Multiple-Decrement Compositional Forecasting with the Lee-Carter Model

Changes in cause of death patterns have a great impact on health and social care costs paid by government and insurance companies. Unfortunately an overwhelming majority of methods for mortality projections is based on overall mortality with only very few studies focusing on forecasting cause-specific mortality. In this project, our aim is to forecast cause-specific death density with a coherent model. Since cause-specific death density obeys a unit sum constraint, it can be considered as compositional data. The most popular overall mortality forecasting model, Lee-Carter model, is applied on compositional cause-specific death density. The predicted cause-specific death density is used to calculate life insurance and accidental death rider.