What is the primary goal of adjusting for excess mortality in life insurance?

The primary goal of adjusting for excess mortality in life insurance is to ensure profitability and sustainability of policies. Insurance companies assess and manage risks associated with mortality rates to maintain a balance between the premiums collected and the claims paid out. When excess mortality occurs—meaning deaths are happening at a rate higher than expected—insurance companies need to adjust their policies and pricing to account for the increased risk. This adjustment helps prevent losses that could threaten the company's financial stability, ensuring it can meet future claims while remaining profitable. Consequently, proper mortality adjustments are crucial for the company’s long-term viability and its ability to serve policyholders effectively.