Life Expectancy Underwriting and Life Expectancy Calculators are NOT the Same Thing Redux
There continue to be those in the life settlement marketplace who promote online calculators as a quick, free means of determining life expectancy. As we’ve said before, life settlement calculators and underwriting are NOT the same things. Put another way, calculation is the last part of a thorough underwriting process, but without a proper underwriting process, life settlement calculators found online have VERY LIMITED value.
Beware of Life Expectancy and Life Settlement Calculators
Self-reported data guided by questions written by an unknown party is simply less useful — and less reliable — than underwriting. How a question is written, who poses the question, their biases, incentives, and opinions, can all influence the outcome produced by the calculator. It is important to note that most online calculators are promoted by life settlement companies operating as either brokers or providers (i.e., buyers) working on either the sell side (brokers) or buy side (providers) of the marketplace. The vast majority of these companies are NOT taking longevity risk, and they are NOT life expectancy underwriters.
Granted, online life settlement calculators of all kinds are used across many industries to entice (or induce) consumers to engage in selling a car, jewelry, furniture, or in the case of life settlements, an unwanted or unneeded policy. So long as the user understands that the purpose of the calculator is to encourage engagement with the industry and the company promoting the tool, there’s nothing intrinsically wrong with the marketing focus of these tools. However, it remains critically important to remember that only through a properly designed, objective life underwriting process can life expectancy be objectively assessed.
Importance of Life Expectancy Underwriting
Remember, the critical component of life expectancy underwriting is the level of impairment applicable to the insured (i.e., the inputs), not the calculation. It is these inputs, which most older aged insureds and non-underwriting professionals are either unqualified or very poorly equipped to understand and enter into these calculators, that have the greatest effect on the output, the calculated result. As the old saying goes, Garbage In, Garbage Out.
Learn more about how ISC Services uses objective medical records and data to create accurate, analytical life expectancy assessments through life expectancy underwriting.