How is "mortality rate" defined in insurance?

How is "mortality rate" defined in insurance?

• A. The number of policies issued in a year
• B. The frequency of claims filed by policyholders
• C. The frequency of death in a defined population over a certain period
• D. The average age at death in a population

Answer: (C)

The concept of "mortality rate" in insurance specifically refers to the frequency of death within a defined population over a specified period of time. This statistic is crucial for insurers as it helps them assess and calculate risks associated with life insurance policies. By understanding the mortality rate, insurance companies can better determine premiums and reserves needed to cover future claims. While other options may relate to factors influencing insurance policies, they do not capture the essential definition of mortality rate. The number of policies issued does not reflect the societal death statistics required for assessing risk. Similarly, the frequency of claims filed pertains more to how often policyholders utilize their insurance rather than the mortality aspect itself. The average age at death, although related to mortality, does not convey the rate per period—it only provides a metric around the age at which members of a population typically pass away, missing the temporal aspect that defines mortality rate.

The concept of "mortality rate" in insurance specifically refers to the frequency of death within a defined population over a specified period of time. This statistic is crucial for insurers as it helps them assess and calculate risks associated with life insurance policies. By understanding the mortality rate, insurance companies can better determine premiums and reserves needed to cover future claims.

While other options may relate to factors influencing insurance policies, they do not capture the essential definition of mortality rate. The number of policies issued does not reflect the societal death statistics required for assessing risk. Similarly, the frequency of claims filed pertains more to how often policyholders utilize their insurance rather than the mortality aspect itself. The average age at death, although related to mortality, does not convey the rate per period—it only provides a metric around the age at which members of a population typically pass away, missing the temporal aspect that defines mortality rate.