A decade ago, writing life insurance on someone from the age 70-plus swim team or the 80-plus sunrise walkers' club was not on the radar screen for most advisors and underwriters. Not much product was available for the mature set, and not many older folks were interested or thought they could qualify.
But in the past couple of years, sales to people ages 70 to 90 have been up, says Lynne Rosenberg Kidd, chairman and CEO of Innovative Solutions Insurance Services L.L.C., Los Angeles, Calif.
So have applications. For instance, the Medical Information Bureau, Westwood, Mass., reports that in January 2006, life insurance applications in the age 60-plus category were up 7.8% compared to the previous month. They were up for ages 0-44 and 45-59, too, but by a lesser amount–1.1% and 4.6%, respectively.
This slowly rising tide is spurring advisors to re-think offering life insurance to older seniors and if so, how to be effective and successful.
Life insurance is good for "older people who have assets just sitting there and a financial reason to protect them," says Kidd. People ages 75-80 can and do qualify, even if they have some health problems, she points out, citing elders with well-controlled diabetes as an example.
In fact, she recently sold a life policy to an 81-year-old individual with a preferred rating. She also sold one to an 83-year-old man who is still intimately involved in his business. Another advisor just placed a 90-year-old client.
"No question, a big reason for the growth in the older age life market in 2004 and 2005 was the growth of investor-owned life insurance," says Jeffrey Suyematsu, senior vice president of sales in the life division of Allianz Life Insurance Company of North America, Minneapolis, Minn.
(In fact, investor- and corporate-owned life insurance were contributing factors to total industry sales in the first quarter of 2006, notes LIMRA International's new U.S. individual life insurance sales report.)
Increased regulatory scrutiny into investor-owned life insurance and also opposition to such plans by several industry trade groups and insurers should curb some of the older market sales, predict sources contacted for this article. (Note: This may already have started to occur. Application activity tracked by MIB in recent months shows declines in apps for the age 60-plus category.)
However, interest in older age life sales will likely continue, predicts Suyematsu, whose company accepts cases up to age 81.
Why is that? For one thing, the wealthy old continue to be an estate planning market for life insurance, despite ongoing uncertainty about federal estate tax laws, he says. They're interested in wealth transfer to children and grandchildren, he says, and they appreciate how life insurance does this "efficiently, income tax-free and if structured properly, estate tax-free."
