Life expectancy underwriting is a critical component of the life settlement industry, as it determines when premiums must be paid and when investors in the secondary market will collect death benefits. It’s essential to understand how different underwriting models used by insurance companies and investors differ and how recent changes to mortality tables can affect life expectancy estimates for insureds as they age.
Differences Between Insurance Company and Secondary Market Underwriting Models: Insurance companies often use different underwriting models than those employed by secondary market investors to evaluate longevity risk. These models may consider certain socioeconomic characteristics of the insureds that can lead to longer projections for life expectancies than expected otherwise. Additionally, advancements in science and technology have enabled more accurate estimations of expected lifespans based on factors such as lifestyle habits or medical history; this has led many leading providers to increase their older-age mortality projections accordingly.
Impact of Revised Mortality Tables on Life Expectancy Estimates: At the end of 2018, the American Academy of Actuaries published revised mortality tables which led many leading U.S.-based providers to increase their older-age mortality projections by an average 9 – 13%. This means that individuals aged 65 or older could expect to live longer lives than previously estimated before, factoring in other variables like medical history or lifestyle habits that could further alter expectations for any particular individual’s longevity risk assessment score. Moreover, it’s important to note that different providers may offer varying estimates depending upon their internal assumptions, so it’s important for those investing in the secondary market to compare results between providers when assessing potential investments into life settlements policies issued by them.
Life expectancy underwriting plays a vital role in the life settlement industry, given its responsibility for determining when premiums must be paid and investors will collect death benefits in the secondary market; however, there are essential differences between insurance company underwriting models used to evaluate longevity risk and those employed by investors in the secondary market which should be taken into account when making investment decisions related to life settlements policies issued by any provider(s). Furthermore, recent updates made at the end-2018 to mortality tables published by The American Academy of Actuaries have resulted in increased estimates for older-age mortality projections; this should also be taken into consideration alongside other factors like medical histories or lifestyle habits when making such determinations related to other individuals’ longevity risk assessments scores in the future.
Check your life expectancy using our advanced life expectancy calculator here.