Blog Posts

Aging Actuarially

It’s rare, these days, that any piece of mail carries unexpected news.  Between phone calls, Facebook, Instagram, Tweets, texts and Snapchat, we learn of most events, both happy and sad, almost in real time.

When my mom died three years ago, I committed the (almost) unpardonable sin of posting a tribute to her on my Facebook page before telling my son—who was lifeguarding at the time and presumably not checking social media—that his grandmother had passed away.

I still haven’t lived that one down.

Receiving disturbing mail via the post office (or Western Union) seems a throwback to an earlier time. The days of “Dear John” letters, of messages that began, “The Secretary of War desires me to express his deepest regret” and of notes that started, “Don’t worry, I’m fine, but…” are all remnants of the past.

Or are they?  

The other day I received one of the most depressing pieces of mail I’ve ever read.  

The dispiriting piece of news arrived innocently enough. It was an insert into the premium notice for a $500,000 term life insurance policy I had taken out in 1998. It carried, as most bloodless bureaucratic notices do, an innocuous heading, “Schedule of Renewal Premiums,” with four orderly columns of numbers beneath it.

“No big deal,” I thought. Term life insurance policies always increase after the initial term has run out.  Well, I didn’t think it was a big deal until I started to scan down the page and saw what my rates would rise to once my initial 20-year term expires…if I did not expire first.

In the 21st year of the policy, the year in which I turn 60, the annual rate will more than triple, from $725 to $2,530 a year. That couldn’t be right—was I three times more likely to die when I turned 60 than I was when I was 59? Apparently some actuary thinks so. 

The year after that, the rate would almost double, and in each subsequent year it would continue its relentless march to higher and higher premiums. If I were still carrying the policy when I turned 70, the yearly premium would be $15,796. At 80, it would be $46,230. The last year on the chart, when I will be 94, showed a staggering annual premium of $279,465! I don’t even want to guess what it would be if I lived to be a centenarian!

Needless to say, I won’t be keeping this policy beyond the end of that initial term.

It’s no secret that the older I get, the closer I am to “the end”… but these figures really seemed to drive that fact home with an unsparing, numerical intensity. And I do not need the reminder spelled out in black and white!  

So next time you find a notice in your mailbox from your life insurance company, you might want to sit down before you open it. It could include the dreadful—and to be dreaded—“Schedule of Renewal Premiums.” If it does, look away. Some things are better left unread.