AD Banker Comprehensive Practice Exam

What term describes the average number of people who die each year?

1. Mortality rate

2. Principle of indemnity

3. Predictability rate

4. Principle of life insurance

The correct answer is: Mortality rate

The term that describes the average number of people who die each year is "mortality rate." This is a key concept in fields like public health, statistics, and insurance. The mortality rate provides insight into the likelihood of death within a specific population during a given time frame, typically expressed per a set number of individuals (such as per 1,000 or 100,000 people). The importance of understanding mortality rates lies in their applications, particularly in life insurance and risk assessment. Actuaries use mortality rates to determine premium pricing and to calculate the expected payouts of life insurance policies. This statistical measure reflects the health and longevity of a population and can help inform medical and public health policies aimed at improving community health outcomes. The other terms mentioned—principle of indemnity, predictability rate, and principle of life insurance—do not pertain directly to measuring death rates. The principle of indemnity relates to insurance coverage that restores the insured to their financial state before a loss, while the principle of life insurance refers to the contractual agreement between the insurer and the insured regarding coverage and benefits. Predictability rate doesn’t commonly describe a recognized statistical measure in this context. Thus, the correct term is indeed the mortality rate, as it specifically quantifies