Morbidity

Morbidity refers to the incidence of disease, injury or disability, as opposed to mortality, which refers to death. Actuaries measure morbidity as rates, such as how many people out of 1,000 at a given age are expected to become disabled, be diagnosed with cancer or need long-term care in a year, and how long those conditions last.

Morbidity drives the price of products that pay while someone is alive but sick: disability income insurance, critical illness coverage, long-term care insurance and life insurance riders such as chronic illness, critical illness and long-term care riders. Say, hypothetically, an actuary assumes 2 in 1,000 people of a certain age will develop a covered critical illness each year. The rider charge must cover that expected claim cost plus expenses.

For pure life insurance, mortality matters more, but morbidity still enters underwriting: an applicant's current conditions affect both the chance of death and the chance of claiming under an accelerated death benefit rider. Morbidity has proved harder to predict than mortality, which helps explain why long-term care premiums have been raised on many older policies. See chronic illness riders vs long-term care riders and hybrid life and long-term care policies.