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Insuring an Aging Population

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The U.S. population is aging rapidly. Today, 1 out of every 9 Americans is “old” — another individual turns 50 every 8 seconds. Those aged 65 and older now exceed 35 million, a number poised to explode. January 2011 ushered in the first 65 year old of the approximately 77 million baby boomers, born from 1946 through 1964, who are surging toward retirement (, Human Aging — A Recent Phenomenon 2011).

The latest brief on data from the 2010 U.S. Census shows the numbers of seniors increasing faster than younger populations, raising the nation’s median age from 35.3 in 2000 to 37.2 in 2010. Seven states have a median age of 40 or older.

Despite the common perception that baby boomers are more active and fit than their parents’ generation, this population tends to have more impairments. Roughly onethird of boomers are obese and another 36% are overweight, according to a 2011 Associated Press – poll. The poll also found that only half of boomers exercise on a regular basis, and 37% do not perform strengthening exercises, which are important for combating muscle and bone loss in seniors.

This demographic makes it challenging for agents and brokers looking for life insurers to take on their risk. But for carriers that take a more indepth look at these potential policyholders, it is possible to insure many of these aging Americans with affordable coverage. Fortunately for our industry, some carriers have developed innovative and comprehensive risk analyses that consider much more than traditional impairments. These forwardthinking evaluations take into account other critical applicant factors — such as current lifestyle and activities along with past health patterns — to enable carriers to offer better underwriting terms and, ultimately, more competitive premiums.

A Lucrative Opportunity

This trend may, in turn, help producers and distributors boost their businesses. The numbers speak to the huge opportunity. Between 2000 and 2010, the U.S. population between the ages of 45 and 64 grew 31.5% and now makes up 26.4% of the total population. By 2012, America’s 50-plus population will reach 100 million (U.S. Census Bureau 2010 Census brief), and 1 in 5 people will be 65 or older by 2035 (UN Population Division report, 2010). This is a lucrative and growing pool of clients, currently underserved by those carriers that have traditionally taken a stricter actuarial approach to evaluating client risk.

From an actuarial point of view, insurance is about taking factors like age and gender and finding an expected mortality for each group based on these factors. Then there’s the collection of applicant information, which is reviewed for indicators that might put the person outside of the expected mortality for his cohort. But at Genworth, one of the key points our research has shown is how the history of an applicant’s impairment(s), combined with knowledge about his or her lifestyle, gives a much clearer picture of the risk that a carrier is taking on with each applicant.

For example, Genworth has been studying how specific impairments relate to each other. What is the interrelationship, for instance, between osteoarthritis, asthma and heart disease? Clearly asthma and heart disease may be related in terms of comorbidity (from a cardiovascular perspective), but the osteoarthritis may have no bearing on this applicant’s longterm survival. Smart carriers are using precision analyses to separate out factors such as these to make sure applicants are not overcharged for having multiple impairments.

Genworth also evaluates the natural history of the disease. How is it acting in each applicant? Is it progressing slowly or rapidly, or is it stable? For example, if a client has had asthma for 70 years and is now developing chronic obstructive pulmonary disease (COPD), this may indicate that this person is a robust, longterm survivor who may be able to live for an extended period with encroaching pulmonary disease. On the other hand, an applicant who has had asthma for 20 years and is developing COPD may actually be a higher risk because the disease is evolving faster.

Moving Beyond Medical Problems

Medical science is now able to find signs of disease earlier than ever. The challenge for many carriers is that, as doctors cast the net of diagnosis wider to an earlier stage and age, insurance applicants are labeled much sooner in life — often long before any real morbidity issues pop up. For example, when PSA testing became popular, many men found to have tiny malignancies were labeled with prostate cancer. Ironically, these men with “cancer” were generally healthier and their insurance risk was lower than men from the previous generation diagnosed with prostate cancer at a later stage of disease. With new monitoring and treatment techniques, prostate cancer can now be watched and controlled much more effectively than in the past. Underwriters need to account for and deal with these trends.

Adding to the challenge, underwriters must do this analysis in the present day, without the benefit of being able to wait for all the results of longterm medical studies. However, smart carriers are looking at other factors that drive an applicant’s morbidity and mortality. 

As people age, they are bound to have some impairment or impairments. To determine where they fall on the spectrum of severity — and financial risk for a carrier — involves looking not just at their medical problems but at the level at which they function. Smart carriers are looking at applicants’ vitality along with their interest in and ability to participate in the “good life.” Connecting with other people is especially important. Are they active in organizations and programs in their community? Are they involved in their religious or spiritual community? Do they exercise?

On the other hand, have applicants’ physical or behavioral impairments forced them to give up something important in their life? Can they still travel for vacation or to see grandchildren? Or are they “stuck” close to home? One of the important factors that Genworth’s research has uncovered is that older applicant’s risk rises not necessarily as her age increases, but as her world shrinks due to impairments, whether physical or cognitive.

Moreover, this is why some carriers can view even a 75yearold applicant with a diagnosis of three or four impairments as still “healthy.” If they are vibrant and rigorous, they deserve credit for that fact.

MultiDisciplinary Approach

Savvy carriers realize that healthcare professionals are working with older applicants to shift diseases that were once debilitating or deadly into the category of “background noise.” With that trend continuing, insurers now look not just for medical problems, but for early signs of frailty that may lead to an inability to participate actively in life. We can expect an 80yearold man to have multiple impairments, but if he shows minimal signs of becoming frail, this may indicate that he will be a longterm survivor.

As the U.S. population ages, it is imperative that underwriters look at their job strategically and make certain that the application process includes such tools as a multidisciplinary geriatric assessment. More and more today, carriers are using tactics such as phone interviews with applicants to examine such factors such as cognition, orientation, the applicant’s ability to perform the activities of daily living (like bathing) along with instrumental activities like driving. Carriers are also looking at cognitive abilities, such as recall and decision making.

In short, are older applicants able to work? To travel? Are they living as if the world is their oyster? Answering all these questions enables carriers to unveil not only bad risks, but, more importantly, pinpoint the good risks.

This, in turn, allows life insurers to offer the huge market of older Americans better pricing and greater accessibility. Because the demographic group most critical to the growth of the life insurance sector may be the U.S. baby boomer, this type of risk analysis will become increasingly crucial in years to come.

Dr. Marjorie Keymer, chief medical director, and her team of insurance medical experts support Genworth’s life insurance business through research and development of underwriting innovations as well as training and renewal of medical underwriting knowledge both inside the company and across the life insurance industry.