A decade ago, writing life insurance on someone from the age 70-plus swim team or the 80-plus sunrise walkers’ club was not on the radar screen for most advisors and underwriters. Not much product was available for the mature set, and not many older folks were interested or thought they could qualify.
But in the past couple of years, sales to people ages 70 to 90 have been up, says Lynne Rosenberg Kidd, chairman and CEO of Innovative Solutions Insurance Services L.L.C., Los Angeles, Calif.
So have applications. For instance, the Medical Information Bureau, Westwood, Mass., reports that in January 2006, life insurance applications in the age 60-plus category were up 7.8% compared to the previous month. They were up for ages 0-44 and 45-59, too, but by a lesser amount–1.1% and 4.6%, respectively.
This slowly rising tide is spurring advisors to re-think offering life insurance to older seniors and if so, how to be effective and successful.
Life insurance is good for “older people who have assets just sitting there and a financial reason to protect them,” says Kidd. People ages 75-80 can and do qualify, even if they have some health problems, she points out, citing elders with well-controlled diabetes as an example.
In fact, she recently sold a life policy to an 81-year-old individual with a preferred rating. She also sold one to an 83-year-old man who is still intimately involved in his business. Another advisor just placed a 90-year-old client.
“No question, a big reason for the growth in the older age life market in 2004 and 2005 was the growth of investor-owned life insurance,” says Jeffrey Suyematsu, senior vice president of sales in the life division of Allianz Life Insurance Company of North America, Minneapolis, Minn.
(In fact, investor- and corporate-owned life insurance were contributing factors to total industry sales in the first quarter of 2006, notes LIMRA International’s new U.S. individual life insurance sales report.)
Increased regulatory scrutiny into investor-owned life insurance and also opposition to such plans by several industry trade groups and insurers should curb some of the older market sales, predict sources contacted for this article. (Note: This may already have started to occur. Application activity tracked by MIB in recent months shows declines in apps for the age 60-plus category.)
However, interest in older age life sales will likely continue, predicts Suyematsu, whose company accepts cases up to age 81.
Why is that? For one thing, the wealthy old continue to be an estate planning market for life insurance, despite ongoing uncertainty about federal estate tax laws, he says. They’re interested in wealth transfer to children and grandchildren, he says, and they appreciate how life insurance does this “efficiently, income tax-free and if structured properly, estate tax-free.”
Regarding estate taxes, Suyematsu points out that the “states do not plan to eliminate their own estate taxes, regardless of what the federal government does,” so this will remain an issue for older people with substantial assets.
Another reason is that more older people today have the means and need for life insurance purchases than ever, says Brian K. Atchinson, president and CEO of Insurance Marketplace Standards Association, Bethesda, Md. Whether and what they buy depends on the situation, goals and needs, he allows, but life insurance is a viable option for some.
Some older people own businesses, and/or still are working, notes David Schumer, president of Competitive Insurance Services, Baltimore, Md. This may lead them to “suddenly realize they need life insurance,” he says.
Kidd agrees. Depending on the circumstances, she says, the business cases can be a “true, good use of life insurance in the mature market.”
Older people who are less wealthy but who still have means are also a viable market, Suyematsu says. Not only are there more older people today than in earlier eras, he explains, but more are healthier and have more money and other assets.
These prospects may have put off buying life insurance when they were younger or they may have believed they did not need it, he points out. But now, as they see friends and family becoming seriously ill, “they realize they are not invincible”–and they become interested in protecting assets and in doing legacy planning.
Finally, Suyematsu thinks aging baby boomers and their parents will become an important part of the older age life insurance market. This will be fueled not only by the transfer of wealth to boomers from parents but also by the significant debts many boomers carry and their changing family arrangements. For instance, the trend of boomers raising their grandchildren creates life insurance needs that their own elders probably did not have, he says.
Selling to the advanced ages is not a “ho-hum” exercise, experts stress. “The dilemma for the agent is to find good risks and carriers,” says Kidd. Agents must also be prepared to address multiple issues and factors. These are covered in the accompanying sidebar.
Changes to life policies and underwriting at the older ages are being made right now–changes that many agents are not even aware of yet, cautions Schumer. For instance, underwriting is tougher, and some insurance companies are not allowing changes in ownership. There is greater scrutiny of insurable interest.
But, he adds, remember it is legal to do life insurance sales with older people. “If you can justify it and document it [with financial, health, etc.], you’ll be able to do the case” for insureds who qualify.