Reply To: Mortality Improvement (GI & SI products)

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Again: very much appreciate your responses!  You are definitely right about anti-selection w/ this product and the importance therefore of marketing/distribution.

Unfortunately I couldn’t find any Limited Underwriting tables aside from the one from the 2008 VBT :-/ So I can’t compare different eras.

We do account for anti-selection in our mortality assumption.  We have seen the phenomenon in our actual experience and have baked it into our qx assumption.  Now, I’ll admit: I don’t know if I fully grasp your concept of anti-selectors overwhelming mortality improvement (but I would definitely like to understand your thinking on that).  Wouldn’t the anti-selectors themselves also experience mortality improvement, even in the early years, or am I missing thinking about something?  I mean, GI buyers are definitely the worst of the worst in terms of their general health compared to the rest of the population– hence why they can’t get underwritten for a fully underwritten (or even simplified issue) policy and have to buy GI.  But couldn’t we say that even the people today in poor health are still likely to live longer than individuals who were in poor health, say, 30 years ago?  And wouldn’t that indicate improvement?  My point being: couldn’t we say basically “a rising tide lifts all boats” in the field of medical advancement?  Or is that an incorrect assumption?

It just occurred to me: it might be worth it to look at what the majority CODs for our GI policies and then research and see if the average lifespan for those specific conditions has increased at all over the years.  What do you think of that?  (Similar to you I’m definitely just spit-balling here of course.)

Whenever I think of mortality improvement, I think of medical advancement.  It seems, possibly, people who buy GI are more likely to have chronic illnesses and chronic conditions in general, and advancements in medicine typically target treating and/or curing common illnesses/conditions, so that’s why I was thinking GI people might benefit more from medical advancements than the average person.  Maybe: am I missing an aspect of mortality improvement other than medical advancement that is key to this discussion?

Now thinking about it, I also am thinking that, because these are low-income individuals mostly, and individuals needing greater-than-average medical attention, the age 65+ issue ages (and issue ages close to 65) might benefit relatively more from Medicare (and SS) than the under-65 group (the difference relative to other products and the general population that is).

We do have a high first-year lapse rate by the way (~38%)  and we do mostly sell through Brokerage, although we do have good monitoring in place with the goal of getting rid of the agents that sell business with the worst mortality and even worst lapse experience.

Much of this post is just me thinking out loud, and I definitely appreciate any insights you may have in any way/shape/form.  That said, my main question I think was: why do you think the anti-selection would overwhelm any mortality improvement?  If we account for anti-selection in our qx assumption, why couldn’t we also assume that poor-health anti-selectors would be subject to mortality improvement in the same way the rest of the population is (even in early years)?  What am I missing here?