Description: Recent advances in mortality modeling have enabled applicant-specific quantification of mortality risk in life insurance applicants using laboratory and physical measurements. Relative to more conventional underwriting, this approach identifies a small population of significantly under-priced policy and a much larger, cross-subsidizing group whose risk is presently overestimated. Applicants placed in the highest percentile by this scoring methodology are more than 10X as likely to die in a given period as their demographic peers, and represent approximately 5% of short-term claims. Implications for product design are substantial in both the short- and long-term, as the possibilities for adverse selection grow, and the opportunity for fully individualized pricing raises the more distant prospect of products with as many rate classes as applicants.

Description: This article focuses on these Key Points - The Situation: Mortality Improvement assumption is not a simple equation. What Could Happen: Any mortality improvement assumption is a bit of a ‘bet’ relative to the ongoing penetration of known developments and the introduction of new developments, such as the appearance of the AIDS epidemic. What Needs to Happen: Better understanding of Mortality Improvement assumption, final assumption, and best estimate approach.

Description: There are certain occasions when the knowledge we have gained in our jobs carries over into our personal lives. For instance, developing insurance products certainly helps when it comes time to buy an insurance policy. Recently, one of the authors had the experience of giving his 91-year-old grandmother, Nanny as she is affectionately called, an Extended Delayed Word Recall DWR test. This article will show that DWR tests are a powerful predictor of mortality in the elderly. As the population ages and more and more life insurance is being applied for at the older ages, having a DWR test in an underwriting arsenal is like comfort food for an actuary.

Description: This article examines the impact of a changing smoking rate on population-level mortality improvement and the importance of taking this driver into account.

Description: This article is a call to participate in industry mortality studies.

Description: This article discusses a recently completed RGA in-depth study that looked at assumptions and experience for lapses and mortality at the end of the level premium period for level term business.

Description: Discussion of a direct writer survey and a reinsurer survey conducted in the fall of 2002 by the Society of Actuaries. The surveys asked a number of questions about underwriting criteria needed to qualify for preferred risk. They also asked questions about the percentage of issues in each underwriting category and the mortality assumptions for the different categories.

Description: This article provides actuaries with general information about the Oregon Death with Dignity Act and experience for pricing of life and other insurance products.