The question was: What does a life expectancy report entail and why are two such reports often needed for a single life settlement case?
The answer is: Life expectancy calculator companies prepare reports that estimate life expectancies. (In the trade, a life expectancy analysis is often referred to as an LE.)…
The LE report content is not standardized from company to company. Most reports contain demographic information which identifies:
- the person evaluated;
- the medical problems found in the review of the insured’s medical records, occasionally with ICD-10 (International Classification of Diseases, 10th Edition);
- the amount of rating for each problem; and
- the rating for the sum of the problems.
Many LE reports include the percent mortality which the medical problems represent, the date of the report, and the identification of the person responsible for the report.
Ultimately, a mortality load will be determined for the use in an actuarial valuation model to determine the percentage compared to standard mortality so that a probabilistic approach is used for determining life expectancy as well as pricing of the economic impact for doing a life settlement or other mortality based transaction.