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Effect of Mortality Experience on Term Assurance Pricing

Abstract

The study examines the effect of mortality experience on term assurance pricing, focusing on how observed mortality patterns among policyholders influence the determination of premiums for term assurance policies. Term assurance provides a death benefit when the insured dies within a specified policy period, making mortality experience a fundamental factor in estimating expected claims. Accurate analysis of mortality experience is therefore important for determining appropriate premiums and maintaining adequate financial provisions. The study will investigate the effect of mortality experience on term assurance pricing by examining how variations in observed mortality rates influence expected death claims and premium requirements. It will assess mortality patterns across different ages and policy durations and determine how differences between observed and assumed mortality experience may affect the pricing of term assurance contracts. The analysis will focus on mortality rates, age at entry, policy duration, survival probabilities, death benefit amounts, expected claims, and discount rates. Actuarial life tables and mortality valuation techniques will be applied to estimate expected death benefits and determine premium requirements under different mortality experience assumptions. Comparative analysis will also be used to assess variations in premium estimates resulting from changes in mortality experience. A quantitative research approach will be adopted for the study. Relevant mortality and term assurance data will be obtained from appropriate secondary sources. Actuarial life table techniques, mortality rate analysis, survival probability calculations, present value methods, and premium valuation techniques will be employed to examine the relationship between mortality experience and term assurance pricing. The study is expected to reveal that variations in mortality experience have a measurable effect on term assurance premium requirements. Higher observed mortality rates may increase the expected frequency of death claims and consequently raise the estimated cost of providing coverage, while lower mortality experience may reduce expected claim costs. The findings may also show that the effect of mortality experience varies according to age structure, policy duration, benefit amounts, and prevailing valuation assumptions. The findings are expected to provide useful information for life insurers, actuaries, underwriters, and insurance pricing analysts. Understanding mortality experience may support more accurate estimation of expected claims, appropriate premium valuation, and improved management of term assurance liabilities. The study may also assist insurers in reviewing mortality assumptions and adjusting pricing models in response to changes in observed policyholder mortality patterns. The study concludes that mortality experience is an important determinant of term assurance pricing because it directly influences expected death claims and the financial cost of providing coverage. It is therefore recommended that life insurance companies regularly analyse mortality experience and update actuarial assumptions used in term assurance pricing to support accurate premium determination and adequate management of future claims liabilities.

Keywords: Mortality experience, term assurance, insurance pricing, mortality rates, term assurance pricing, expected claims, death benefits, survival probabilities, actuarial valuation, life tables, policy duration, age at entry, premium calculation, insurance liabilities, actuarial pricing.