morbidity tables and continuance tables
A life actuary leans on a mortality table — a column of death rates by age. A health actuary needs richer tools, because illness is not a single instant like death: people fall ill at some rate, and then stay ill for varying lengths of time. Two companion tables capture this: a morbidity table for how often claims start, and a continuance table for how long they last.
A morbidity (or incidence) table gives the probability of a covered event beginning at each age — say the chance a healthy 50-year-old becomes disabled this year. A continuance table then tracks a cohort of claimants over time: of 1,000 people who started a disability claim, how many are still claiming after 3 months, 1 year, 2 years, and so on, as some recover, some die, and some reach benefit limits. The continuance table is essentially a survival curve for the claim itself. Multiplying incidence by the expected length and benefit from the continuance table gives the expected cost of a claim — the building block of pricing and of claim reserves for disability and long-term care.
These tables are the morbidity equivalent of life tables, but harder to build and shorter-lived in usefulness. They depend on the exact benefit definition (a stricter 'disabled' test produces different continuance), on the elimination period, on the economy, and on medical and social change, so they must be studied and updated far more often than mortality tables. A continuance table built for one product or era can be badly wrong for another, which is a recurring source of pricing error in disability and LTC.
A disability continuance table starts with 1,000 new claimants. After 90 days 600 are still disabled (others recovered quickly); after 1 year, 350; after 2 years, 180; after 5 years, 60. Combined with an incidence rate of 0.5% per insured per year, this lets the actuary value both new premiums and the reserve held for claims already open.
Incidence says how often claims start; continuance says how fast they end.
A continuance table is specific to a benefit definition and period — borrow one from a different product or era at your peril. Unlike mortality, morbidity assumptions drift with the economy and medical practice, so they must be re-studied far more often.