What does the term "mortality rate" refer to?

The term "mortality rate" refers to a statistical measure that quantifies the number of deaths in a specific population over a designated period of time, typically presented as a ratio or a percentage. This measurement is crucial in the insurance industry, especially for life insurance, as it helps insurers assess risk and determine premiums based on the likelihood of policyholders passing away within a certain timeframe. Understanding mortality rates allows insurance companies to underwrite policies appropriately and calculate their liabilities.

In contrast, the number of claims filed by policyholders does not directly represent mortality rates but rather the activity resulting from policies. The percentage of policies that are active measures policy engagement rather than mortality. The average age of policyholders might provide insight into the demographic characteristics of a policyholder group, but it does not reflect the broader statistical concept of mortality in the population, which is central to the definition of mortality rate.