What is the function of actuarial tables in insurance?

Actuarial tables play a crucial role in assessing various risk factors associated with insurance, particularly in the context of life insurance and health insurance. Their primary function is to evaluate life expectancy and the likelihood of claims based on statistical data gathered from large populations. This involves examining various factors, such as age, gender, health conditions, and lifestyle choices, to predict how long individuals are likely to live and when they might file a claim.

By utilizing these tables, insurance companies can make informed decisions regarding premium pricing. They can accurately set premiums that reflect the risk of paying out claims, ensuring that they remain financially viable while also providing coverage to policyholders. This process helps maintain the balance between affordability for customers and sustainability for the insurance company, making actuarial tables a fundamental component of underwriting in the insurance industry.