What does "mortality" refer to in life insurance?

In life insurance, "mortality" specifically refers to the incidence of death within a defined population or group. It is a critical concept because life insurance operates on the principles of risk assessment and statistical analysis. Insurance companies use mortality tables, which are statistical charts that convey the likelihood of death within certain age groups and demographics, to determine premium rates, benefits, and the overall pricing structure of life insurance products.

Understanding mortality helps insurers estimate how much money they will need to pay out for claims compared to how much they collect in premiums. This balance is crucial for the sustainability of the insurance product, as it allows insurers to maintain financial stability while ensuring they can meet their long-term obligations to policyholders. Mortality is integral to underwriting decisions, premium pricing, and product design in life insurance.