- How family health history affects life insurance acceptance and pricing
- October 29, 2015
By Edward E. Graves (Editor, McGill’s Life Insurance, 9th Edition)
Republished with permission from The American College of Financial Services
Family history is considered significant because certain characteristics are hereditary. Build follows family lines, and to some extent, so do structural qualities of the heart and other organs. A greater than average susceptibility to infectious diseases may also be inherited. Hence, the applicant is asked to provide information about the ages and state of health of parents and brother and sisters if they are living, or if deceased, their ages at death and the causes of death.
Long-lived parents and siblings at one time were looked at as assuring a long life for an applicant, even though he or she was somewhat overweight or had some other impairment that would normally have been placed in the category of borderline risks. On the other hand, an applicant from a short-lived family, unless the deaths resulted from accidents, had to be better than average in other respects in order to be insured at standard rates.
Except for cardiovascular-renal diseases and to a lesser (and declining) degree, tuberculosis, considerably less emphasis is now placed on family history with the exception of preferred-risk programs. This is because of the unreliability of family history details recited by the applicant and the difficulty of tracing the influence of heredity.
There is a tendency, which can be demonstrated statistically, for the applicant to exaggerate the ages of family members when they died. Unless his or her parents and siblings are dead or dying, the applicant generally reports them to be in good health; instances of hypertension, diabetes, and other impairments that would be regarded as significant by the home office underwriters are usually not disclosed. Furthermore, it is not feasible to follow up on the applicant’s family record. Even if the facts were accurately reported, there would still be insufficient evidence to measure the true impact of heredity or longevity. Only data concerning parents and siblings grandparents and great-grandparents. Moreover, the influence of heredity may not have an impact until an individual is aged 60 or older, which is too late to be useful in evaluating the application of a younger person whose family record is relatively immature.
Despite the foregoing inadequacies, it has been determined that if a group of applicants– all free of any known personal qualities that would adversely affect their longevity–is divided into classes on the basis of their family histories as revealed in their applications, the lowest mortality will be found in the class with the poorest record. The best group shows a mortality reflects a mortality of about 115 percent. Therefore companies usually give a credit of 15 points for a very good family history and a debit of 15 points for a very poor history.
EDITOR’S NOTE: The above content appears under authorized copyright license from The American College of Financial Services, the nation’s largest non-profit educational institution devoted to financial services since 1927. The American College’s faculty represents some of the financial services industry’s foremost thought leaders. For more information, visit TheAmericanCollege.edu. To access the College’s database of degreed advisors, click here.
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