Study questions late-age mortality rates

Jul 18, 2005 @ 12:01 am

By Gary S. Mogel

NEW YORK - While noting that the overall mortality rate in this country generally is declining, a recent study has challenged findings from other reports and insurer mortality tables that show that medical advances and better living conditions have lowered mortality rates across the board.

"Though many studies have indicated a decrease in mortality [rates] in the U.S., this is not uniformly the case - especially among women," said Al Klein, a senior consultant in Chicago for the Tillinghast business group of Towers Perrin in Stamford, Conn. "The study indicated that there are pockets in which mortality rates are higher than they were 20 years ago."

Life insurance policy mortality rates of people over age 50 are influenced the most by smoking, cancer and cardiovascular disease, according to the "Older Age Mortality Study," released last month.

The study could lead to changes in how life insurance is underwritten, said Mike Taht, a Tillinghast principal. Better screening methods might be developed to determine whether applicants smoke, or have or could develop cancer or heart disease, he said.

As baby boomers continue to age and as more insurers have life insurance on people in their 80s and 90s, it has become critical for insurers to enhance their understanding of mortality at advanced ages, the study noted.

The numbers showing improving mortality for most demographics might not have been accurate, because they were extrapolations from younger ages, while the Tillinghast study focused specifically on an older age group, Mr. Klein said. "The lack of data in the past - especially for females - resulted in some wrong estimations," he said.

Data from 38 life insurers that paid $18 billion in benefits for more than 1 million deaths from 2000 to 2003 were included in the study. Results reflected mortality patterns of people whose lives were insured by these companies, and not the mortality of the general population.

Insured mortality is generally lower than population mortality because people who buy life insurance generally are better off financially and have more access to medical care, the study authors said.

Women were more affected by smoking and cancer than men. The mortality difference between female smokers and non-smokers was triple the difference between male smokers and non-smokers, the study found.

Cancer was the leading cause of death, as measured by policy face amount, for 33% of the males and 37% of the females. Cardiovascular disease was the leading cause of death by policy count - 33% for males and 32% for females.

Accidental and violent deaths were considerably higher in the first few years that the policies were in force, and tended to have higher-than-average face amounts, Mr. Taht said.

Because of "adverse selection," Mr. Klein said, "it's possible that insurance companies are being selected against by persons who know they may encounter accidents or violence, such as by driving too fast or having a dangerous hobby."

"The data can also serve as an impetus for insurers to develop more-innovative approaches to expanding their product offerings for older individuals," he said. "A number of companies were previously not comfortable writing life insurance on older age groups, because there was no reliable loss experience out there. Now they have more confidence."

Life settlement companies also are becoming more comfortable with the mortality figures on older insured people, leading to further expansion of that business, Mr. Klein added.

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