On the Construction and Use of a Series of Select Mortality Tables, to be employed in combination with the Institute HM(5 Table

Abstract

The opinions exprest at several recent meetings ov the Institute ov Actuaries apear to indicate that ther is a general agreement among practical actuaries, that the Institute Tabl HM(5) represents very faithfully the mortality among insured lives after the first benefit ov selection has worn of,—say, after the laps ov five years from the date ov insurance;—and that therefore life office valuations shoud, in the case ov policies ov five or more years' standing, be to a great extent based upon that tabl. When we consider to what extent it shoud be uzed, we see at once that we shoud calculate by means ov it the values ov the sums payabl by the offis and ov the sums receivabl, that is, ov the gross premiums; we shoud also, ov cours, uze it in converting the divisibl surplus into reversionary bonuses. But it is not a suitabl tabl for the calculation ov the net premiums; and net-premium valuations therefore cannot with propriety be made by means ov it alone. The mortality during the first five years being considerably less than that shoen by the tabl in question, the true initial anuities (or anuities at the date ov asurance) wil be greater than those givn by it for the same age, and the net premiums consequently less. It folios then that, if we wer to value the HM(5) net premiums, we shoud hav too large a credit, and the liability bro't out woud be too smal.