Life tables
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japjotsingh99
One of the most common risk assessment models are life tables, which are used to price life insurance policies. Life tables seek to predict the probability that a person will die before his or her next birthday. There are two primary types of life tables used in modern actuarial science – period life tables and cohort life tables. A period life table represents mortality rates during a specific time period of a certain population. A cohort life table, often referred to as a generation life table, represents the overall mortality rates of a certain population’s entire lifetime. For a cohort life table, a population must have been born during the same specific time interval. A cohort life table is more frequently used because it is able to make a prediction of any expected changes in mortality rates of a population in the future. Both of these types of life tables are created based on an actual population from the present, as well as an educated prediction of the experience of a population in the near future.
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