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A Mortality Table is an instrument exhibiting the mortality rates at different age groups. Premium
rates are calculated on the basis of mortality tables. It indicates the life expectability, the probability
of living or death. According to Mayerson, "Mortality table is a statistical representation showing at
each age the rate of mortality." It is an instrument which measures the probability of living or dying.
Federation of Insurance Institute of India defines mortality table as “a table giving probabilities of
survival and death at successive ages."


The important characteristics of a mortality table are:

(1) It is a statistical table which shows the probability of death or living on a given age.
(2) This table exhibits the average life of a person.
(3) It cannot predict the death of a particular person.
(4) It cannot give 100 per cent accurate information. It helps only to determine an approximate
premium rate.


The significance of mortality table can be stated as under the following points:
(1) It is a scientific instrument to determine the premium rate from different age groups of insured.
(2) It presents the probable deaths among a similar age-group of insured; on the basis of which
attractive insurance plans can be developed for different age groups, by the insurer.
(3) Helps to estimate the costs of acquiring the services of insurance.
(4) It helps the insurer to estimate the income from insurance business.
(5) Helps to ascertain the number of death claims and the time of payment of claims.
(6) Helps the insurance companies for efficient management of income, losses, risks and the
probable claims.
(7) Mortality table has been an important source of huge-scale operation of insurance business.

The risks are measured or evaluated for fixation of premium to be charged by the insurer. There are
two methods of calculation of Premium: (i) Value of Service, (ii) Cost of Service.

(i) Value of Service. The value of service determines the rate of premium according to the utility of
insurance to each proposer. Since, the value or utility to each person differs; the premium rate also
varies. The value of service principle cannot be used in insurance because its utility to each
individual cannot be determined. Moreover; the value is higher to the proper section of society and
to the head of large family; but they cannot be charged higher premium than the premium charged
by richer class of the society. Moreover, the higher premium will not attract business from them.
The value of service cannot be used due to its impracticability.

(ii) Cost of Service. In fact, the premium should be charged according to cost to the insurer. In
insurance demand side does not play important role. Therefore, it is called that the insurer is not
bought, but it is sold. So, the insurer must fix the cost or premium to be charged on a particular risk
or policy. Insurance business may carry on only when the cost of insurance is met. The cost includes
all expenses of the business plus small profit margin. Above the profit margin, insurer is not
expected to gain. This is the reason that insurance business is expected to run on 'no loss, no gain',
basis. The most important cost to insurer is cost of claim. Therefore, the insurer must charge at least
so much of premium that can be used to pay the full amount of claim. Technically, the premium
charged to meet the amount of claim, is called net premium. Another cost to insurer is cost of
administration. It includes all expenses of management and other amount for provisions of
contingency. The cost of administration may be of two types, (i) fixed cost, and (ii) recurring cost.
The fixed cost is spread over the policy-life but the recurring expenses do not involve much problem
of allocation. The method of distribution of the expenses is called loading which, is discussed in
detail in a separate chapter. With the help of loading net premium is enhanced to charge a fixed
amount regularly from the policy-holders, which is called gross premium or office premium. So, the
first problem before the insurer is to calculate the cost of claims.

Cost of Claims

The claims may arise at the death of the life assured or at the maturity of the policy. In annuity
contract the payment shall continue to death therefore, the expectation of survival will be the basis of
the cost. In life insurance, in most cases, payment of claims depends upon the death. The death is
certain but when it will take place is not certain. Therefore, the main problem before the insurer is to
decide when the death will take place. The forecasting of death is very important factor to decide the
period and amount of claim. If the period and amount of claims have been decided, the premium can
be easily calculated. The forecasting of death can be done on (i) experience of medical science, and
(ii) On the experience of past records. If the medical science of insurance has been sufficiently
advanced and its knowledge could be perfectly used, the same, then, might have projected the time
of death of each applicant. The medical science can be useful to modify the past experience
according to the present mortality prospects. The insurer has to rely upon the past experience which
is treated as a basis for germinating future mortality. Evidently, the death of one life can not be
forecasted; but the expectation of a number of deaths from a group of persons of the same age can be
forecasted on the basis of (i) Theory of Probability and (ii) Law of Large Numbers.


The best method of construction of mortality table will be to select a large number of persons at
attained age. Attained age means age nearer to birth date. For example, persons of 19 years 6 months
to 20 years 5 months and 29 days will be treated as the age of 20 years. The attained age will be
selected at which policy is to begin. The selected persons of the attained age will be observed and
the number of deaths will be recorded during a year till the persons selected are dead. Theoretically
speaking this type of mortality table will be the actual mortality table. The number of death in a year
is deducted from the number of living at the beginning of the year to get the number of living in the
beginning of the next year.

(i) Preparation of such table is difficult because a large number of persons or an attained age is
impracticable to get.
(ii) Constant watch on them is not possible.
(iii) It will require a long-period to construct the table and for which a permanent officer, say for
about 100 years, is required.
(iv) A lot of money and time will be wasted to record number of deaths every time.
(v) However, if such impossibilities are dared to do the mortality table will be quite obsolete because
it had been constructed at least within 100 years during, which a lot of changes might have occurred.

Age Number of Living Number of Death Death Rate Survivors Rate
20 10,00,000 2,000 0.002 0.998
21 9,98,000 3,000 0.003 0.997
22 9,95,000 4,000 0.004 0.996


To avoid the above difficulties, death rate is calculated on yearly basis. The death rate is calculated
for every age. Separate sample is taken for each age. The number of living in each age is observed
and number of death during the age is recorded. By dividing number of deaths by number of living
in each age, the death rate for the age is calculated. A year is selected because a year constitutes
various types of weather and, therefore, low, high and normal mortalities are averaged in the year.
Secondly, rates of premium in insurance are quoted on a yearly basis and so the cost depending on
mortality showed also be based on yearly basis.


For construction of mortality table, number of living of the beginning of each age and the number of
deaths during the age are required. The mortality table should be constructed to represent the past
experience as accurately as possible. So the figures of mortality construction should be as accurate as
possible and based on a large number of persons. The sources of mortality construction can be
obtained from (i) population statistics, and (ii) records of life insurers.(iii) other resources

1. Population Statistics
The insurer gets number of living at each age from the census records and the number of deaths from
municipal and other death records. The population statistics will reveal how many persons have died
at what age. So, with the radix of total number of persons at the beginning, it can be calculated how
many died in a particularly age. The calculation of mortality table on this basis is not very easy and

The population statistics is not very much useful to insurers. It was applied only when there was no
insurance experience in this field.
(i) The accuracy of population statistics is doubtful in absence of age-proof. There has been over
estimation or under-estimation in several cases. Sometimes, members of a certain section of society
are unaware of ages.
(ii) It has been also noticed that some deaths are unrecorded. It is difficult to know exactly how
many deaths are unrecorded and similarly. It is also difficult to know exactly how many deaths
occurred a particular age. ..
(iii) Census figures are available only after 10 years and therefore, it would not be very recent figure.
A particular census figure may be biased with the abnormality of the year.
(iv) Interpolation and extrapolation are involved and correct figures are generally not known.
(v) The population statistics will give statistics of all types of persons without any separation while
the insurer requires mortality of only insurable lives. Mortality for standard and substandard lives are
required separately.

2. Records of Insurers
The records of insurer give a correct figure because the death rates can be correctly recorded. No
death will go unrecorded, correct number of persons living and dead for each age can be known.
Collection of figures is done from the records of as many insurers as possible in large numbers but is
not more than 10 years covering, favorable and unfavorable years. Generally 10-year period may be
quite sufficient. The abnormal years are excluded from the sample. Separate mortality tables may be
prepared for standard lives, sub-standard lives, female and male lives. Sub-classification according
to sex, marital status, occupation, geographical area, class may be made and tables are constructed
separately. The counting of persons is done very cautiously, withdraw and lapsation are excluded.
Persons included for calculation caused exposed to risk. If the calculation starts at the withdrawal
from this number is excluded. Year wise aggregation of number of deaths and number of living
persons is done from the information of all insurers. Mortality rate at every age will be counted by
dividing the number of expired lives by number of exposed lives.

3. Other sources: Other sources also used for construction of mortality tables, such as patient's
register maintained by the hospitals, statistics relating to health and deaths, lives statistics of Hindu
male members, etc. which are more reliable and trustable. The mortality table constructed on the
basis of these statistics shall be more reliable.
Process of Construction of Mortality Tables
The process of construction of mortality table is based upon scientific methods and follows the
following steps:
1. Identification of Objectives: The purposes of construction of mortality tables may be for
determination of premiums evaluation of mortality rate or some other objectives. As such the
purpose for which the mortality table is to be constructed should be clearly identified and determined

2. Selection of Statistical Methods: After the determination of objectives, the next step must be to
select the statistical method which should be applied for this purpose.
3. Sources of information: The next step should be to determine the sources of collecting
information for construction of mortality tables. For this purpose population statistics or the
document/records of insurers can be used. While using any of these methods, the drawbacks or
limitations of such sources of information should be taken care of.

4. Determination of period of records: The duration of research may be longer or shorter. The
mortality table formulated for longer period, gets older soon. As such, as far as possible mortality
table should be made for shorter period.
5. Selection of the methods-The following methods are available for construction of mortality
(a) Life-year method
(b) Calendar year method
(c) Insurance policy method
(d) Census method
6. Analysis of the persons included in the risks: Analysis of the persons whose mortality rates are
to be determined, also be included in the table.
7. Determination of mortality rate: First of all the number of persons whose risks have been
identified and then the ratio of deaths also be determined for formulation of mortality table.
8. Construction of mortality table: The mortality table may be crude or graduation. Graduation
means the process of determining a series of mortality rate. After this, different point constructed in
the mortality table. Then the construction of age, number of survivors, number of deaths during the
year, mortality rate etc. are made.


There are three types of mortality tables: (i) Aggregate Table. (ii) Select Table, and (iii) Ultimate
(i) Aggregate Table. A table constructed without distinguishing the select, and ultimate lives is
called an Aggregate Mortality Table lives from which the mortality rates of the aggregate lives are
derived being a mixture of the ‘Select' lives and ‘Ultimate’ lives, the aggregate rates lie between the
select and ultimate rates for the same age attained, that is say, they are lighter than ultimate rates but
heavier, than the select rates. This is also called Mix or General Mortality Tables. In these table
persons of same age irrespective of consideration whether they were insured at age 30 or some years
before the age 30. The table below is an example of aggregate table.
Hm Maikaham Graduation Mortality Table (table-4)

Age No. of No. of Death Survival Force of No. of Total Complete Age
Living Deaths Rate Rate Mortality Survival at Survival Expectatio
at x between at age x mid age Ix No. n of life
x and and Ix+ 1 at age x
x Lx Dx qx=dx Px=1-qx Ux Lx=1/2 Tx=∑Lx Tx/Lx= 0ex x
lx {lx+l(x+1)}
20 96061 548 0.00572 0.99428 0.00550 95787 4044238 42.101 20
21 95513 582 0.00608 0.99392 0.00592 95222 3948451 41.339 21
22 94931 609 0.00643 0.99357 0.00629 94626 3853229 40.590 22
23 94322 631 0.00668 0.99332 0.00659 94007 3758603 39.849 23
24 93691 647 0.00691 0.99309 0.00682 96367 3664596 39.114 24

This table is used where no selection is required, or non-medical policies are assured. This
table is also used in Group Insurance. This is the oldest kind of mortality table. This mortality table
does not differentiate new or old insured at a prescribed age group and the mortality rate for the
whole group of insured can be identified. For example, 20,000 persons were insured five years back
at the age of 18. Today they reached the age of 23 years. Today, another 10,000 persons of the age of
23 years also insured. According to this mortality table, the total number of insured now reached to
30,000 and the mortality rate of 30,000 insured identified with the help of this table. For the purpose
of preparing this type of mortality table, the insured are selected not on the basis of health
considerations, but on the basis of claim experience in the past of a number of insurance companies.
The mortality table of this kind is considered as more accurate because (i) the statistics of claims
obtained for preparation of this table from different insurers belong to different age-groups, (ii) It
relates to economically sound, educated and of high social level, and (iii) It also belongs to people
from different groups.
2. The Select Table. Select mortality table is a table which exhibits not only the mortality rate
according to age group but also the policies matured. The creator of this table is Dr. Sprag, who
constructed this table on the basis of insured male-member of 20 companies. The conclusion arrived
from this table is that among the insured of similar age groups, differences can be found in the
mortality rate according to the period so far completed by the policies. This means that the mortality
rate win increase according to the time spent after affecting insurance.

According to select mortality table, less rate of premium is only accepted from new insured of the
similar age group than the old insured. With the passing of time from the date of affecting insurance,
the mortality rate will increase. The mortality rate of those joining the scheme newly will be lower
and the rate of premium also be lower. McClean, while defining the term wrote "A select mortality
table is one which shows the rate of mortality not only by age but by duration of insurance, i.e., time
since selection." This way, less rate of premium is recovered from new assureds of the same age-
group in comparison to old assureds. Therefore, this type of mortality table has much importance at
the present time of competition. This table can also be used to determine the paid up value of the
policy. But the defect of this table is that this table is effective for a short period of 5 to 10 years
only. Mortality table giving rate depending on both age and duration elapsed since entries are called
select mortality tables. Thus, persons taking policies at different ages are kept separate from each
other for the purpose of the calculation, even though they all may be of the same age now. This is
done because mortality rate among them will not be the same despite the same attained age. It will
vary according to the duration of insurance because at the initial stage, all the policy-holders are
select after a thorough inquiry of health. The method to select, only insurable live is called,
'Selection'. It has been observed that the effect of this selection wears out quickly and that two
groups of persons so selected at different times will not experience the same mortality though they
are of the same age. The group which has been selected first now is found to experience lighter
mortality than another of the age at present but selected some time ago. The effect of selection may
be eliminated altogether after a certain period i.e., 5 years.

Mortality Rate per 1000

Age Years of insurance 6 years Age
1 2 3 4 5 & over attained
20 2.73 3.9 3.80 3.96 4.13 4.31 25
21 2.78 3.66 3.86 4.01 4.18 4.35 26
22 2.83 3.72 3.g1 4.07 4.21 4.38 27
23 2.86 3.76 3.06. 4.08 4.24 4:41 28

The above table shows that the mortality, rate is 2.86 per thousand at age 23 during 1 year
after selection, 3.72 per thousand at 22 during 2 years after selection, 3.86 per thousand at age 21
during 3 years after selection and 3.96 per thousand at age 20 during 4 years after selection. Thus, it
reveals that as the selection period passes the mortality rate increases although they are of the same
age at present. The effect of selection is removed after 5 years and the mortality rate will be
approximately equal if there are not approximately the same, there will be a case of spurious
selection, i.e., where effect of selection is not required.

3. Ultimate Mortality table. A mortality table in which the rates in the select period are omitted and
only the ultimate rates are tabulated is caned an ultimate mortality tables. In other words, figures for
policies that still have the effects of selection are not included. In the above example, the mortality
rates for the years will not be included for preparing an ultimate mortality table.

Ultimate Mortality Table (Table-6)

Age at entry 6 and over Age attained

20 4.31 25
21 4.35 26
22 4.38 27
23 4.41 28

Generally both the 'Select' and 'Ultimate' Mortality tables are shown together. The ultimate table is
used for valuation purposes. Where insurer wants to have a reasonable safety margin and where
policies are participating ones, the ultimate table is used. It gives maximum possible rate of death.