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 (Transgenerational.org, 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 – LiveStrong.com 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