AD Banker Comprehensive Practice Exam

The mathematical probability table used by insurance companies to determine loss due to sickness or injury is the:

1. Rate Table

2. Mortality Table

3. Morbidity Table

4. Claims Table

The correct answer is: Morbidity Table

The morbidity table is specifically designed to assess the probability of individuals experiencing sickness or injury over a designated time frame. This table provides careful statistical analysis based on historical data regarding health issues across various demographics, including age, gender, occupation, and lifestyle factors. By utilizing a morbidity table, insurance companies can estimate the frequency of claims associated with health-related conditions, which directly informs the underwriting process and premium calculations for health insurance policies. This data is crucial for assessing risk levels and aligning insurance product offerings with the likelihood of claims occurring. In contrast, mortality tables focus on death rates, which is relevant to life insurance products rather than health-related issues. Rate tables generally provide information on premium costs associated with various types of coverage but do not delve into the specifics of illness or injury. Claims tables track filed claims but do not offer predictive insights into future health-related probabilities. Thus, the morbidity table is the most appropriate tool for evaluating potential losses due to sickness or injury within the context of insurance.