What do insurance companies assess to determine the life expectancy of policyholders?

Insurance companies utilize mortality tables to assess and determine the life expectancy of policyholders. Mortality tables are statistically derived tables that provide data on the likelihood of death for individuals at various ages. These tables are compiled from extensive demographic research and historical data, allowing actuaries to analyze mortality rates based on factors such as age, gender, health status, and lifestyle.

By evaluating these mortality tables, insurers can calculate premium rates, determine policy reserves, and forecast future claims. This assessment is crucial for ensuring that the insurance company can fulfill its obligations to policyholders while remaining financially viable.

Other options, though relevant to the overall functioning of an insurance company, do not specifically pertain to the assessment of life expectancy. Investment earnings relate to the growth of assets, operating expenses refer to the costs incurred while running the company, and legal guidelines provide the framework within which the insurer must operate but do not directly influence life expectancy calculations.