuals who purchase life insurance. These tables can also be used for group insurance covering multiple individuals, annuities, pension 🥀plans, and other financial instruments.

Creating an Aggregate Mortality Table

Actuaries create tables of percentages indicating the number of insured events that will occur in a population, usually based on the age or other relevant characteristics of the population. These tables may be referred to as mortality tables or 澳洲幸运5官方开奖结果体彩网:morbidity tables.

Mortality tables are grids of num🌼bers that show the probability of death for members of a given population within a defined period. Morbidity tables show the probability and rates of diseases and illnesses for a given population within a defined period. These tables 🍌commonly show separate data for men and women.

Certain risks, like smoking, occupation, and socioeconomic class, help actuaries determine longevity. The 澳洲幸运5官方开奖结果体彩网:life insurance industry relies heavily on mortality tables, as does the 澳洲幸运5官方开奖结果体彩网:Social Security Administration.

Mortality rates aren't static. They often shift over time on the basis of such factors as age group, sex, and other determinants. 

Top-Down vs. Bottom-Up Approaches

Actuaries use a variety of approaches to build aggregate mortality tables. Those techniques generally fall into two categories: top-down approaches start with national statistics that cover many thousands of people, while bottom-up techniques originate from a company's customers. Either way, the goal is to reduce the company's 澳洲幸运5官方开奖结果体彩网:longevity risk in its actuarial calculations.

The top-down approach begins by obtaining large quantities of data from standard tables published by national agencies, such as the Society of Actuaries. The broad experience statistics reflected in these tables are then adapted to the company's experiences and help it project future results.

The bottom-up approach calculates longevity for various individuals based on their personal characteristics and rolls those assumptions up into an aggregate table. One type of bottom-up methodology is the factor-based approach, which applies the factors that most affect longevity to estimate the longevity of each person. These individual assumptions are combined to create an overall mortality assumption for all the participants.

Each type of approach has its pros and cons. Bottom-up approaches are easier to monitor and adjust, as they are accumulated by individual assumptions. However, bottom-up methods also require more time and effort to maintain a group of individual assumptions. On the other hand, the top-down approach takes larger bodies of existing national data and makes adjustments based on the company's overall experience. Even so, it is also more difficult to monitor individual derivations from these broader assumptions. Top-down approaches are more common in North America, while bottom-up methods are growing in popularity in the European Union.

Aggregate Mortality Table Statistics Example

According to the Society of Actuaries, the overall age-adjusted mortality rate for both sexes from all causes of death increased in recent years. Based🐻 on published records dating back to 1900, the U.S. population experienced its historically highest increase in 2020 at 16.8%, following a 1.2% decrease in 2019. The impact of the 2020 COVID-19 pandemic varied by age and sex. When COVID deaths are removed, all other causes of death combined mortality increased by 4.9%. 

It is possible to break down mortality rates based on the cause of death. For example, the death rate from heart disease was up 4.2% in 2020, After years of fewer people dying from heart disease, there was a sudden spike in 2020. Aggregate mortality tables help identify these trends.

The Bottom Line

Aggregate mortality tables provide consolidated statistics about the likely death and sickness rates among the♈ general public, as well as specific groups that are covered by life, health, pension, and similar products. Actuaries use these 🐎aggregated tables to help them set insurance premium rates and make other financial decisions for insurance companies.