Take A New Look At Underwriting Older Age Applicants

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Agents looking for an untapped and eager set of buyers for life insurance products might be surprised to find that these clients are vital, still working, running companies and raising families–and well past what we have come to consider “retirement age.”

Many older Americans well over age 65 are enjoying the demands of a second or third–or fourth–family, still at the helm of the family business, or continuing their professional pursuits. They dont want to retire, at least in the way society has come to define it.

Furthermore, many of these older age Americans are in the market for life insurance.

To work successfully with this emerging segment, agents will need to forget the “golden age” stereotypes that many older Americans have already left behind.

Healthier and more active than generations past, many older individuals, for personal and financial reasons, are working into their 70s and beyond. Continuing family commitments, college bills and ongoing home mortgages mean they may desire income protection.

And, if they own or direct a business, coverage for business continuation can be important.

These motivators are in addition to the traditional merits of life insurance as a tool for estate planning.

Interestingly, the trend of continuing to work at an older age is likely to intensify. Despite todays unemployment concerns, over the long term, the smaller number of younger workers will mean employers more and more will seek out older workers.

The Bureau of Labor Statistics projects workers age 55 and over will grow from 18 million in 2000 to more than 33 million in 2025.

Powered by good health and a sense that a fulfilling life includes some work, this age group is requiring that the marketplace change its thinking as well. For the life insurance industry, this change means a shift in underwriting philosophies.

For underwriters, in particular, the change in viewpoint is dramatic, and it is only beginning.

Across the industry, there is a need for new measuring sticks when it comes to assessing health and longevity among todays older age applicants.

Clearly, some of the same indicators apply but in different ways. Health status and concerns remain important, for instance, but now underwriters are beginning to look at two other key areas–an older individuals functional abilities and the persons social and physical activities–as part of a larger understanding of longevity.

Underwriters are beginning to take a 360-degree view of applicants, beyond what blood tests reveal and the chronic diseases that are part of life after age 70 or so.

An older age applicant who is living with diabetes or doing well after cardiac surgery is far from an automatic “decline.”

In fact, healthy recovery from surgery can indicate vigor and strength. Many individuals in this age group will have impairments, but that doesnt necessarily make them rated risks.

Alongside health issues, insurers are beginning to assess cognitive ability, functional status and social involvement. Weekly golf games are a plus, so is volunteering, an active church community or a nearby network of family and friends.

If this sounds more difficult to assess than cholesterol levels, it is.

The biggest challenge is developing tools to gather good information about applicants. Questions for applicants will change to help insurers know more about what they do week by week. An applicant might say, “Yes, I exercise.” But the agent needs tools to help explore and quantify this–does he still play two sets of tennis on Saturdays or spend an hour walking with the dog each afternoon? Or does exercising mean reaching for the remote control?

New data about this increasingly healthy group of older age people are helping insurers and agents assess changing predictors of longevity and create new underwriting tools specifically for this age group.

Given what were learning, this sliding scale of underwriting issues ultimately will measure not just health concerns but, as importantly, the vitality that is so meaningful to a long life.

Susan L. Bailey, FALU, FLMI, regional underwriting director, is part of a multi-disciplinary team dedicated to underwriting and research of the older age market for ING Res individual life and health operation, based in Denver. She can be reached at susan.bailey@ing-re.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.