- Longer life spans may yield larger profits
- March 26, 2014
Life expectancy for Americans has been on the rise and is showing no signs of slowing down, as a result of medical advancements made during the last few decades.
A person born today will live longer than any other generation. About two-thirds will live past 80 years old, and one-third past 90 years old, according to Slate.
In addition, almost one in 10 girls born today will live past the age of 100.
Because life expectancy is continuing to rise, life insurance companies are going to start collecting a substantial profit on the life insurance premiums of those people who will retire later in life, but will live considerably longer than the generations before them.
This means insurers will get an extra several decades worth of premium payments.
However, baby boomers, unsure of their ability to outlive their savings, are buying annuities, which pay a certain amount of interest over time.
If this trend continues into the next 50 or 60 years, then insurers could be paying that interest for much longer than expected.
A recent article in the Wall Street Journal said baby boomers should manage their life insurance intelligently, purchasing a lot in middle age and reducing the amount, as they grow older.
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