When first hearing about life expectancy reports, most people think in terms of macro-longevity (i.e., life expectancy based on population data) because they are unaware that there is a way to assess micro-longevity (i.e., individualized life expectancy estimation). A micro-longevity assessment does not provide a perfect answer, but it is a far better approach to answering the question of “How long can I expect to live?”
What is a Micro-Longevity Assessment?
A micro-longevity assessment is individualized as compared to looking at a giant mortality table based on a very large population. Most publicly available mortality tables are “population-based” and do not take an individual’s unique characteristics into account. These tables can be “free,” but you get what you pay for, and they are certainly not tools suitable for micro-longevity assessments. Outliers within averages and that which is unique about individuals are what micro-longevity reports evaluate. These assessments produce a mortality curve that's based on a population of 1000 like-kind individuals who have similar characteristics, and not just the attributes of the general population, which contains huge variations that are not helpful to assessing micro-longevity risk.
There is a vast difference in the average life expectancy of the general population versus the underwritten population. People who qualified for life insurance in the past were underwritten when they applied. Thus, they have demonstrated that they were ”insurable,” and thereby healthy enough to buy life insurance. Not everyone qualifies and these applicants are deemed “uninsurable.” The underwritten population tends to be financially better off, healthier, and they tend to be more forward thinking (the reasons for buying life insurance are driven by concerns and expectations about the future). They have a more stable lifestyle and tend to live well into their 80’s, while the average American’s life expectancy is 78. As you drill down into the older aged, insured population, you find more and more differentiation. People that are severely impaired, people that are slightly impaired and everything in between.
A Market for Micro-Longevity
Life Settlement Industry
With the most accurate life expectancy information available, life settlement professionals can help clients decide whether to explore a life settlement and secure the highest offer possible for their unwanted or unneeded life insurance policy. The value of the policy is tied to the life expectancy of the individual insured it covers, and life expectancy assessments issued by companies that specialize in evaluating micro-longevity risk.
Financial Planning Industry
Consumers that interact with the life settlement market are, by definition, insured, but consumers participating in the financial planning market may not be. However, life settlement is not the only reason micro-longevity assessment is important. Older age consumers need to know how long their money will last in retirement and be able to address other concerns tied to their individual life expectancy. This is when a micro-longevity assessment can help. To more thoroughly evaluate and plan for retirement and related issues, a micro-longevity life expectancy assessment is warranted, and can serve as the basis for comprehensive planning and personal risk management.
Senior Living Industry
There's a certain amount of commonality amongst residents of a particular senior living community. Most of them see the same doctors, are members of the same church, went to the same schools, and so on. When you have that kind of homogeneity amongst a population, there is a certain amount of predictability in outcomes related to their expected mortality. Proper application of micro-longevity underwriting can be very helpful in evaluating and managing longevity risk within such a group.
Survivability tends to increase in a senior living community, but that’s predominantly a social factor. When residents are engaged with others, as opposed to not being engaged because there's nobody to engage with, there are benefits in terms of well-being and life expectancy. If seniors find themselves in an environment where they can re-engage with other people, whether it's someone of the opposite sex or not, then their survivability increases. All of these factors are meaningful for determining financial outcomes for senior living and care facilities. By assessing the members of a community through a uniform and consistent progress facility, operators can better manage resources and care across their resident populations.
Talk to the Experts
Now that you understand how ISC’s reports differ from a typical life expectancy calculation, don’t reach for a generic mortality table the next time you’re trying to determine an LE. Instead, contact ISC Services to help you evaluate and assess the data for an accurate, individualized report.
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