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Life Expectancy

CHILING LIN

Life Expectancy, the length of time people can on average expect to live when born. Specifically, the concept refers to the number of years a newborn infant can be expected to live if prevailing patterns of mortality at the time of its birth stay the same throughout its life, regardless of gender. Life expectancy reflects social factors such as health care, disease control, immunization, overall living conditions, and nutrition.

CHILING LIN

When looked at nationally, three measures are used: overall life expectancy, male life expectancy, and female life expectancy. In almost all countries in the world, women now live longer than men, often by as much as six or seven years in developed countries. People are also living longer: in the United Kingdom, the average male born in 1901 could expect to live for 48 years and the average female for 51.6 years; in 1991 the average male born that year could expect to live for 73.2 years and the average female for 78.8 years; this rose, in 2000, to 75 years for men and 80.5 for women.

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Life expectancy is a useful indicator of standards of living and is one of the elements used in compiling the Human Development Index, devised by the United Nations Development Programme (UNDP). Very often it is the poorest countries that have the lowest levels of life expectancy and the richest that have the highest. For example, in more than 20 countries in sub-Saharan Africa, overall life expectancy is between 40 and 50 years, whereas in nearly all of the countries that belong to the Organization for Economic Cooperation and Development (OECD, sometimes referred to as the “rich nation’s club”) it is at least 75 years.

In business, life expectancy data is especially important to life insurance companies in devising their policies and, in particular, deciding whom to insure and on what terms. The data examined for this purpose go into considerable detail: for example, how life expectancy varies according to the jobs people do, how it varies according to how much people smoke or drink, and so on. Armed with such data, actuaries can calculate the risk of insuring an individual, and a premium can be set according to the degree of risk of the event insured against occurring and the insurance company having to pay out; or, if the risk is deemed too great, the individual may be refused insurance cover.

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