Daniel Erasmus
18 October 2017 | 11:45 – 12:45 | Ballroom 1
Relevant practice area(s):Healthcare, Life Insurance
Suggested audience knowledge level: Foundational
Abstract:
An increase in life expectancy is generally acknowledged to be one of the main indicators of growing prosperity and wellbeing of the modern age. I consider this theme in more detail and postulate the idea that “too much of a good thing” also applies to life expectancy.
Until now, the value of additional life years couldnt be adequately assessed within the current linear framework of more is better. Consideration of the quality of life in each additional life year is essential to contextualising the value of living longer. Fundamentally, my research answers the question of when is the ideal time is to die, rather than how one can maximize your life expectancy.
The research thus examines the intersection between increased longevity, transposed with the general/frequent decline in the quality of life at advanced ages. This is considered in terms of key quality metrics including health and physical status, financial status, emotional and mental status as well as relational status at advanced ages. The aim is to quantify these factors and illustrate the impact of the results for a cohort of healthy lives starting at age 35.
The results are quantified in terms of a quality of life index. Ideally this index value will gradually slope downwith increasing age up to death. At advanced ages, the prospect of a sudden decrease in the quality index is significantly increased. The results quantify the point in future at which the quality of life would be significantly lower in subsequent years compared to those immediately preceding this point. This point is deemed the maximum quality adjusted age (MQAA). I argue that ideally your actual age should not exceed the MQAA.
The analysis is based on a detailed review of medical scheme data as well as morbidity and mortality data from the life insurance industry in South Africa. Financial projections are based on current projected annuity rates, investment returns as well as average savings statistics and indicators from Stats SA and ASISA. The analysis is also complimented by desktop research and stakeholder interviews.
The findings of the research indicate that as life expectancy increases there is a simultaneous increase in the probability and consequent risks that a persons life expectancy exceeds the MQAA. The results illustrate the need to consider not only the number of additional life years gained, but also the quality of those years, as a key metric for an aging population.