Predicting How Long You’ll Live

For most of the past century, the financial-services industry has used actuarial tables to design life-insurance policies, pensions, and other products based on predictions of human lifespan. These “life tables” rely on historical death rates to predict the future longevity of broadly defined population groups. But human life expectancy has increased dramatically—from 47 years in 1900 to 77 today in the United States, with similar surges around the world, leading to skyrocking pension and healthcare costs. What’s more, sizable variations in longevity have emerged among different subgroups.

Thus the financial-services industry no longer considers life tables adequate, as they leave too much room for companies to lose money.