Defined terms for the annuity market and lifetime income landscape.
Morbidity risk is the risk of disease and disability across the lifespan — the complement to mortality risk in characterizing the total health-related exposure an individual faces.
Mortality rate is the proportion of a defined population that dies within a specified period of time, most commonly expressed as deaths per thousand or per hundred thousand people per year. Why it matters Mortality rate is the basic measurement unit of mortality science — every other concept in the field, including life expectancy, survival curves, hazard rates, and actuarial pricing, is derived from mortality rates measured across populations and ages. Without a measurement unit,
A mortality and expense charge (M&E) is the bundled annual fee on a variable annuity contract's account value that compensates the carrier for the mortality risk under the contract's death benefit and for administrative expenses, typically expressed as a percentage charged daily against subaccounts.
Mortality basis risk is the risk that an individual's actual mortality experience diverges from the average mortality assumption used by the pool or insurer underwriting their lifetime income arrangement.
