What Is an Actuarial Table?

An actuarial table, also known as an actuarial life table or mortality table, is a statistical tool used by life insurance companies to calculate policyholders' life expectancies. These tables include data points such as age, gender, mortality rate and lifestyle, which are used to calculate life expectancy, inform life insurance risk assessment and help determine premiums and payouts.

Actuarial tables are also utilized across various other sectors, including social security administration, pension plan management, public health initiatives and demographic studies.

Actuarial tables enable life insurers to price products based on the risk that a given policyholder will pass away during the policy's lifetime. These tables calculate project life expectancies using factors like age, gender, mortality rate and occupation, alongside variable risks such as smoking and socioeconomic status.

Actuaries, professionals who build and interpret actuarial tables, apply these data points and predictive modeling to ensure that insurance premiums and payouts are accurately projected. Actuarial tables are tailored to specific populations, such as men and women, since they have different average life expectancies. Life insurance companies may also interpret actuarial tables differently for term life insurance, which covers a set period, versus whole life insurance, which covers the insured's entire lifespan.

Actuarial tables are key to determining premiums across all policies, from variable life insurance, which combines a death benefit with an investment component, to guaranteed acceptance life insurance for those with significant health issues. They also inform annuities and final expense insurance. In return of premium life insurance, actuarial predictions determine the refund of premiums if the policyholder outlives the policy term.

Actuarial tables may additionally be adjusted for subgroups within a population, such as individuals with certain medical conditions or those engaged in high-risk occupations, to ensure that the premiums charged are commensurate with the risks the insurer assumes.

The calculations of actuarial tables are based on several key data points that quantify life event probabilities.

This is a snippet of a larger actuarial table found in the National Vital Statistics Reports demonstrating how the key components are used to calculate life expectancy, which is used to gauge insurance risks.

Source: National Vital Statistics Reports (March 2022)

The two primary types of actuarial tables are period life tables, which rely on mortality rates from a specific point in time, and cohort life tables, which follow a group's mortality over time, taking into account future changes in mortality rates.

Actuarial tables extend beyond insurance and play a pivotal role in various sectors, including pension planning, public health, social security, and personal financial planning, by providing a statistical foundation for decision-making and risk assessment.

Explore our answers to frequently asked questions regarding the function and impact of actuarial tables.

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