Two key considerations.
1. Risk management – refers to how much risk an insurer is prepared to take and offer a sustainable product. The risk appetite is informed by a number of factors and influences the terms an insurer offers on a cover.
2. Salability of product – a reasonable insurer thrives to offer products that are salable in terms of affordability and the premiums should make commercial sense vis a vi the cover offered.
Most Insurance companies that offer funeral policies on a no medicals, guaranteed acceptance basis normally apply a cut off Age Next Birthday (ANB) 65 for new applicants. This is largely to mitigate risks inherent in guaranteed acceptance proposition and older ages. At Diaspora Insurance we treat our customers fairly and we try to accommodate as many applicants as is possible, so we increased the entry age to 75 especially to include Diasporans’ parents wherever they maybe in the world.
Needless to say, a lot of factors influence the monthly insurance premium that a policyholder pays and one of the most significant factors in determining the average cost of insurance is an applicant’s age. Generally, the older a person is, the higher the cost of their life or funeral insurance. Whereas the insurer can cover any age, the commercial consideration in restricting entry age is informed by both the increased death risk and the salability of the cover. If, because of the age, the monthly premium is ridiculously expensive it entails no-takers so any reasonable insurer would opt for age ranges where the product is saleable.
Life expectancy in Africa rose by nearly 10 years between 2000 and 2019, from 46 years to 56 years, according to the World Health Organization’s State of Health in Africa report released on the 4th of August 2022. However, WHO officials note that is still well below the global average of 64 years. The current global life expectancy in 2022 is 63.82 years, a 0.46% increase from 2021. Therefore, it makes sense for Diaspora Insurance to have ANB 75 as our cut off age because it’s way beyond the global average of 63.82 years.
The beauty of the Diaspora Funeral Cash Plan is that the age 75 restriction only applies on entry and once someone is on cover their cover persists for life; they do not come off the policy.
More information on Age and Insurance
This is the most frequently asked question when it comes to taking insurance and it is also crucial to understand what is meant by an age limit and why there may be an age limit in insurance. Below is what you need to know.
What is the age limit
Most cash-based policies have set the entry age limit at 65 years old, and the minimum age is 18 years old. With Diaspora Insurance the entry age limit is age next birthday 75 and the minimum age is ANB 1, that is, from newly born.
Why do insurers have an age limit?
• Manage Risk
The reality of the age limit on life insurance policies is due to the increased level of frailty we face in our lives as we get older. Having a policy while you are still young and healthy can help prepare you and your loved ones when you need it the most. It also means that the older we get the more likely it is for us to fall ill or sustain a fatal injury which can be a high risk for insurers.
Furthermore, it is not only put in place to protect insurers from people taking out a policy only to place a claim in a short period of having it, leaving insurers with an unstainable claim rate.
• Underwriter’s Risk Appetite
Risk appetite is defined as the degree to which a company accepts the risks that it faces. The actuaries for Diaspora Insurance calculate the appropriate risk that we can take and that will make our book sustainable. A sustainable book ensures that members are protected and will enjoy the benefits of their cover in the long term.
Insurance is made to grow with you and protect you and your loved ones from some of life’s curveballs like being diagnosed with a terminal illness or death. The best time to have an insurance policy in your name is now, when you are younger.
N.B THE TERMS AND CONDITIONS ARE NOT MEANT TO CAUSE ANY HARM TO THE CLIENTS BUT INSTEAD THEY ARE PUT IN PLACE TO PROTECT THE CLIENTS AND SUSTAIN THE COMPANY IN THE SHORT AND LONG RUN.
