Not since WWII has life expectancy dropped more steeply than in 2020. Pre-2020 life expectancy was 78.8 years and is now 77.3, the same as it was in 2003. The last time the United States has experienced such a drop was in 1943 due to the war.
Most reasonable and prudent individuals point to the pandemic as the obvious culprit for the drop in life expectancy in 2020, and it is unlikely that life expectancy will recover anytime soon.
Before the pandemic most individuals with chronic health conditions were receiving consistent medical services that resulted in longer life expectancy. With the interruption of medical services, many chronic conditions worsened, and these effects will likely be seen throughout the patient’s lifetime. Actuarial estimates of life expectancy will likely change, and this change will have an effect in underwriting and pricing assumptions for life insurance.
Limited access to care for those with chronic conditions has had a deleterious effect on health. Medical conditions that have worsened due to lack of care has resulted in permanent effects that will likely result in shorter lifespans.
During the pandemic doctors and hospitals were so busy taking care of COVID patients that sufferers with diseases such as high blood pressure, diabetes, and heart disease were neglected. Elective surgeries were cancelled or postponed. These cancellations allowed chronic conditions to progress which will undoubtedly affect future health. Heart disease and diabetes not properly controlled won’t affect mortality in the first couple of years, but certainly will lower overall survival in the long term. Some COVID survivors now have weakened heart and lung function, and the fear is this may be permanent.
Stress and prolonged isolation will change overall health and survival rates. Changes in diet due to stress, less exercise, and missed doctor appointments are impossible to quantitate. Increased alcohol consumption, drugs, grief, and poor eating habits will result in more heart disease, cirrhosis, and atherosclerosis. Not working can also lead to premature morbidity.
Today, the questions are many for life insurance companies. Can they predict future health due to the effects of the pandemic? Will experience ratings have to be changed? Who is going to pay for these premature death benefits paid out much earlier than expected?
For many years life insurance companies could rely on the law of large numbers and a steady, predictable increase in life expectancy thanks to medical advances to set premium rates. Due to the pandemic the future of underwriting has become far less predictable.