Page 148 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 8: Life Insurance

Self Assessment Notes

Fill in the blanks:
7. Life Insurance pertains to the years of ……………………………… and annuity to the years
of decline.

8. Annuity is a contract sold by a life insurance company that provides fixed or variable
payments to an ……………………………….
9. The purpose of the annuity is ……………………………… against one’s income earning
age.
10. Life insurance protects against the …………………………… of income in the event of
premature death of the bread earner or disability.

8.5 Mortality Tables

We will discuss mortality tables in this section. A mortality rate refers to the number of deaths
in a specified population during a known period of time. The mortality rate is normally expressed
in the form of deaths out of 100 or 1000 individuals.

Example: Suppose there are 10,000 inhabitants in a town, out of them 10 people die of the
flu, then in that case, the flu mortality rate would be one in 1000. Mortality rates are based on
purely how many die of any reason in a population, or it can be used to define the death rate of
a certain illness or condition.

Mortality rates can have multiple uses, but are often used to explain the increase or decrease in
a cause of death over a lengthy time period.

Example: Mortality rates have been used by the Centre for Disease Control (CDC) to
indicate that the mortality rate for deaths caused due to car-accident in the United States have
gone down from almost 25 per 100,000 to nearly 15 per 100,000 between the time period of year
1979-2006, whereas during the same period deaths caused due to poisoning rose from 5 to 15 per
100,000.
Observing the mortality rates over time can help health officials understand where to focus
prevention and safety efforts, and indicate the possible trends in death caused due to factors
affecting the measured population.
A mortality rate may be used to describe the chances of survival or death in the treatment of a
disease. This piece of information can guide the patients to decide as to which treatment will
give them the best chance of survival. Moreover, if the mortality rate of a treatment is
tremendously high, patients may decide that it is too dangerous and unsafe or not worth the
pain or risk of the procedure.

The mortality rate of infants and children is generally used as a factor in determining the health
status of a country. A high infant mortality rate point toward poor prenatal and obstetric care,
and is normally found in conjunction with very poor areas or nations. In India, infant mortality
rates are frequently broken down by ethnicity or economic bracket, to highlight areas where
better care is required.
A mortality rate may also be expressed as a mortality table, also called a life table. A mortality
table shows the mortality rate and probability of death each year by using a generalized table
broken down by age. A healthy person can determine the probability that they will die before

LOVELY PROFESSIONAL UNIVERSITY 143