There are far more seniors around than when I was young. And the ratio of widows to widowers has plummeted.
Why are these things happening? Weve all heard that better diets, medical advances, and healthier living habits and conditions are among the reasons. But Ive been wondering whether the tremendous recent drop in nonsmoker male mortality has something to do with it, too. (Chart I shows what that drop looks like).
Most males are nonsmokers these days–in fact, 86% of them are nonsmokers, based on my most recent data (1997). Thats a definite jump from the 1980 to 1985 period, when the nonsmoking male average was 82%–and that figure was higher than the decade before.
By and large, the male longevity improvements Ive been noticing have occurred just in the last five years.
If nonsmoking is a factor in that improvement, as I suspect it is, this is going to mean that a lot more male seniors will be around in the future.
In pondering the impact of that, I decided to look at how nonsmoking may affect the broad senior market. So I assessed longevity for a sample married couple, comparing life table statistics from 1987 and 2002, where each spouse is a nonsmoker and age 50 (at the doorstep of the senior market, our topic for today).
Chart II was the result of my analysis. It shows how longevity prospects have improved for such a couple, from 1987 to now. For example, it’s now most likely that both spouses will still be around when each turns age 80.
My first reaction to seeing that was, “this is good, because the 80s are an ideal age for going on cruises and generally living it up if you are still around and happily married.”
Or is it? I raise the question because the 80s are also a time when a lot of sickness occurs, so a lot of seniors in that age group will need not only regular retirement income, but also advanced medical services and long term care–and, presumably, the insurance to fund these things.
So, from a financial standpoint, it may be that the funding costs for our couple may increase substantially as the couple ages. Considering that there may well be more such senior couples around in the future than now, this presents obvious opportunities and challenges for insurance companies serving the senior market.
In studying the numbers further, I noticed that Chart II shows the probability of death by age 80 has decreased by 33% for nonsmoking males and by 20% for nonsmoking females.
Those improvements, most of which are very recent, no doubt will be passed on in the form of lower life insurance premiums.
Now to the nonsmoking issue. Since nonsmoking among males has increased roughly 4% between 1983 and 2002, we may surmise that the improvement in male longevity correlates with nonsmoking.
A good question to ask is, why has nonsmoker male mortality improved so dramatically? Three main reasons come to mind, although there could be more. Here they are:
–Many of these individuals used to smoke, but many have now spent a longer time not smoking (i.e., since they “quit” many years before.) As a result, they are healthier than they used to be, because after 10 years or more of nonsmoking, the harmful effects of smoking begin to wear off.
–Better urine and blood testing was introduced in the late 1980s. From those tests, researchers and testers now know which people truly are nonsmokers. (Previously there was “contamination” of the alleged nonsmoker group by smokers, so smoker-nonsmoker data was not as accurate as it is now.)
–Medical treatment has improved dramatically.
My conclusion? If the spouses in our 50-year-old couple look after themselves, obtain the proper financial planning, and keep on being nonsmokers, they should be able to live out their years in storybook style–i.e., live happily ever after.
And if lots of couples do that, the insurance industry will face many new challenges and opportunities in the years ahead.
John M. Bragg, FSA, ACAS, MAAA, is actuarial consultant at John M. Bragg and Associates, Atlanta; past president of Society of Actuaries; and past CEO of Life Insurance Company of Georgia. You can e-mail him at firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, April 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.