But When Will you Die?

No, this isn’t the question being asked by grumpy life companies about aggregators, or even the cry of a dejected broker unhappy with underwriting service. Believe it or not, people are interested in when they think they might die. 

Of course no one really knows when they will die – and they can’t guess. But it is useful to think about it because it can inform action right now: Should I try and improve my health? Do I have enough saved for retirement? Should I buy insurance? When people think about their expected lifespan the interesting thing is they get it wrong all the time, and they get it wrong in two different directions depending on their age, for example:

Folk in their 30s usually think that they are bullet proof. This is not so much about thinking they will live to 110 when their actual age adjusted mortality is, say, 82, it’s simply a refusal to acknowledge any meaningful risk right now. A small number are wrong – but very, very, wrong, with catastrophic impact.
Folk in their 70s think that they will die soon, a very small number will, and the consequences of that will be sad – but not devastating. The consequences of living longer than expected are more desirable, and also more serious. But by then it’s usually too late. A special memo to any passing superannuation provider – you should put this calculator on all your websites and get members to update it once a year.

This explains the popularity – if it can be called that – of sites that enable the calculation of life expectancy, or “personal disability quotient” – i.e. how likely you are to get disabled, and even your “real age” which is a great favourite of the ‘wellness’ industry. 

The first approach tells you your risk of death and / or disability – usually expressed as a percentage chance of being disabled or dying between your current age and an age in the future – usually age 65. These can be great sales tools. A really good one is published by the council for disability awareness at www.disabilitycanhappen.org – although I am sure there are many others.

The next approach is to provide you with an adjusted life expectancy. www.moneycentral.msn.com – choose the life expectancy calculator. With this kind of tool you get an adjusted life expectancy. 

The third form of the approach is very similar to the last – except in one concept which may account for its popularity – this form gives you an ‘adjusted age’. They sometimes refer to it as your ‘health age’ or ‘biological age’ or even ‘real age’. It’s just another way of looking at the same thing as a different life expectancy. But if you are a man aged 48 and you’ve been told your ‘real age’ is 39 that’s a much better sounding proposition than being told you’ll live until you are 97. It may all be in the mind, but it’s the difference between telling yourself you could still pull a woman in her thirties and facing an extra ten years pulling on incontinence pants. A good example is at www.realage.com – although I did see a kiwi version offered by a wellness firm a few years ago, it’s no longer about. 

Therein lies one of the problems. What is the payoff for running an online calculator for the morbidly inclined? Having been one of many people who has failed to sell life insurance online these tools always interest me. But unless they are part of a wider product offer they are unlikely to provide much in the way of revenue. I figure the natural on sale is life insurance. But it seems some of them figure that it’s actually vitamins, seminars, and massage. There are dozens of good jokes about the difference in attitude there, but I realized that I was on the wrong side of most of them. Insurance is, really, the ambulance at the bottom of the old cliff. What’s more, when the ambulance turns up, it’s only going to take your bank balance away and repair that. So maybe the vitamin folks have the right intention – even if their tools may be weak.

But assuming both life companies and the websites have good commercial reasons for assessing the life expectancy of people accurately (within reason) they should ask similar questions. The surprise is that they don’t. We can discount all the questions that the online calculators don’t ask because they don’t have proper human underwriters looking at the information. Frankly, they also don’t want to come up with an answer that is too bad either – no one wants to come up with a result that shows them dying next Wednesday. But where the online calculators ask extra questions which our own life and disability insurers don’t ask I get curious. Who’s right and who’s wrong? Or does the insurer get the information another way? Let me give you three examples:
A common question in the calculator is to ask whether you have had any recent speeding infringements. This is a matter of record, and I suspect the answers would be more accurate than those given by 90% of the people filling in a typical alcohol question on a life application. So why don’t our insurers ask – or doesn’t it matter?

Another question is how much exercise you do. Again, insurers ask for other behavioural information, such as sexual activity and drug taking, at least as open to non-disclosure as having a big tubby chap look sideways and twist his moustache while he tells you he runs three times a week. Our insurers – don’t ask – but they do get height and weight, so we might let them off the hook.
Then there’s a personal favourite of mine. It’s also (according to one site) the biggest reason I cannot expect to live past 90. It’s personality type. The multi-choice question runs “How would most of your friends describe you…” and then offers some choices. Here’s a tip. The option which best corresponds with “couldn’t really give a shit about anything” is apparently worth about an extra five years. 

Back to Recent Articles