Life Expectancy

Life expectancy, referred to as “actuarial age” in the insurance industry, describes the average age of death in a population and, more specifically, to the number of years an individual can expect to live. Research from Our World in Data shows that “since 1900 the global average life expectancy has more than doubled and is now above 70 years.”

Specifically in the United States, the average life expectancy was 78.9 years in 2019. This measure is indicative of period life expectancy, which is the average number of years a newborn would live if the mortality pattern of that year were to stay consistent.

According to the Social Security Administration, “Between 1900 and 2017, the age-sex-adjusted death rate declined at an average rate of 0.77 percent per year for ages 65 and over, and 2.99 percent per year for ages under 15,”.

Statistics from the National Center for Health Statistics show that age-adjusted death rates decreased for 6 of 10 leading causes of death, including cancer, chronic lower respiratory diseases, heart disease and unintentional injuries, from 2017 to 2018.

World health statistics reports compile the most recent health statistics for 194 Member States every year. The 2020 report, issued by the World Health Organization and UN agencies, summarizes life expectancy trends to monitor health-related Sustainable Development Goals (SDGs).

Cohort life expectancy is the average life length of a group of people born in a given year. According to Our World in Data researchers, tracking a group of people born in a particular year for several decades allows them to derive the cohort’s life expectancy by taking the average of the group’s ages upon death.

The other, more commonly used, metric is period life expectancy, which estimates the average lifespan for a hypothetical cohort whose mortality rate is tied a specific time period, typically a year. Period life expectancy does not take into account the changes in mortality rates over time.

Regardless of the metric used, life expectancy is an average. Even if mortality rates stayed the same, some people in a population will die much earlier than expected and some will die much later.

In the insurance world, actuaries compile statistical data for analysis. Actuaries are professionals who use modeling software to forecast the probability of specific events and, in the field of life insurance, estimate how long a person will live. They leverage mathematics and financial theory to determine a person’s actuarial age.

Life insurance companies hire actuaries to collaborate with accountants, financial analysts, market research analysts and other specialists to set profitable, competitive life insurance and annuity premiums and mitigate the insurance company’s financial risk.

Likewise, you can use your life expectancy to make important decisions about your financial portfolio and retirement planning.

One of the biggest risks in retirement is the possibility that you may outlive your savings. In addition to securing death benefits for your beneficiaries, knowing your actuarial age allows you to plan your retirement goals around your time horizon and long-term financial objectives.

Because life expectancy estimates are statistical measures, they do not take into account factors such as lifestyle choices or an individual’s family health history.

Insurance companies, however, rely on more accurate information. They may require you to undergo a medical exam before they approve you for a policy. In general, annuities don’t require a medical exam or the disclosure of any information regarding lifestyle or medical history.

The insurer will look at specific factors that influence a person’s life expectancy.

Geography, socioeconomic status and access to health care may also influence one’s lifespan. Some studies have also shown a link between a person’s height and their life expectancy.

Life expectancy calculators and tables are widely used to estimate how long a person will live.

Calculators provide an estimate based on values the user inputs. These may include the user’s date of birth and gender, as well as information regarding tobacco and alcohol use, physical activity and height and weight.

The results from online life expectancy calculators are driven by formulas based on historical statistics.

Some calculators take less input than others. For example, the Social Security Administration’s longevity calculator doesn’t factor in a person’s current health, lifestyle or family history, even though these are all determinants.

In addition to calculators, life expectancy tables provide helpful estimates. These charts — also called mortality tables and actuarial tables — offer an organized visual overview of survival rates based on age and sex.

Regardless of which calculator or table you use, your result is only an estimate. No tool, no matter how sophisticated, can predict mortality with 100 percent accuracy.