Longevity protection : Fact or fiction?
Recently, two prominent insurers announced their 2015 claim statistics and both companies emphasised the fact that longevity is a reality of our time.
Competing for market and mindshare in a very saturated long-term insurance industry is becoming increasingly difficult. Growth is limited because the differentiating edge no longer revolves around refining existing products.
Key insight
However, it seems that local and international demographic and economic changes might provide insight into growth opportunities within the long-term insurance industry. This is because statistics point to the fact that we will probably live longer, and need the financial means to sustain this extended lifetime. In turn, this could perhaps make longevity protection the industry’s biggest growth opportunity.
Widely documented statistics indicate that global life expectancy for both male and female increased from 65.3 years in 1990 to 71.5 years in 2013, with female life expectancy being slightly higher than men. If trends seen over the last 23 years hold, by 2030 global female life expectancy will be 85.3 years and for males this could stand at 78.1 years.
There are a number of reasons for this increase in life expectancy including the eradication of diseases that were previously fatal as well as medical advances that can prolong life significantly.
Balancing the scales
Are you still not thinking that longevity has become a commodity to factor into risk insurance? Countries like Australia and the UK are fast-tracking the impact of longevity on their workforce and economy by increasing their official retirement age.
Australia’s countermeasure for longevity becoming a risk to the economy includes increasing their retirement age to 70 by 2035. In the UK, the official retirement age will increase from the current 65 years to 67 by 2028.
Turning trends into opportunities
The trend of aging populations, along with a decrease in fertility rates across the globe, seems to fuel the so called perfect storm. This it why is has never been more important to take longevity into account when you and your clients determine the best path for them to reach their desired level of financial wellness.
Surely the majority of us want to live a life where we can enjoy our golden years in a way that we always dreamt about? These days, this does come at a price, but a solid - yet individually tailored longevity benefit - could provide what is needed for your clients to live their dreams their way.
Longevity cover has proven to be just as important as critical illness, income protection and disability cover because statistics tell us that the older we get, the more likely we are to contract a critical illness or become disabled. Having the funds to pay for specialised treatments and smart drugs - or simply just being able to afford a longer life - is now within your clients’ reach.
The bottomless well
With specific reference to critical illness, if your clients survive a qualifying critical illness, certain benefits enable them to receive additional pay-outs (over and above their critical illness benefit) for the rest of their life. This means that their critical illness cover will simply never run out.
Also, in cases where clients become disabled and unable to work, they can receive up to 50 per cent extra disability pay-outs. Then, at age 80, if the client has not claimed before, certain insurers will pay-out a significant lump sum that can supplement their retirement income in the long run.
Last but certainly not least, when your clients retire, existing longevity protection benefits can ensure that they receive between 30 to 45 per cent of their risk premiums back that will boost their retirement savings, should this be combined with other benefits.
