Dementia Risks Grow for Life Insurers as Population Ages

April 23, 2012

By Linda Koco

ORLANDO – Insurers are starting to make cognitive impairment testing a part of the underwriting process for larger life insurance cases, especially for older-aged applicants, according to Dr. Stephen Holland.

That means that life insurance agents may see more of their clients undergo such screening in the future. The screens are to test for mental functioning – including reasoning, planning and remembering.

“The tests will be just one more thing, in addition to fluid checks and paramedic exams,” said Holland, the chief medical officer of Univita Health, in an interview before his talk here at the Life Insurance Conference, which is sponsored LIMRA, LOMA, Society of Actuaries, and the American Council of Life Insurers.

“Currently, between 5 percent and 10 percent of our cognitive impairment tests are done for life insurers,” Holland pointed out. The Scottsdale-based firm has done such testing for long-term care insurance applicants for many years, but in more recent years has begun testing related to life insurance sales.

“I think more life insurers will become serious about doing this testing,” now that they are selling to many applicants over age 60, he said.

Why it’s important

It is important to screen life insurance applicants for cognitive impairment, especially at the older ages, because research has shown that cognitive impairment is a progressive, degenerative disease that contributes to elevated mortality, the doctor said.

It is all the more important because about 5.5 million people have Alzheimer’s disease today, and that number is growing, he added.

If underwriters do not spot the risks in a life insurance applicant, Holland cautioned, the carriers may end up having anti-selection in the risk pool. That is due to the higher mortality that researchers say is associated with people having cognitive impairment.

Reports that people with dementia actually live a very long time — because they reportedly no longer feel the pressures and stresses of daily life — are just anecdotal, the doctor said. 

“Medical research has found that the disease will shorten life expectancy by four to nine years--and the older you are, the shorter the expectancy.”

For instance, a 65-year-old woman in the average population has a life expectancy of about 20 years, based on the Social Security Period Life Table, he said. But if a 65-year-old woman has dementia, her life expectancy is seven and one-half years, according to a study published in 2008 in the British Medical Journal that Holland cited.

At age 70, the expectancy drops to 16 years (average population) and 5.8 years (with dementia), he said. At age 80, the numbers drop again, to 9.4 years (average) and 4.4 years (with dementia).

“As for men, their life expectancy is approximately 20 percent to 25 percent shorter than that for women.”

Like coronary artery disease

Think of cognitive impairment and dementia as something like coronary artery disease, Holland suggested. The health of someone with the disease degenerates progressively over time.

Unfortunately, he said, the life insurance industry has not thought about dementia the way it does coronary artery disease. That’s partly because dementia is silent, and the symptoms are subtle, especially in the early years.

“In fact, there are indications that the disease actually starts 20 to 30 years before diagnosis,” he says.

Another problem is that, although there is a genetic component to the disease, many families don’t know whether their elders had the disease and so don’t report it. Previous generations tended to die earlier in life than many people do today, Holland noted, and some of those deaths could have occurred in the very first stages of the disease when it is more difficult to detect.

Still another problem is lack of documentation. In their attending physician statements, doctors generally don’t document cognitive impairment issues, he said. They may not have ordered the tests or did not have the time to look into that area, he explained. This means the underwriters who see those reports do not always have the full picture of the applicant.

Then, there is the matter of agnosia. That’s a medical term for the state of being unaware or not knowing, Holland said.  Where cognitive impairment is concerned, some people are not aware of their condition because the agnosia is affecting them. “They are not intentionally fooling or lying about it on the application. They are completely unaware.”

The problem for insurers is that the agnosia makes it harder for the underwriter to get accurate information from the applicant.

Think about testing

Since cognitive impairment impacts mortality – and mortality impacts a life insurance claims experience, the life insurance industry should be thinking about testing applicants for memory problems, the doctor concluded. He suggested this might be productive on applications for $500,000 or more of coverage, starting at age 60 and up.

Holland made clear that he was not speaking about off-the-shelf or free tests, or mini-tests that advisors conduct in their offices.

Rather, he was referring to professionally developed and administered tests that “are scripted, timed and designed to pick up subtleties that can help identify presence and absence of cognitive impairment.” His firm uses the Minnesota Cognitive Acuity Screen (MCAS), which he says was developed for use with the insurance industry. He says his firm has done the MCAS more than 800,000 times in the past 12 years, and that the test scores show a correlation with death claims.

The panel discussion will also include remarks by Peggy Hauser, who is senior vice president of actuarial services at Univita.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at [email protected].

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