Health Expectancy: A Sales Tool Whose Time Has Come

By John M. Bragg

Health expectancy is a brand new sales tool with many applications. Its different. It deserves attention.

Health expectancy gives our customers a way to fight their negative expectations. Thats whats new and different about it.

What is it? Health expectancy tells how long a person will be well. Everyone is eager to know that. Its optimistic. In many ways its the opposite of life expectancy, which is of much less interest today.

Heres another amazing thing about health expectancy: The “well” periods are nearly always far longer than expected. Negative expectations of imminent poor health are instantly overcome.

Chart 1 shows health expectancy for an actual 84-year-old nonsmoking male who is in good health–for his age. It shows he will be well for seven years, a fact that has amazed him. It also shows he will eventually need 0.7 years of assisted living and 1.2 years of skilled nursing care. (Health expectancy is, of course, a statistical average and not an exact prediction.)

Consumers can easily understand the division of a persons eventual “sick” period into two pieces–the “assisted living” period and the “skilled nursing” period. (Chart 2 describes those terms.)

The meaning for individuals might be translated this way: A reasonably normal life can be carried on during the “assisted living” period, thus extending the already long “well” period. Also, it is common for people to recover from skilled nursing and go into assisted living, and later go back to skilled nursing.

Another thing to keep in mind: Health expectancy is something that can be run on people who already have ailments or supposed ailments.

Thats important to know, because there are many common ailments–controlled diabetes, mild arthritis and high blood pressure, for example–that convince people they will soon become invalids for life. Customized health expectancy runs prove the opposite.

Even for people who do have those ailments, the “well” periods–requiring no assisted living–tend to be amazingly long.

Here is an example for a 56-year-old nonsmoking male with arrhythmia and no other impairments. He will be well for 14.2 years, and will eventually require assisted living for seven years and skilled nursing care for three years. Incidentally, this run was done four years ago; the gentleman involved is still alive and well today, at age 60.

As an aside: Several public personalities have seen potential damage to their careers because of alleged illness. Health expectancy runs, which are factual, can put an end to such problems.

Whether ailments exist or not, health expectancy is a customized service for each individual. Experience shows that individuals want to keep their health expectancy statements (like the one shown in Chart 1) permanently. This suggests a real service has been done.

There seems no doubt that health expectancy can be a real door opener/sales tool/referrals tool–especially in the senior market and especially if presented in an informed way. You may be interested to know that when I first wrote about this topic for National Underwriter in 1999 (see the Aug. 16, 1999, issue), I received a large number of inquiries from brokers. I still get inquiries from brokers on the topic.

The interest centers on the ability to tell people (clients) how well they are going to be. Beyond that, the health expectancy statements (such as in Chart 1) are viewed as helping producers focus the conversation on the need for senior products such as annuities, long term care insurance, and Medigap health coverage.

I have received enough inquiries about this topic to conclude that the industry should consider doing formal research on health expectancy, especially concerning how to incorporate the concept into products and services.

What are needed are volunteer agencies and brokers and associations to test the value of the concept as a door opener/sales tool/referrals tool. Insurers are also needed to assist in this endeavor and perhaps to spearhead the effort with research of their own.

Yes, the entire economy has been in a downturn for quite a while. But this is a bright spot. Researching the topic of health expectancy might help the industry find new ways of demonstrating need for its products. This would be doing something worthwhile, despite the economy.

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 jmb@braggassociates.com.


Reproduced from National Underwriter Edition, April 28, 2003. Copyright 2003 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.