Mortality table

Since December 21, 2012, the date set by the Test-Achats ruling of March 1, 2011, the French TH and TF 00-02 tables can no longer support two different prices. They were built separately for men and women. A mortality table gives, for each age, the probability that a living person dies within the year. By construction it also gives the population surviving at each age from a conventional starting cohort. It is the basic instrument of all personal insurance: the price of a death benefit and that of a life annuity come from the same set of probabilities, read in opposite directions. The death insurer loses if people die too soon, the annuity insurer if they live too long. In France the regulatory tables are approved by ministerial order. They distinguish commitments contingent on survival from those contingent on death, and the former must be generational to reflect lengthening lifespans. A table too optimistic about mortality underprices annuities and overprices death benefits. The error shows up only after years and cannot be corrected on a book already written. The problem solved is a commitment made for forty years on an individual outcome that is unpredictable, yet whose collective average is remarkably stable.