Mortality Table

What Is a Mortality Table?

A mortality table is a statistical table that shows how likely people of a given age, and often a given sex, are to die within a set period, usually one year. It is built from observed death records across a large population. Actuaries use these tables to estimate how long people are expected to live, which is a core input for pricing and reserving life insurance, annuity contracts, and pension benefits.

How a Mortality Table Works

The table lists each age and the probability of dying before the next birthday, often written as q(x). From these probabilities, actuaries derive other columns, such as the number of people still alive from a hypothetical starting group, often written as l(x), and the number who die at each age. Starting from a group of people at birth, the table tracks how that group shrinks year by year and allows life expectancy to be calculated at each age.

Tables may be period tables, which reflect mortality over a single period, or cohort tables, which follow a specific group of people born in the same year as they age. Government agencies, such as the U.S. Social Security Administration, publish period life tables. Insurers often build their own tables from policyholder experience and adjust them for factors such as health, smoking status, and occupation.

Why It Matters to Investors

Mortality tables matter to investors mainly through the companies that rely on them. Life insurers use them to set premiums and hold reserves, so a table that assumes longer lives can increase the liabilities an insurer must fund. Pension fund and annuity providers face similar effects. When underlying actuarial assumption change, companies may need to revise their reserves, which can affect reported earnings. Investors reading an insurer's financial statements may find these assumptions discussed in the notes.

Limitations

A mortality table is an estimate based on past data. It cannot predict an individual's lifespan, and it can become outdated if medical advances, lifestyle trends, or public health events shift death rates. Because tables average across groups, a person's actual risk may differ substantially from the table's average.