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The future diagnosis

While none of us really expect to live forever, recent research suggests that we should all plan to live longer than previous generations. The same will be true for future generations.

A report by Richard A. Miller, Professor of the Institute of Gerontology (USA), estimates that our future lifespan could increase to 112 years, with a few among us reaching 160. If he proves to be correct, this will bring a whole new dimension to the markets in which we operate.

Taking the theme of improving mortality, it is true to say this has been a major contributor in the downward trend in the cost of protection. But can this trend continue?

Actuaries have already taken into account improving mortality when calculating premiums for products on the market now.

Although these improving trends have been experienced in the insured population there remains a “gap” between the best and worst mortality groups and in the UK as a whole this life expectancy gap has widened over the last 40 years.

It is therefore important to understand the influences that contribute to the gap. In data recently released by the Office for National Statistics there is evidence that where you live affects your health and life expectancy. Factors ranging from the weather to the hardness of the rock on which towns and villages are built and what we do for a living have an impact upon mortality and morbidity expectations.

The ONS specifically highlights the geographical variations in the context of heart disease – the UK&#39s biggest killer with the highest incidence occurring in the North of England and urban areas.

Breast cancer and prostate cancer detection were found to be more common in the South.

All the above will have an impact on the way in which we design and price protection products in the future.

However, by focusing on the solutions to the real needs of our customers today, we should consider carefully some very interesting statistics from the British Heart Foundation that are not normally factored into the advice we provide on critical-illness cover.

BHF figures estimated that every year 270,000 heart attacks occur. That means someone in the UK suffers a heart attack every two minutes. Fifty per cent of those heart attacks prove to be fatal, with about 30 per cent of sufferers dying even before they reach hospital.

Of course, heart attack is covered under critical-illness contracts but to be a valid claim the policyholder would need to survive for a minimum period.

The fact is it does not make a difference what the survival period is on a stand-alone critical illness contract if they are among the 30 per cent that die on the way to hospital.

A practical and cost-effective solution is to advise your clients to consider the difference between stand-alone critical-illness cover and critical-illness cover with comb-ined life insurance.

Of course, there will be a difference in cost but this can prove to be as little as 1 per cent – making it a very cost-effective alternative to having to tell a widow that “Yes, your husband was covered for a heart attack – he just died too quickly from it.”

Which ever direction product and pricing developments take in the future, the fact remains that the solutions need to be attractive to customers. It is essential that any unnecessary barriers to buying the right type and amount of cover are removed because today&#39s consumers are still dramatically underinsured.

Research from Legal & General (Value of a Mum research 2000) shows that 91 per cent of males and a staggering 97 per cent of females have no critical-illness cover above their mortgage.

With a massively underinsured population and an array of solutions to the growing issues facing consumers, the opportunity for advisers focusing on their clients&#39 protection needs are enormous.

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