What do actuaries use to predict the likelihood of an individual dying at any certain age in the premium rate-making process?

Actuaries utilize mortality tables to predict the likelihood of an individual dying at any specific age during the premium rate-making process. Mortality tables are comprehensive statistical charts that encapsulate historical data about death rates within a specific population, segmented by various factors such as age, gender, health status, and lifestyle habits.

These tables provide essential information regarding the expected lifespan of individuals in different demographics, enabling actuaries to estimate risk levels accurately. By analyzing the data within these tables, actuaries can determine the appropriate premium rates to charge for life insurance policies, balancing the insurer's need to cover future claims against the need to remain competitive in the market.

While statistical analysis, historical data, and risk assessments are important components of the process, it is the mortality tables that serve as the foundational tool to quantify the specific relationship between age and mortality risk in a precise and structured manner. Thus, mortality tables are integral in ensuring that the calculations lead to fair and precise premium pricing for life insurance products.