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Effect of Mortality Investigation Methods on Life Insurance Valuation Accuracy

Abstract

Mortality investigation methods provide important statistical and actuarial information for estimating patterns of death and survival within a population. These methods help actuaries assess mortality rates, survival probabilities, life expectancy, and other demographic measures required for life insurance valuation. The accuracy and appropriateness of mortality investigation methods may therefore influence the reliability of actuarial assumptions and the resulting valuation of life insurance contracts. This study will examine the effect of mortality investigation methods on life insurance valuation accuracy. It will assess how different approaches to investigating mortality experience influence the estimation of mortality rates and survival probabilities used in life insurance valuation. The study will also examine variations in valuation results arising from the application of alternative mortality investigation methods to relevant mortality data. The study will focus on mortality investigation methods, mortality rates, survival probabilities, life expectancy, mortality experience, life insurance valuation, actuarial assumptions, mortality data, life tables, and valuation accuracy. Selected mortality investigation approaches will be applied to historical mortality data to estimate relevant mortality parameters. The resulting actuarial assumptions and valuation estimates will then be compared to determine the extent to which the choice of investigation method affects life insurance valuation outcomes. A quantitative research approach will be adopted for the study. Historical mortality and life insurance data will be analysed using mortality rate estimation, survival analysis, life table techniques, statistical analysis, actuarial valuation methods, and sensitivity analysis. Valuation results generated from different mortality investigation methods will be compared to assess variations in estimated liabilities, premiums, reserves, and other relevant life insurance values. The study is expected to reveal that mortality investigation methods may have a significant effect on life insurance valuation accuracy. Methods that adequately reflect the underlying mortality experience may produce more consistent estimates of survival probabilities and actuarial values, while differences in data treatment, mortality assumptions, and estimation procedures may lead to variations in valuation results. The magnitude of these differences may depend on the quality, size, and characteristics of the mortality data used. The study will be useful to actuaries, life insurance companies, underwriters, valuation specialists, regulators, and researchers. It may provide useful information for selecting appropriate mortality investigation methods, improving mortality assumptions, strengthening actuarial valuation practices, and reducing uncertainty in life insurance liability estimates. The findings may also assist insurers in evaluating the implications of mortality investigation procedures for pricing, reserving, and long-term financial planning. The study concludes that mortality investigation methods are important determinants of the reliability of life insurance valuation because differences in mortality estimation procedures can influence actuarial assumptions and valuation results. It is therefore recommended that insurers and actuaries carefully select appropriate mortality investigation methods, ensure the quality and adequacy of mortality data, and regularly review mortality assumptions to improve the accuracy and reliability of life insurance valuation.

Keywords: Mortality investigation methods, life insurance valuation, valuation accuracy, mortality rates, survival probabilities, mortality experience, life expectancy, actuarial assumptions, mortality data, life tables, actuarial valuation, insurance liabilities, mortality estimation, life insurance reserves, actuarial analysis.