Mortality improvement

Mortality improvement is the reduction in mortality rates from one year or generation to the next, usually expressed as an annual percentage. Over the 20th century, medical advances, public health measures and safer workplaces made people at a given age less likely to die in a year than people the same age a generation earlier. Actuaries build improvement scales that project how much rates will keep falling by age and sex.

Say, hypothetically, the death rate at age 70 is 2.0% this year and an actuary assumes 1% annual improvement: in 10 years, the projected rate at 70 would be about 1.81%. Small percentages compound into large differences over the decades a policy or annuity runs.

Improvement cuts in opposite directions for different products. For life insurance, it lowers expected claims, which helped push term premiums down over past decades. For annuities and pensions, it raises costs, because people collect payments longer. Improvement isn't guaranteed: U.S. death rates rose during the COVID-19 pandemic, and drug overdoses have worsened mortality for some age groups, so assumptions get revisited. Regulators periodically adopt new standard tables, such as the CSO mortality table. See mortality trends and how they move life insurance prices and are life insurance prices going up or down?.