Expected mortality is the anticipated rate or probability of death for a defined insured population over a stated period. In life insurance, it is one of the main assumptions behind pricing, reserves, and long-term profitability.
How insurers develop the assumption
Expected mortality is usually built from:
- mortality tables
- insured experience studies
- underwriting class
- age, sex, and product design
- expected future improvement or deterioration in mortality
Insurers do not rely only on broad population data. They adjust for the fact that an underwritten insured block can have very different death patterns from the general population.
Why it matters
If mortality comes in worse than expected, death claims are heavier than priced for. If mortality is better than expected, life insurance results may improve while some annuity results can move the other way because annuitants live longer.
That makes expected mortality important across both life insurance and annuity products, even though the financial impact differs by product type.
Practical example
A life insurer issues preferred-rate policies to nonsmokers with strong underwriting results. The expected mortality for that class is lower than standard-risk mortality, so premiums can be lower than they would be for a broader or less-select group.