What are actuarial tables used for in insurance?

Actuarial tables are essential tools in the insurance industry for calculating policyholder rates. These tables provide statistical data about the likelihood of various events occurring, such as death, illness, or accidents, based on demographic factors like age, gender, and health status. This information allows insurance companies to assess risk accurately and set premium rates accordingly.

By using actuarial tables, insurers can determine how much a policyholder should pay based on their individual risk profile and the probability of a claim being made. This not only helps in pricing policies fairly but also ensures that the insurer can maintain financial stability while fulfilling its obligations to policyholders.

In contrast, tax rates, investment goals, and customer satisfaction do not directly relate to the primary purpose of actuarial tables in insurance. Tax rates involve different calculations based on financial laws and regulations, investment goals are typically aligned with financial planning rather than risk assessment, and customer satisfaction is measured through surveys and feedback rather than numerical data provided by actuarial analysis. Thus, the role of actuarial tables is specifically focused on risk assessment and policy pricing in insurance.