Why Do Insurers Use a Different Mortality Table for Annuity

question 27

Multiple Choice

Why do insurers use a different mortality table for annuity benefit calculations than they use for life insurance premium calculations?

• A) Annuities require more stringent underwriting than life insurance.
• B) The average life expectancy of an annuity applicant is greater than that of a life insurance applicant.
• C) The health status of annuity applicants is generally worse than that of life insurance applicants.
• D) People with a greater-than-average likelihood of premature death are typically the ones who want to purchase annuities.

---

Definitions:

Product's Price

The monetary value assigned to a product by a company, reflecting costs, market demand, and competitive pricing, which consumers are expected to pay to acquire it.

Value

Reflects the relationship of benefits to costs, or what the consumer gets for what he or she gives.

Quality

A measure of excellence or a state of being free from defects, deficiencies, and significant variations, brought about by strict and consistent adherence to measurable and verifiable standards to achieve uniformity of output that satisfies specific customer or user requirements.

Perceptual Map

Displays, in two or more dimensions, the position of products or brands in the consumer’s mind.