What is the difference between Select Mortality and Ultimate Mortality?
A simple life mortality table classifies people by attained age and assumes each attained age (or possibly age range) is subject to some rate of mortality. Another way of saying this is the mortality depends on only one variable, attained age.
Since most life insurance involves some kind of underwriting or selection process, it may be interesting to look at the mortality based on two variables, age at selection and duration since selection. This produces a two-dimensional table; that table is Select mortality table.
- · A select mortality table includes mortality data on individuals who have recently purchased life insurance. These individuals tend to have lower mortality rates than individuals who are already insured, due chiefly to the fact that they have most likely just passed certain medical exams required to obtain insurance.
- · some period of years after the selection (say 10 years) the only factor that affects the mortality rate is the attained age. For example, if underwriting wears off after 10 years, the mortality rate is the same for persons who are now age 60, as long as they were selected before age 50.
- The length of time that the rate depends on two variables is called the select period.