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Life Health > Life Insurance

As Insureds Live Longer, Old Gets Older

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Life underwriters may be starting to think of age 70 as the new age 65.

Back in 2000, the majority of underwriters who participated in a Society of Actuaries survey on older age underwriting said the “older age group” included individuals ages 60 to 65.

Just 6 years later, 60% of the underwriters who participated in a follow-up survey said old age starts at ages 70 and up, according to Lynn Ruezinsky, an associate actuary in the Bridgewater, N.J., offices of a unit of Met Life Inc.

Over that same period, the maximum issue age the underwriters said they would consider accepting for any life coverage increased to 85, from 80, Ruezinsky reported.

Ruezinsky and other life experts talked about the changing definition of “old” here at a workshop on older insureds, at a life insurance conference organized by the SOA, Schaumburg, Ill.; LIMRA International, Windsor, Conn.; LOMA, Atlanta; and the American Council of Life Insurers, Washington.

Another workshop panelist, Allen Klein, a vice president at AIG American General, Houston, a unit of American International Group Inc., New York, said he believes that the 2006 survey results are accurate and that most insurers now start applying older-age underwriting at age 70.

Today, age 70 is around when cognitive problems, medical problems and other problems often start to become noticeable, Klein said.

Because the 65-84 age group is growing rapidly, “the older age market is a golden opportunity for us,” Klein said.

But underwriters have little room for error if they are issuing to age 90, or even to age 80, Klein cautioned.

Klein reviewed an SOA list of 21 indicators of mortality at older ages.

“The top 3 indicators are current health, cognitive function and frailty,” Klein noted.

There are a number of tests for assessing the top 3 indicators, but normal underwriting would be unlikely to pick up 11 of the other indicators on the list, Klein said.

Even screening for the top 3 indicators can be a challenge.

Fewer than half the SOA survey participants said they now use, or plan to use, cognitive testing, Ruezinsky reported.

Obstacles to more extensive underwriting include the length of time involved, the cost of acquiring more information, the impact on speed of issue, pressure from competitors, and pressure from agents, Klein said.

But Klein aid he thinks insurers will start doing more cognitive testing in the future.

Michael Fasano, president of Fasano Associates, Washington, a firm that underwrites older insureds for life insurers and life settlement firms, said underwriters also may have to change the way they treat some known risk factors.

“Relative additional mortality for any impairment decreases as overall expected mortality increases,” Fasano said, “so [underwriters] will need to use age formulas to adjust for this.”

Another example, Fasano said, is the fact that some impairments that progress about as quickly in younger insureds and older insureds are less likely to create a life-threatening event during an older insured’s lifetime.

Underwriters will need to use “a little more liberal eye” when looking at those sorts of risks when assessing older age applicants, Fasano said.

Finally, some impairments–such as prostate cancer–tend to move more slowly in older people than in younger people, Fasano said.

“If you are looking for opportunities, this is an opportunity in underwriting,” Fasano said. “Ask, ‘How bad an impairment is it?’”

With 75-year-olds, Fasano said, underwriters should pay less attention to family history, cardiovascular risks and blood samples and more attention to cognitive function and frailty.


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