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Traditional “Death Markers” Increasingly Off Target

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News: “Ever so quietly, insurance industry number crunchers are tossing aside the old statistical models and life tables.” — If You Plan to Make It to 100, Plan Very Well,” The Wall Street Journal Sunday, Feb. 12.

Views: As the article mentions, life insurance underwriters are indeed transforming company underwriting manuals, determining that heart disease and several forms of cancer are no longer the “death markers” they once were. Many people with preexisting conditions who used to be uninsurable are now insurable.

Take for example MassMutual’s announcement late last September that the company had made significant revisions to its life insurance underwriting guidelines for people who have battled breast cancer, based on a review of recent medical research. “The end result: more breast cancer survivors than ever before are likely to be eligible for life insurance coverage, and often with lower premiums,” MassMutual’s press release noted.

The Wall Street Journal article calls the trend “the new death calculus,” and points to compelling changes to U.S. life expectancy statistics: “Since 1940, American men have gained about a year of life expectancy — and American women, 1.1 years — with every five-year period. If we merely hold to the same pattern … average life expectancy at birth by the end of this century will be close to the century mark.”

Bottom Line: Insurance companies realize that serious health problems that used to frequently lead to death are increasingly treatable and manageable, and they are smartly adjusting their underwriting practices to offer coverage to previously uninsurable people. On the flip side, many people are now living much longer than they would have before advances in modern medicine, but they are not necessarily saving the additional money that will allow them to live out these extended golden years in the lifestyle to which they are accustomed.