Ask Dalene Assessing mortality vs morbidity

What is the difference between assessing mortality and morbidity? Dalene Allen, underwriting expert and co-founder of specialist long-term risk cover provider, Altrisk, answers this underwriting question brokers often grapple with.

At first glance, the difference between mortality and morbidity is clear. The former investigates the risk of a person dying either before or after the age predicted by actuaries. The latter considers the risk of an individual becoming disabled or impaired during the course of his or her life in relation to population statistics.

Risks covered

However, these scenarios are very different in terms of the risks to be covered and brokers need to bear this in mind when advising their clients on the options available to them.

The first consideration is the type of cover being addressed. In underwriting terms, mortality comes into play when making an offer to provide life cover, while morbidity is assessed when providing protection against disability and loss of income.

Secondly, the time-frames are different. With life cover (mortality) the protection is for an event that will happen sometime in the future. With disability and income protection (morbidity) a person can be involved in an accident that has an immediate impact, or can develop a condition that is likely to affect him or her within 10 years. So a shorter-term view is required when assessing morbidity risks.

Divergent risks

There is also a need to separate life expectancy from diseases that may kill in the long-term, but could disable in the short-term (e.g. a stroke may not be fatal, but could result in partial paralysis). And, while some diseases do not affect life expectancy, they are debilitating. Things like depression and back pain affect quality of life and possibly the person's ability to work.

Finally, life cover (mortality) protects against a definite event that will occur at an unknown time, while disability and income protection (morbidity) cover events which may or may not occur. The risks are completely different.

Impact on claims

This influences the claims process. With life cover, the claims event is clear. With disability and income protection, the person's quality of life and ability to work after the event are arguably more important than the event itself. Here, claims assessment is far more ambiguous, because a judgement call is made on a person's ability to carry out activities of daily living and perform the occupation and duties he or she disclosed at application stage.

This is why brokers need to encourage their clients to make full and accurate disclosures when applying for insurance policies. It is also vital for clients to inform brokers of changes, and that these are promptly communicated to the insurer.