Page 260 - DMGT303_BANKING_AND_INSURANCE

Unit 12: Insurance

2. The perinatal mortality rate, the sum of neonatal deaths and fetal deaths (stillbirths) per Notes
1000 births.

3. The maternal mortality ratio, the number of maternal deaths per 100,000 live births in
same time period.

4. The maternal mortality rate, the number of maternal deaths per 1,000 women of
reproductive age in the population (generally defined as 15-44 years of age) .
5. The infant mortality rate, the number of deaths of children less than 1 year old per 1000
live births.
6. The child mortality rate, the number of deaths of children less than 5 years old per 1000
live births.
7. The standardised mortality ratio (SMR)- This represents a proportional comparison to the
numbers of deaths that would have been expected if the population had been of a standard
composition in terms of age, gender, etc.
8. The age-specific mortality rate (ASMR) - This refers to the total number of deaths per year
per 1000 people of a given age (e.g. age 62 last birthday).
In regard to the success or failure of medical treatment or procedures, one would also distinguish:

1. The early mortality rate, the total number of deaths in the early stages of an ongoing
treatment, or in the period immediately following an acute treatment.

2. The late mortality rate, the total number of deaths in the late stages of an ongoing treatment,
or a significant length of time after an acute treatment.
Note that the crude death rate as defined above and applied to a whole population can give a
misleading impression. The crude death rate depends on the age (and gender) specific mortality
rates and the age (and gender) distribution of the population. The number of deaths per 1000
people can be higher for developed nations than in less-developed countries, despite life
expectancy being higher in developed countries due to standards of health being better. This
happens because developed countries typically have a completely different population age
distribution, with a much higher proportion of older people, due to both lower recent birth
rates and lower mortality rates. A more complete picture of mortality is given by a life table
which shows the mortality rate separately for each age. A life table is necessary to give a good
estimate of life expectancy.

12.16 Application of the Theory of Probabilities to the Mortality
Table
The statement was made earlier in this chapter that risk in life insurance is measured by the
application of the laws of probability to the mortality table. Now that these laws are understood
and the mortality table has been explained, a few simple illustrations may be used to show this
application. Suppose it is desired to insure a man aged 35 against death within one year, within
two years, or within five years. It is necessary to know the probability of death within one, two,
or five years from age 35. This probability, according to the laws heretofore explained, will be
determined according to the mortality table and will be a fraction of which the denominator
equals the number living at age 35 and the numerator will be the number who have died during
the one, two, or five years, respectively, following that age. According to the table, 81,822
persons are living at age 35, and 732 die before the end of the year. Hence the probability of
death in one year is 732/81822. During the two years following the stated age there are 732 + 737
deaths, or a total of 1,469. The probability of dying within two years is therefore 1469/85822.

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