* Period table: For each period the
mortality table depends only on age, not on time.
The updated
mortality tables will require insurance companies to lower their payout rates in order to properly reflect longer life spans.
"
Mortality tables must reflect mortality improvement or they will be out of date before they are even used," Daitch said.
But by the early 2000s, it became clear that there was a significant difference between the
mortality tables that insurers used to price policies and the life expectancy reports that were used by the life settlement industry.
In Brazil, where the use of
mortality tables in the life insurance business (and also in private pension plans) is regulated by SUSEP, most life insurance premium calculations use the AT-83 Annuity Table, which reflects mortality conditions in the USA in 1983.
The problem is that it does not provide an adjusted premium in any way (either express or implied) and for this reason the insurance companies work with outdated
mortality tables in order to avoid unfavourable deviations from actual claims with regards to expected claims.
Using
mortality tables, it's easy to determine a person's life expectancy, but that number is just an average.
Further, the transaction here did not violate Section 415, which excludes rollover contributions from the employee's annual benefit, because the value of the annuity was determined using the interest rate and
mortality tables provided in Section 417.
When odds are predictable,
mortality tables are used, because underwriting life insurance policies involves risk.
ERISA plans can't discriminate on sex; income annuities use gender-specific
mortality tables.
Mortality tables, based in mathematics, show a more rational story, of course.
The state Public Employees Retirement System has reported a more than threefold increase in the number of retirements in December 2009 compared with the past three Decembers - a flurry that may have been prompted largely by an adjustment to the
mortality tables used to calculate benefits.
