Underwriting the elderly: the utility of DWR, part II

Cognitive function is an important predictor of mortality in the elderly. Over the past few years, an increasing number of life insurance companies have incorporated screening for cognitive impairment into the underwriting process at older ages. Many different test instruments provide a measurement of cognitive function. Among these, the 10 word delayed word recall test (DWR) offers the best opportunity to study mortality directly, because of a long history of use in long-term care risk assessment. This article revises and extends a previous report published in the Journal in 2006 looking at the relationship between DWR score and mortality.     

Diverging Mortality Inequality Trends among Young and Old in the Netherlands*

We analyse the trends in inequality in mortality across poverty groups at different ages over the period 1996–2016 in the Netherlands. In addition, we examine whether these trends are related to unequal changes in avoidable mortality, separated by preventable and treatable causes of death. We find that while inequalities in mortality have decreased at ages up to 65, inequalities increased for the oldest age groups. The decline in inequality at the younger ages can, to a large extent, be explained by a strong decrease of mortality from preventable and cardiovascular causes among the poor. The link between inequality and avoidable mortality at the oldest ages is less straightforward. The increasing inequality at old age might be the result of the inequalities shifting from the young to the older age groups, or of the rich benefiting more from the recent health (care) improvements than the poor.     

Exercise test on the older patient: is it still as predictive as for the younger patient?

Exercise testing predicts both cardiac events and mortality after age 65, just as it does for younger patients. In both age groups, functional aerobic capacity itself is a potent indicator of mortality risk. In the elderly, achievement of predicted functional aerobic capacity identifies favorable mortality even in the presence of CAD and CAD risk factors.     

Mortality Measurement at Advanced Ages

Abstract

Accurate estimates of mortality at advanced ages are essential to improving forecasts of mortality and the population size of the oldest old age group. However, estimation of hazard rates at extremely old ages poses serious challenges to researchers: (1) The observed mortality deceleration may be at least partially an artifact of mixing different birth cohorts with different mortality (heterogeneity effect); (2) standard assumptions of hazard rate estimates may be invalid when risk of death is extremely high at old ages and (3) ages of very old people may be exaggerated. One way of obtaining estimates of mortality at extreme ages is to pool together international records of persons surviving to extreme ages with subsequent efforts of strict age validation. This approach helps researchers to resolve the third of the above-mentioned problems but does not resolve the first two problems because of inevitable data heterogeneity when data for people belonging to different birth cohorts and countries are pooled together. In this paper we propose an alternative approach, which gives an opportunity to resolve the first two problems by compiling data for more homogeneous single-year birth cohorts with hazard rates measured at narrow (monthly) age intervals. Possible ways of resolving the third problem of hazard rate estimation are elaborated. This approach is based on data from the Social Security Administration Death Master File (DMF). Some birth cohorts covered by DMF could be studied by the method of extinct generations. Availability of month of birth and month of death information provides a unique opportunity to obtain hazard rate estimates for every month of age. Study of several single-year extinct birth cohorts shows that mortality trajectory at advanced ages follows the Gompertz law up to the ages 102–105 years without a noticeable deceleration. Earlier reports of mortality deceleration (deviation of mortality from the Gompertz law) at ages below 100 appear to be artifacts of mixing together several birth cohorts with different mortality levels and using cross-sectional instead of cohort data. Age exaggeration and crude assumptions applied to mortality estimates at advanced ages may also contribute to mortality underestimation at very advanced ages.     

Mortality Measurement at Advanced Ages: A Study of the Social Security Administration Death Master File

Accurate estimates of mortality at advanced ages are essential to improving forecasts of mortality and the population size of the oldest old age group. However, estimation of hazard rates at extremely old ages poses serious challenges to researchers: (1) The observed mortality deceleration may be at least partially an artifact of mixing different birth cohorts with different mortality (heterogeneity effect); (2) standard assumptions of hazard rate estimates may be invalid when risk of death is extremely high at old ages and (3) ages of very old people may be exaggerated. One way of obtaining estimates of mortality at extreme ages is to pool together international records of persons surviving to extreme ages with subsequent efforts of strict age validation. This approach helps researchers to resolve the third of the above-mentioned problems but does not resolve the first two problems because of inevitable data heterogeneity when data for people belonging to different birth cohorts and countries are pooled together. In this paper we propose an alternative approach, which gives an opportunity to resolve the first two problems by compiling data for more homogeneous single-year birth cohorts with hazard rates measured at narrow (monthly) age intervals. Possible ways of resolving the third problem of hazard rate estimation are elaborated. This approach is based on data from the Social Security Administration Death Master File (DMF). Some birth cohorts covered by DMF could be studied by the method of extinct generations. Availability of month of birth and month of death information provides a unique opportunity to obtain hazard rate estimates for every month of age. Study of several single-year extinct birth cohorts shows that mortality trajectory at advanced ages follows the Gompertz law up to the ages 102-105 years without a noticeable deceleration. Earlier reports of mortality deceleration (deviation of mortality from the Gompertz law) at ages below 100 appear to be artifacts of mixing together several birth cohorts with different mortality levels and using cross-sectional instead of cohort data. Age exaggeration and crude assumptions applied to mortality estimates at advanced ages may also contribute to mortality underestimation at very advanced ages.     

Peripartum cardiomyopathy: mortality outcomes

Mortality estimates of peripartum cardiomyopathy have been reported to be between 18 and 56% without reference to time frames. Although this is an unusual impairment, medical directors need accurate information to meet the gold standard of underwriting: decisions must be based on sound underwriting and actuarial principles reasonably related to actual or anticipated loss experience. In an insurance purchasing population, the excess mortality in peripartum cardiomyopathy can be nearly eliminated by not insuring those with the impairment within the first 6 months postpartum or until all abnormal physiologic parameters have resolved. Thereafter, the risk is probably negligible. This abstract illustrates the challenge to determine expected mortality when the study population exhibits strong racial diversity and when available expected life tables contain raw data of only alive and dead at each yearly interval.     

Approaches and Experiences in Projecting Mortality Patterns for the Oldest-Old

Abstract

In 1998 the United Nations Population Division extended the age format of its estimates and projections of population dynamics for all countries and areas of the world from 80 years and above to 100 years and above. The paper is based on experiences made during the implementation of relevant mortality projection methodologies and their application in two rounds of global population projections.

The paper first briefly addresses the need for the explicit inclusion of very old population segments into the regular UN estimates and projections. It is argued that since population aging is an important issue for both developed and developing countries, the need for more information regarding the elderly, and the oldest-old in particular, is significant.

The paper then documents the methods that have been evaluated and implemented, namely, the relational mortality standard proposed by Himes, Preston, and Condran, the Coale-Kisker extrapolation method for extending empirical age patterns of mortality to very high ages, and the Carter-Lee projection method for projecting model patterns of mortality to very high levels of life expectancy at birth. The methods are critically reviewed, and possible improvements to the methods are discussed.

The paper concludes with a discussion of different views regarding the future evolution of mortality at older ages, their regional variability, and the necessity to improve the coverage and quality of data collected in this area.     

Historical and Projected Mortality for Mexico,Canada, and the United States

Abstract

This paper presents historical death rates for Canada, Mexico, and the U.S. by sex and broad age group. The time period for this historical analysis begins with 1900 (1930 for Mexico). These data provide a quite consistent basis from which experts can develop and contrast their expectations for future mortality trends. Official mortality projections developed by government agencies of each of the three countries provide a starting point for this discussion.

During this century, death rates declined fairly rapidly in all three countries. However, the rate of mortality improvement has varied considerably across time periods: distinct periods of rapid and slow improvement are evident in the data, but are not consistent across the countries and have not yet been explained.

The historical rates of improvement in mortality have also varied greatly by age and sex: younger age groups have shown the most rapid proportional improvement in mortality in all three countries, and mortality improvement during this century has generally been greater for females than for males. However, the data provide evidence that this difference in the rates of mortality improvement between men and women has recently slowed, and even reversed, in the U.S. and Canada. Historical experience and projections are provided in graphs, in which death rates are plotted on a logarithmic scale. This approach allows easy detection of the extent to which rates of improvement have been changing (death rates with constant rates of improvement would be plotted as straight lines).

The official projections supplied for comparison provide strikingly similar outlooks for future potential mortality improvement. In each case, the relatively average rapid rate of mortality improvement experienced so far this century is assumed to slow in the future. In addition, rates of improvement are projected to be much more similar for all three countries across age groups and between the sexes.     

Extreme Value Analysis of Mortality at the Oldest Ages: A Case Study Based on Individual Ages at Death

In this article, the force of mortality at the oldest ages is studied using the statistical tools from extreme value theory. A unique data basis recording all individual ages at death above 95 for extinct cohorts born in Belgium between 1886 and 1904 is used to illustrate the relevance of the proposed approach. No leveling off in the force of mortality at the oldest ages is found, and the analysis supports the existence of an upper limit to human lifetime for these cohorts. Therefore, assuming that the force of mortality becomes ultimately constant, that is, that the remaining lifetime tends to the Negative Exponential distribution as the attained age grows is a conservative strategy for managing life annuities.     

Gender and Age Differences in Socio‐economic Inequalities in Total and Avoidable Mortality in Portugal: A Trend Analysis*

The purpose of this paper is to analyse how socio‐economic inequalities in mortality (total and avoidable) evolved in Portugal from the 1990s onwards by looking at differences by gender, age group, poverty and cause of death. Results show that mortality in younger age groups is decreasing faster in the most deprived municipalities. Yet, avoidable deaths do not follow this pattern, particularly with respect to treatable mortality amenable to the health care services. Although total and avoidable mortality are decreasing across all age groups and both genders, decreases in treatable deaths during and after the 2011–14 economic crisis slowed down among the young, with a sharpening of socio‐economic inequalities in avoidable mortality among adults and the elderly. This provides evidence that, in some respects, focusing programmes on those living in poor circumstances has been successful over time. However, the impact of the Great Recession on health care services might have contributed to a significant increase in some treatable causes of death associated with these services.     

Mortality risk assessment in the elderly: the utility of delayed word recall

Cognitive impairment is an important predictor of mortality in the elderly. An extended delayed word recall (DWR) is one of the most sensitive tests for cognitive impairment. A mortality study was performed on a population of long-term care insurance applicants aged 70 and older who were underwritten during the years 1995-2003 and who had cognitive testing by DWR. Within this relatively short period of time, individuals with DWR score of 0-5 compared to those with DWR score of 6-10 had a markedly worse mortality outcome overall and also when analyzed by gender, underwriting age, underwriting year or smoking status.     

Beyond the Gompertz law: exploring the late-life mortality deceleration phenomenon

Using a new distribution capable of exhibiting all the possible modes of accelerating and decelerating mortality, we conduct a systematic investigation of late-life mortality in humans. We check the insensitivity of the distribution to age cutoffs in the data relative to the logistic mortality model and propose a method to forecast evolution in the characteristic deceleration ages of the distribution. A number of data sets have been explored, with a particular emphasis on those originating from Scandinavia. Although those from Australia, Canada, and the USA are compatible with Gompertzian mortality, those from the other countries examined are not. We find in particular that the onset of mortality deceleration is being progressively delayed in Western societies but that there is evidence of mortality plateauing at earlier ages.     

A logistic two-population mortality projection model for modelling mortality at advanced ages for both sexes

In the current literature, numerous mortality projection models have been proposed and tested, but in general they have been designed for and applied to mainly ages below 90. As medical advances are being shifted to older ages over time and there is a rapid growth in the number of centenarians, there is a need to expand the modelling to older ages. We propose a logistic two-population mortality projection model for the death rates at ages 80 to 100+ for both sexes. We apply this model and its extensions to high quality old-age mortality data of Belgium, Sweden, Switzerland, and the UK and produce decent model performance in both mortality fitting and forecasting. The model structure also provides a reasonable way to close off the life table, which is supported by both theoretical arguments and empirical evidence.     

Minimum Death Rates and Maximum Life Expectancy: The Role of Concordant Ages

Only five populations have achieved maximum life expectancy (or best practice population) more than occasionally since 1900. The aim of this article is to understand how maximum life expectancy is achieved in the context of mortality transition. We explore this aim using the concepts of potential life expectancy, based on minimum rates at each age among all high longevity populations, and concordant ages. Concordant ages are defined as ages at which the minimum death rate occurs in the population with the maximum life expectancy. The results show the extent to which maximum life expectancy could increase through the realization of demonstrably achievable minimum rates. Concordant ages are concentrated at increasingly older ages over time, but they have produced more than half of the change in maximum life expectancy in almost all periods since 1900. This finding is attributed to their quantity and position whereby concordant ages are concentrated at the ages that have the greatest impact on mortality decline in a particular period. Based on mortality forecasts, we expect that concordant ages will continue to lead increases in female maximum life expectancy, but that they will play a weaker role in male maximum life expectancy.     

Balancing Retirement Security With the Needs of Frail Parents

Abstract

Caring for frail elderly parents can interfere with work responsibilities. People who provide care to their parents may need to take time off from work or retire altogether. However, reductions in labor supply at midlife can have serious implications for retirement wealth and, as a result, on economic well-being in later life. This paper examines how family support for the elderly can affect retirement savings by examining the relationship between labor supply, time help to parents, and financial assistance to parents. Using data from the Health and Retirement Study on a nationally representative sample of women ages 53–63, we found that women who helped their parents with personal care assistance worked significantly fewer hours than did those who did not help their parents, whereas those who provided financial assistance worked significantly more hours. Although few persons at midlife presently spend substantial amounts of time helping their elderly parents in any given year, for those who do, the costs can be high. Pressures on families are likely to mount in the near future as falling mortality and fertility rates continue to increase the proportion of the population that is very old and as women continue to play more important roles in the labor market.     

Financial literacy amongst elderly Australians

Financial illiteracy is widespread amongst the elderly. Financially illiterate people are more likely to experience asset loss and outlive their savings after retirement. This paper measures financial literacy of elderly Australians using Item Responses Theory. Using a Lasso regression, we find that younger, married males with higher income and greater net wealth are more likely to be financially literate. Better financial literacy is also associated with good health, higher educational attainment, better occupation and outright home ownership. Our findings suggest policy‐makers take action and we make informed and practicable policy recommendations.     

Improving the Forecast of Longevity by Combining Models

Mortality is a dynamic process whose future evolution over time poses important challenges for life insurance, pension funds, public policy, and fiscal planning. In this paper, we propose two contributions: (1) a new dynamic corrective methodology of the predictive accuracy of the existing mortality projection models, by modeling a measure of their fitting errors as a Cox-Ingersoll-Ross process and; (2) various out-of-sample validation methods. Besides the usual static method, we develop a dynamic one allowing us to catch the change in behavior of the underlying data. For our numerical application, we choose the Cairns-Blake-Dowd (or M5) model. Using the Italian and French females mortality data and implementing the backtesting procedure, we empirically test the ex-post forecasting performance of the CBD model both for itself (CBD) and corrected by the CIR process (mCBD). We focus on age 65, but we show results for a wide range of ages, also much younger, and for cohort data. On the basis of average measures of forecasting errors and information criteria, we show that the mCBD model is parsimonious and provides better results in terms of predictive accuracy than the CBD model itself.     

Mortality outcomes of various causes of syncope

Syncope, especially in older-age applicants, presents a risk selection quandary. When the etiology is established, risk classification is based on the causative impairment. However, often no diagnosis is ascertained. The lack of diagnosis presents a dilemma for the medical director. Underwriting decisions must be based on sound actuarial principles or related to actual and reasonable anticipated experience. The mortality outcome of various causes of syncope from participants of the Framingham Heart Study is presented in this abstract. The primary value to the medical director is the mortality outcome of those applicants without a specific etiologic diagnosis; those belonging to the unknown, the vasovagal or other causes groups. Over a 24-year observation period, patients whose syncope was attributed to vasovagal or other causes had a mortality ratio of 14% and an excess death rate of 20. Neurogenic syncope had a mortality ratio of 168% and an excess death rate of 34. No excess mortality was observed when those with seizures were excluded from analysis. Those whose cause of syncope was unknown had a mortality ratio of 192% and an excess death rate of 46. Individuals whose syncope was deemed to be cardiac exhibited a mortality ratio of 270% and an excess death rate of 82.     

Seasonal mortality for fractional ages in short term life insurance

Abstract

Fernández-Durán, and Gregorio-Domínguez, Seasonal Mortality for Fractional Ages in Life Insurance. Scandinavian Actuarial Journal. A uniform distribution of deaths between integral ages is a widely used assumption for estimating future-lifetimes; however, this assumption does not necessarily reflect the true distribution of deaths throughout the year. We propose the use of a seasonal mortality assumption for estimating the distribution of future-lifetimes between integral ages: this assumption accounts for the number of deaths that occurs in given months of the year, including the excess mortality that is observed in winter months. The impact of this seasonal mortality assumption on short-term life insurance premium calculations is then examined by applying the proposed assumption to Mexican mortality data.     

Estimation of future mortality rates and life expectancy in chronic medical conditions

Estimates of old-age mortality are necessary for the construction of life tables and computation of life expectancy, and are essential in the growing area of life insurance for the elderly. Two common assumptions are that either the excess death rate (EDR) or the relative risk (RR) stays constant with increasing age. It is known, however, that for most medical conditions the former underestimates the risk and the latter overestimates it. A third popular method is that of rating up: a subject is said to be "rated up k years" if his future mortality rates are assumed to be those of a person in the general population who is k years older. It is shown here that this method generally leads to gross overestimates of old-age mortality. We consider two less-commonly used models, log-linear declining relative risk (LDR) and constant proportional life expectancy (PLE), and compare them to the methods of constant EDR, constant RR and rating up. Although slightly more complicated to employ than the other methods, both LDR and PLE generally give better estimates of mortality and life expectancy. When mortality rates for chronic conditions are known within a certain age range, and estimates outside of the range are required, the LDR and PLE methods may be preferable to the more familiar methods of constant EDR, constant RR, or rating up.