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Insurers adjust to aging U.S. population Policy terms, rates relax as more people live longer

By Christine Dugas, USA TODAY

July 14, 2003

Longer life spans and medical advances are prompting life insurers to lower rates for older Americans.

At The Hartford Financial Services Group, for one, rates for Americans 70 and older have fallen 5% to 20% this year. Others are increasing age limits and adding more price categories for seniors.

It's no wonder.

By 2035 the 70-plus age group will more than double, from about 26 million last year to 57 million, according to Census Bureau estimates.

''It's where the action is,'' says Joel Seigle, at Transamerica Occidental Life Insurance. Transamerica is raising the age limits for its term life policies.

Manulife USA has added a preferred rate category for older customers. ''Increasing amounts of knowledge about older age people enables us to better sort them into different risk categories,'' says Robert Cook, president of the U.S. insurance division of Manulife USA.

Insurers also are relaxing criteria for preferred rates for seniors. Among things that count less heavily against them:

* Family medical history. If people reach age 70 in good health, their life expectancy isn't likely to be affected by diseases that run in their family, experts say.

* High blood pressure, cholesterol. Slight increases are normal as people age and have little effect on life expectancy, says Ann Hoven, chief medical director for Hartford Life's individual life division.

* Weight. ''When people get older, extra pounds are associated with longer life,'' Hoven says. If someone older is underweight, that can be of concern.

Older Americans haven't been big buyers of life insurance. In 2001, consumers age 65 and older accounted for just 4% of life insurance policies sold in the USA, according to the most recent study by LIMRA International, an insurance research organization. As a group, they represent about 13% of the U.S. population.

Typically seniors are interested in cash value policies, such as whole life and universal life insurance. Those have a death benefit as well as a savings or investment feature and are designed to last for the policyholder's lifetime. Older consumers often buy these policies for estate-planning purposes.

Term insurance, by contrast, provides only a death benefit. It usually appeals to parents with small children who want be able to replace their income if they die before their children are grown.

But in the last year or two, more seniors have been buying term insurance, Seigle says. On just one day last week, his company sold more than 20 term policies to consumers in their 60s or 70s.

One reason: As investment assets shrank during the bear stock market, some older consumers have purchased term insurance to make sure their spouse is provided for if they die first.