In 1980 there were 32,194 Centurions (those over 100 years old). By 2010 that number had grown to 53,306. That’s a 65% jump over a period of just three decades. Clearly, people are living longer. In some cases, they are flat out-living their life insurance.
Many holders of life insurance have paid substantial amounts in premiums, only to have their policies and any payout expire at the age of 100. In other words, they would only receive the cash value of their policy, if any, not the full death benefit.
While life insurance policies have expiration dates, they were typically set so the policy would outlive the individual. Policies written decades ago just didn’t anticipate people living to be over 100 years old.
Many of the policies written over the past several years now have a standard maturity date of 121 years. Policy maturity dates were initially created as a method of helping policy-holders get a decent value out of their policy after years of ownership (prior to death).
These expiration dates weren’t an issue when very few people lived beyond 100. But they are becoming more of a challenge for the U.S. life insurance industry as more people become centenarians.
Faced with the potential loss of coverage, some policyholders have filed suit, claiming the insurance companies knowingly used age limits that were too low. The suits also allege the insurers improperly marketed the policies as “coverage for life.”
What’s the lesson to be learned here?
As times change, insurance policies need to be updated. A best practice we’ve engaged over the years at MCM is to meet with our clients annually to review their policies. A simple policy review can often undercover areas where clients are either over or under-insured.
As we get ready for 2018, we’d like to encourage you to take advantage of our policy review. It is a great way to ensure you are properly insured and your current policies reflect your and your family’s needs.