As the nation ages, so will the client base of many advisers. Fergus Bescoby assesses longevity and its impact on underwriting.
Family history does, however, remain a useful factor when examining longevity instead of mortality. An applicant whose parents lived to old ages could well do the same and this is obviously a good sign for the underwriter.
Body mass index should also be looked at in a different light. Traditionally, for younger lives, underwriters view values slightly under the average more favourably than above-average levels.
For older lives, however, a below-average result may be a sign of an underlying medical condition which in turn could signal deteriorating mortality. Underwriters should therefore view slightly above-average BMIs more favourably than a below-average value.
Smoking history becomes more complex at older ages and the fact that someone may be an ex-smoker at application stage does not mean it can be ignored. A 65-year-old, for example, who stopped smoking five years ago may already have a 40-year history of smoking a packet of cigarettes a day.
While lung tissue has been shown to be able to repair itself after quitting the habit, the damage done over a lifetime will not be repaired over the client’s remaining life expectancy.
Avocations in an underwriter’s eye are normally a sign of greater mortality risk but when considering an older life, these can often be a good indicator of the applicant’s stamina and mental faculties.
Underwriters should consider activities such as scuba diving or piloting aircraft as a sign of more robust cardiovascular health and (in the case of piloting aircraft) high mental acuity. In fact, an active lifestyle in general should be viewed as a positive indicator.
So what impact does this have on underwriting? There is no doubt we will be seeing more older lives entering our underwriting pools and the underwriter needs to be conscious of the different approach required in assessing these risks.
It can be expected that when a person reaches older age there will be a reasonable amount of medical history. This will include several minor conditions which may well be disregarded, but will also include some more serious conditions which need to be factored into the overall underwriting decision.
The difficulty is deciding which of these conditions are part of the normal ageing process (and are priced for in the premium rate) and could be deemed normal in an elderly client, and which of those conditions warrant an additional loading.
Certainly, most elderly clients will have an element of vascular disease, high blood pressure and/or type 2 Diabetes, which may be regarded as ‘normal’ for their age.
The type of cover available is generally restricted to life cover only, with a few limited forms of critical/serious illness and disability cover available by certain providers. Non-medical limits are very small for the older lives and in most cases a medical exam and or a GPR will be requested.
Fergus Bescoby is underwriting development manager at PruProtect
