Tillinghast Unveils Older Age Mortality Study

–And, for level term 10-year business, mortality experience through years 11-15 was 215% of mortality in policy years 6-10.

Tillinghast says the study observed mortality deterioration starting in year 10, evidence of possible anti-selection.

In an interview with National Underwriter, Taht says that data on experience after the 10-year level term period has not been previously available but is important because it makes it possible to compare date to the pricing assumptions a company has made.

Older age mortality experience is getting “richer,” according to Taht. In terms of older issue ages, insurers need to look at what is available and triangulate data using direct experience of companies, experience of policy types and experience of the general population, he says. This method is no different than the method that was used to determine experience for preferred risks such as smoker/nonsmoker rates, until sufficient data became available, he continues.

The data in TOAMS 2 can be used to as a comparison against a company’s term, universal life, whole life and variable life products, according to Taht.

While some companies do use VBT as the basis for making assumptions about their products and do not make adjustments, companies should still look at all data available and not just become less conservative because mortality data proved better than VBT, says Elinor Friedman, a Tillinghast principal.

The study also notes the growth of the life settlement industry and the need for data so that insurers can properly price products. In order for companies to address investor-initiated life insurance and stranger-owned life insurance, according to Taht, “they must understand how policies would behave under that kind of program” and how policyholder behavior might differ if policies are kept in force.

“It heightens the need for confidence and a strong point of view about what expected mortality is at older ages,” he says.