What does the mortality table estimate in the context of insurance?

The mortality table estimates the amount needed to pay death claims by providing statistical data on the likelihood of death at various ages. This tool is grounded in demographics and historical data, which helps insurers assess the risk associated with insuring individuals at different life stages. By understanding the probability of death within specific age groups, insurers can calculate how much they need to set aside to cover future claims arising from death benefits. This fundamental aspect is crucial for determining premiums and ensuring the financial stability of the insurance company.

The other options, while related to various insurance considerations, do not accurately reflect the primary purpose of a mortality table in the context of life insurance. For instance, potential profit margins and the number of policies sold are influenced by broader market factors and company strategies and are not directly derived from mortality statistics. Similarly, the average age at which claims are paid does not specifically pertain to the function of mortality tables, which focus on the likelihood of death, rather than claims processing or timing. Thus, the choice that underscores mortality tables as a tool for estimating the funding required for death claims is the most fitting.