What Is an Actuarial Table?

ByNathan Paulus
Edited byRae Osborn

Updated: November 20, 2023

ByNathan Paulus
Edited byRae Osborn

Updated: November 20, 2023

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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.

KEY TAKEAWAYS ON ACTUARIAL TABLES
  • Actuarial tables are tools used to determine someone's life expectancy based on factors such as age, gender, mortality rate, and even smoking and socioeconomic status.
  • Life insurers rely on these tables to price policies and estimate future payouts.
  • Actuarial tables have applications beyond life insurance, including pension planning, public health policy and social security administration.

How Actuarial Tables Work

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.

Key Components

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

Data Point
Description

Age (between x and x+1)

This indicates the one-year age interval referenced in a given table row (for example, between 70 and 71).

Mortality Rate (qx)

The probability that an individual at age (x) will die before reaching age x+1.

Number of Lives (Ix)

The number of individuals out of the initial hypothetical 100,000 that survive to age (x).

Number of Deaths (dx)

The number of individuals out of the initial hypothetical 100,000 who die in each age interval.

Life Expectancy (ex)

The average number of additional years an individual at exact age (x) is expected to live.

Sample Actuarial Table

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.

Age (between x and x+1)
Mortality Rate (qx)
Number of Lives (lx)
Number of Deaths (dx)
Life Expectancy (ex)

0-1

0.005575

100,000

557

78.8

1-2

0.000379

99,443

38

78.3

....

....

....

....

....

70-71

0.018143

77924

1414

15.9

71-72

0.019683

76511

1506

15.2

Types of Actuarial Tables

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.

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Other Applications of Actuarial Tables

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.

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FAQ About Actuarial Tables

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

How often are life tables updated?
Why do insurers need separate tables for smokers and nonsmokers?
Are mortality rates and number of deaths the same?
How do actuarial tables affect life insurance rates?

Related Content

Enhance your understanding of life insurance through these essential topics:

Best Life Insurance — Discover the top life insurance policies offering optimal coverage tailored to individual risk factors.

Evidence of Insurability for Life Insurance — Understand the importance of providing evidence of insurability and how it influences policy rates and coverage options.

How to Buy Life Insurance — Learn the steps involved in purchasing life insurance, focusing on choosing the right policy terms and premiums.

Types of Life Insurance — Explore different life insurance policies available and how they cater to varying coverage needs and financial situations.

Importance of Life Insurance — Discover the role of life insurance in financial planning, highlighting its significance in ensuring economic security for policyholders and their families.

About Nathan Paulus


Nathan Paulus headshot

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.


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