The old adage is true: You get what you pay for. With life expectancy assessments (i.e., “LEs”), it is certainly the case.
Many financial services websites have free tools that calculate life expectancy. Yet herein lies the problem. Individual life expectancy should not be calculated using self-reported inputs and population-based mortality tables. The mortality tables from which a mortality curve can be derived, should be tied to the population (i.e., a subset of a cohort, a very large group of like-kind individuals) of which the subject is a member. General population tables are simply not based on the population of older aged individuals who benefit most from knowing their LE. No algorithm, using self-reported information and generic mortality tables can accurately estimate the life expectancy of an individual subject. These rudimentary tools are simply too crude to provide a thorough assessment of the micro-longevity risk associated with a specific, unique individual.
Free LE tools give you exactly that — a value-less estimate that is generally biased in one direction or the other depending on who is providing the tool. If the tool is on a website focused on living longer, its estimates may be skewed to produce overly long LE results. If the site is oriented around issues related to shortened life spans, a calculator may produce artificially short life expectancy estimates. For life expectancies that are based on independently produced information evaluated comprehensively by experts, an underwriter is critical.
The Role of a Life Underwriter
Life underwriters are trained to work with health care information of all kinds and assess the mortality risk associated with individuals relative to a population of people like the subject (i.e., "like-kind" individuals). They also use mortality tables specifically designed to be used to produce mortality curves for such populations. Life underwriters go far beyond mere numbers to develop each individual LE report. They draw on years of experience working with a variety of people and apply their understanding of all the factors that affect longevity, and more importantly the interrelationships between such factors. These variables include both quantitative elements like age and gender, as well as qualitative considerations such as the social, functional, and lifestyle issues that impact an individual’s mortality risk. No free calculator can accurately produce output without this kind of thorough analysis.
Computers are not yet able to function like a human brain. They can’t accurately weigh, contrast, or compare the myriad of interrelated factors that come into play to produce a supportable, reasonable life expectancy assessment. They simply do not yet have the ability to “think” contextually, which is what is required to correctly underwrite micro-longevity risk. Therefore, life expectancy assessment isn’t something just anyone can or should attempt. It requires deep, intimate knowledge of how a variety of factors work together to influence the expected future life span of a unique individual.
ISC understands this completely. We bring a team of expert life expectancy underwriters with many decades of underwriting experience to the table. Our underwriters apply a consistent, thoughtful, skilled approach to each life expectancy case they produce, based on knowledge gained from tens of thousands of cases they’ve assessed
How Does a Life Underwriter Benefit Your Business?
Life expectancy underwriting can be beneficial to a number of different businesses. Life settlement companies, for example, benefit greatly from accurate LE reports. When a life settlement provider is evaluating a life insurance policy for purchase armed with an accurate LE, they can quickly determine the financial risk they’re willing to take if they buy the policy. Since longevity risk is the critical variable when purchasing a life insurance policy, the closer the life expectancy estimate is to the actual outcome, the better the results of the investment.
Financial planners can also use this valuable information to plan for clients approaching retirement. Again, even a year or two can throw off the recommended savings for clients. Planners run the risk of investments either not earning enough to cover their client’s entire retirement, or they may leave too much money on the table when they pass away. It’s a delicate balance to strike. With an LE report they can trust, planners can make better, more refined recommendations with more confidence and greater precision.
Moreover, life settlement providers and financial advisors can set themselves apart from the competition by providing these value-added services. With better information, they’ll be able to provide better services to their clients.
Enlisting an Underwriter
When you work with ISC, you’ll have the power of a team of underwriters with extensive expertise at your disposal. ISC performs a thorough evaluation of each subject and produces a concise, customized report that includes an individualized mortality curve and table. They evaluate each insured’s specific medical history, including all meaningful impairments, lifestyle factors like frequency of exercise, smoking, and alcohol use, social factors like interpersonal engagement, and functional status considerations including ambulatory ability and the ability to independently manage finances. Analyzing all these variables correctly produces a comprehensive LE assessment that can inform your most critical business decisions in a way generic, online life expectancy calculators simply can't.
Life expectancy is a factor that has tremendous implications for your business. Leverage the power of a thoughtful, expertise-driven approach to ensure that you make the right decisions for your business.
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