Older Age Life Underwriting Needs New Approach, Life Conference Told

"I don't want to scare you away from this business," Klein continued, but insurers need to learn about the risks they are taking in order to underwrite successfully.

Klein reviewed a list of 21 indicators of mortality at the older ages–taken from an SOA study of older age underwriting (see chart).

"The top three indicators are current health, cognitive function and frailty," he noted, suggesting that underwriters could approach older age cases by building a program around those top three items. He identified a number of tests that could be used in all three areas, including 8 different cognitive tests (not all of equal value).

Eleven of the 21 indicators are not picked up by normal underwriting, Klein pointed out, so additional testing is required.

But not all companies run all available tests. For instance, according to Ruezinsky, fewer than half the underwriters surveyed in the SOA study said they now use, or plan to use, cognitive testing.

When they review their underwriting guidelines in the future, more may start doing so, she indicated, but not now.

There are obstacles to asking more underwriting questions and doing more tests at the older ages, conceded Klein. These include the length of time involved, the associated costs of acquiring more information, the impact on speed of issue, how competitors are handling this, and pressure from agents, among others.

Still, he said he thinks insurers will start doing more cognitive testing in the future.

Fasano added that underwriters will need to make some underwriting adjustments to current approaches. For instance, "relative additional mortality for any impairment decreases as overall expected mortality increases," he said, "so they will need to use age formulas to adjust for this."

Also, the rate of progression for some impairments won't create a life threatening event in a senior's remaining lifetime as it would for a much younger insured, he said. So underwriters will need to use "a little more liberal eye" when looking at these risks in older age applicants, he said.

Finally, some impairments–such as prostate cancer–move more slowly in older people than younger people, Fasano said. "If you are looking for opportunities, this is an opportunity in underwriting. Ask, how bad an impairment is it?"

With 75-year-olds, Fasano added, pay less attention to family history and cardiovascular risks and blood samples and focus more on cognitive function and frailty.