Insuring an Aging Population

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.