Definition
A select and ultimate mortality table is a mortality table in which the mortality rate at any given age depends on both the current age and the time since underwriting selection, with a lower-mortality "select" period reflecting the recent underwriting screening and a higher-mortality "ultimate" period reflecting the unselected long-run experience of the same lives.
Why it matters
Underwriting screening — a medical examination, an application questionnaire, a death-benefit-rejection check — temporarily improves the average mortality of the people who pass through it, because the screening removes those with detectable elevated risk. The select-and-ultimate structure is how this temporary improvement is reflected in the table: the same individual's mortality at age 65 is treated differently depending on whether age 65 is just after underwriting or many years after, when the screening's effect has worn off.
How it works
A select and ultimate table is two-dimensional. The first dimension is the age at which a measurement is taken; the second is the duration since the individual was underwritten. Within the select period — typically five to twenty-five years, depending on the table — mortality at any given age is lower than the population-average mortality at that age, because the underwriting screening removed individuals with identifiable elevated risk. After the select period ends, the same age cell collapses to the ultimate mortality rate, which reflects the unselected long-run mortality of the surviving population. The 2017 Commissioners Standard Ordinary (CSO) table is a select-and-ultimate table widely used in US life insurance pricing and reserving; pension and annuitant mortality tables typically do not use select-and-ultimate structure because pension and annuity underwriting is much lighter or absent. Where select-and-ultimate structure applies, ignoring it overprices mortality in the years just after underwriting and underprices it in the long run; respecting it produces a structurally honest pricing that reflects the underwriting effect's natural decay.
In practice
Select-and-ultimate structure is largely invisible to individuals on the buying side of a lifetime income arrangement, but it is operating behind the pricing of any product whose underwriting includes meaningful medical screening. The structure matters most in life insurance, which typically uses substantive underwriting; for SPIAs, DIAs, and most other lifetime income products, underwriting is light and select-and-ultimate effects are small or absent. Where they are present — for example, in medically underwritten substandard annuities, where individuals with impaired life expectancy receive enhanced payouts — the select-and-ultimate structure of the underlying mortality table is part of how the enhanced pricing is justified. A professional explaining a medically underwritten arrangement should be able to describe the underwriting effect; the table structure is the technical form that effect takes.
In the Longevity Standard Framework
A select and ultimate mortality table is supporting vocabulary in the Longevity Standard framework, relevant where an arrangement's pricing reflects underwriting screening. The framework's focal individual configuration does not invoke select-and-ultimate structure directly — the focal SPIA and DIA pricing reflect representative annuitant mortality without explicit underwriting selection — but the structure becomes operationally relevant when characterizing arrangements such as medically underwritten substandard annuities, where underwriting is a primary cost-structure feature, or life-insurance-linked structures where the select effect drives a material portion of pricing.
Related terms
- Mortality table
- Period life table
- Projected mortality table
- Underwriting in longevity context
- Adverse selection
- Anti-selection
- Risk classification
- SOA mortality research