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Effect of Joint Mortality Assumptions on Multiple-Life Insurance Valuation

Abstract

Joint mortality assumptions represent the actuarial assumptions used to estimate the probabilities of survival, death, and other mortality outcomes for two or more lives covered under an insurance arrangement. They are particularly important in multiple-life insurance valuation, where the benefits payable may depend on the survival or death of more than one policyholder. Accurate joint mortality assumptions are therefore essential for estimating expected benefit payments and determining appropriate actuarial values. The study examines the effect of joint mortality assumptions on multiple-life insurance valuation. It will assess how variations in mortality assumptions for multiple insured lives influence the actuarial value of insurance benefits. The study will also examine the relationship between joint survival probabilities, mortality rates, policy duration, benefit amounts, interest rates, and the resulting valuation of multiple-life insurance contracts. The study will focus on joint mortality probabilities, survival probabilities, multiple-life insurance benefits, policy duration, benefit amounts, interest rate assumptions, and actuarial present values. Multiple-life actuarial models will be applied to estimate insurance values under different joint mortality assumptions. Comparative and sensitivity analyses will also be conducted to determine how changes in mortality assumptions affect the valuation of benefits payable on first-death, last-survivor, or other multiple-life arrangements. A quantitative research approach will be adopted for the study. Relevant mortality and life insurance data, including age-specific mortality rates, survival probabilities, policy durations, benefit amounts, and interest rate assumptions, will be considered. Actuarial life table functions, joint-life valuation techniques, actuarial present value calculations, comparative analysis, and sensitivity analysis will be used to examine the effect of joint mortality assumptions on multiple-life insurance valuation. The study is expected to show that changes in joint mortality assumptions can influence the estimated actuarial values of multiple-life insurance benefits. Higher assumed mortality rates may increase the expected present value of benefits that become payable upon death, while lower mortality assumptions may produce different valuation outcomes depending on the structure of the contract. The magnitude of the effect may vary according to the ages of the insured lives, mortality differentials, policy duration, benefit structure, and interest rate assumptions. The study is expected to provide useful information for actuaries, life insurance companies, underwriters, product developers, and financial managers. The findings may support more accurate valuation of joint-life and multiple-life insurance contracts, premium determination, reserve estimation, product design, and assessment of insurance liabilities. The study may also assist insurers in evaluating the sensitivity of multiple-life valuations to changes in mortality assumptions. The study concludes that joint mortality assumptions are an important component of multiple-life insurance valuation. It is therefore recommended that insurers use appropriate mortality data, regularly review joint mortality assumptions, and apply sensitivity analysis to evaluate the effects of alternative mortality scenarios on the actuarial values of multiple-life insurance benefits.

Keywords: Joint mortality assumptions, multiple-life insurance, joint-life insurance, mortality probabilities, survival probabilities, actuarial valuation, life insurance benefits, actuarial present value, mortality rates, policy duration, benefit valuation, mortality assumptions, life tables, actuarial analysis, insurance liabilities.