A new study indicates that the growth area for life insurance is at older ages and suggests that the life insurance industry will need to have a firm grasp on products sold and how those products are priced.
The study, “Tillinghast Older Age Mortality Study (TOAMS 2),” was released last month by Tillinghast, a Stamford, Conn.-based actuarial unit of Towers Perrin. The study includes data from 29 life insurance companies from 2003 to 2005.
The study findings concur with research by MIB Group, Braintree, Mass., which reports that 2007 life insurance sales were up 4.3% over 2006 for ages 60 and older, while sales among the 45-99 age group are declining, according to Mike Taht.
Taht says that from 2000 through 2005, there has been a $6.6 billion increase in exposures in the TOAMS studies at issue ages 75 and above. In fact, he adds, for some companies the issue ages over 70 represent 30% of all universal life premiums sold.
Among the study’s findings are:
–Actual experience was better than the valuation basic table, a measure of what is expected to happen. For instance, mortality experience of companies surveyed was 74% of the 2001 VBT for the most recent Tillinghast study compared with 78% of VBT for the first TOAMS.
–Using the Society of Actuary 1975-1980 mortality tables, male experience was 51% of the SOA 75-80 and female experience, 71% of the SOA 75-80.
–Preferred nonsmoker mortality was 58% of 2001 VBT by face amount; and 60% of VBT by policy count.