Underlying Mortality Assumption

The underlying mortality assumption is a key input into the valuation of life insurance products. It is the expected number of deaths in a given population over a specified period of time. The underlying mortality assumption is used to calculate the present value of future death benefits and to determine the level of premiums required to fund those benefits.

The underlying mortality assumption is based on a number of factors, including:

* The age and sex of the insured population
* The historical mortality experience of the population
* The expected future trends in mortality

The underlying mortality assumption is typically developed by actuaries, who are professionals who specialize in the calculation of insurance premiums and reserves. Actuaries use a variety of statistical techniques to analyze mortality data and to develop assumptions that are consistent with the expected future experience of the insured population.

The underlying mortality assumption is a critical input into the valuation of life insurance products. If the underlying mortality assumption is too low, then the premiums charged for life insurance products will be too low, and the insurer will be at risk of financial loss. If the underlying mortality assumption is too high, then the premiums charged for life insurance products will be too high, and the insured may be unable to afford the coverage.

The underlying mortality assumption is a dynamic input, and it is subject to change over time. As the age and sex of the insured population changes, and as the expected future trends in mortality change, the underlying mortality assumption will need to be updated.

The underlying mortality assumption is an important concept for anyone who is considering purchasing a life insurance policy. By understanding the underlying mortality assumption, you can make an informed decision about the type of life insurance policy that is right for you.