In a message dated 2/27/00 9:03:39 PM Central Standard Time, firstname.lastname@example.org
> Hal! Your post led me to a most wonderful insight: the life expectancy
> tables that most people take for granted and use plan their own lives are
> based on propaganda by the one industry that profits from our collective
> pessimism: the insurance company!
> If State Farm can convince you that you will probably kick it around
> 75, you are far more likely to pay their rates for life insurance! And
> keep paying, as 75 comes and goes.
I've been working on a series of cases for various life insurance companies
for the last five years. In the process I've learned a little bit about the
techniques of that most cold-blooded of statistician, the life insurance
actuary. Among the basic tools of the actuary are what is called "mortality
tables". There seem to be two components to these tables, publicly-available
tables compiled and published by industry groups, and closely-guarded
proprietary tables maintained by each company's own actuaries. The latter
refine the information and calculations available in the former, based on the
company's own experience with the specific demographic "slices" to whom
they've sold insurance.
Depending on conditions in the general economy and the specific competitive
environment for particular demographic segments, "mortality margins" defining
the core cost of insurance component of whole and universal life policies can
be razor-thin. In key market segments (high-wage earners in the First World
and other wealthy people) competitive pressures drive actuaries to work their
calculations to the edge of profitability. Thus, I find your statement above
to be wrong: Any attempt by one life insurance company to overstate mortality
rates will be quickly exploited by competitors.
Greg Burch <GBurch1@aol.com>----<email@example.com>
Attorney ::: Vice President, Extropy Institute ::: Wilderness Guide
http://users.aol.com/gburch1 -or- http://members.aol.com/gburch1
ICQ # 61112550
"We never stop investigating. We are never satisfied that we know
enough to get by. Every question we answer leads on to another
question. This has become the greatest survival trick of our species."
-- Desmond Morris
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