ACTUARIAL MODELING OF MORTALITY IN NIGERIA: PROJECTIONS AND IMPLICATIONS FOR TERM-LIFE ANNUITIES

Abstract

This study investigates the actuarial modeling of mortality in Nigeria, leveraging data from the World Health Organization's Abridged Life Table for the years 2000 to 2019. Given the critical role mortality projections play in the financial stability of insurance and pension industries, this research explores the Expected Present Value (EPV) of term-life annuities due under varying conditions. Missing data were addressed using linear interpolation, while projections for 2020 to 2024 employed double exponential smoothing. The analysis considers demographic characteristics such as gender and age, focusing on four policyholder age groups (15, 40, 60, and 80 years) across a five-year term. Results reveal declining mortality rates over time, with females consistently exhibiting lower probabilities of death than males. The EPV of annuities shows notable variations based on age, gender, and term duration, underscoring the importance of accurate demographic-specific mortality data for actuarial applications. This research provides actionable insights for the insurance industry and policymakers to address longevity risks and design equitable financial products tailored to Nigeria's demographic realities.