This is the second of a three-part series unpacking the key findings of RGA’s new report, “Aging in Asia: Inclusive Insurance Study on Seniors,” which explores the outlook for senior-focused insurance products across the region. For more information, view the full survey report and infographics here. Click here for Part I of the article series.
As Asia's population continues its rapid greying, insurers are facing an unprecedented opportunity to tap into the severely underserved senior market segment across the region. Unlocking this potential will require a deep understanding of the on-the-ground realities and evolving needs of elderly consumers in different Asian markets.
This article, the second in a three-part series exploring the results of RGA’s exclusive research into the senior insurance market across eight markets, will detail key approaches to the successful development and launch of senior-focused insurance products. RGA surveyed over 1,600 consumers aged 55-80 across eight markets: China, Hong Kong, India, Japan, South Korea, Taiwan, and Vietnam.
Armed with these critical insights, insurers can craft innovative life and health protection solutions purposefully designed to increase product appeal, simplify access, and deliver affordable pricing tailored to this unique demographic.
The World Health Organization defines aging as “a gradual decrease in physical and mental capacity, a growing risk of disease, and ultimately death. These changes are neither linear nor consistent, and they are only loosely associated with a person’s age in years.”
While age 65 is a benchmark for senior citizenship across many countries, older people do not instantly become “senior” at that age. Instead, aging – and our concept of aging – is affected by a host of biological, social, and psychological factors.
♦ Aging is characterized by progressive and broadly predictable changes associated with increased susceptibility to many diseases.
♦ Aging is not a homogenous process. Rather, organs in the same person age at different rates, influenced by multiple factors, including genetic makeup, lifestyle choices, and environmental exposures.
♦ A Danish twin study1 found that genetics accounted for approximately 25 percent of the variation in longevity among twins and environmental factors accounted for approximately 50 percent.
♦ With greater longevity (to age 90 or 100), genetic influences became more important.
In addition, people in developed countries are living longer, and living longer with chronic diseases. This is especially evident in the Asian population, where longevity has increased due to a combination of genetics, lifestyle factors, and clinical advancements in the treatment of cancer, chronic disease, infectious disease, and accidents.
RGA’s senior survey demonstrates the spectrum of health conditions faced by seniors in Asia. Survey findings indicate that many seniors – currently or in the past – have been diagnosed with health conditions associated with aging, including predominantly cardiovascular conditions (54%), followed by metabolic or endocrine disorders and musculoskeletal disorders each with 35%.
The realities of aging in Asia are key to product development: This cohort will not respond to health and life options “copy-pasted” from products designed for 30-year-olds. Insurers should instead adopt a customer-centric approach to product design focused on the question, “Are the specific benefits of this product valuable to seniors and their health concerns?”
Key considerations when designing senior products:
Among all Asian seniors who responded to RGA’s survey, respondents reported their top three health concerns were cancer, stroke, and heart attack.
Other top health concerns across specific markets:
Because this generation of aging seniors will likely live long-term with one or more health conditions, some insurers are shifting to multi-pay products that offer coverage of multiple conditions.
For example, integrate the needed healthcare services/support, and financial protection into the product design. In addition, look closely at rapidly changing medical advancements in areas like cancer, which could affect the benefits needed for seniors. Because of the increased number of long-tail treatments available for cancers like prostate and breast, many seniors will die with cancer, not because of it.
In addition, calibrate the level of benefits to the needs that could arise throughout the patient journey (for example, in-patient and out-patient treatment, rehab, home-care).
When designing a product and underwriting senior customers with varied levels of pre-existing medical conditions, inevitably there is a trade-off between accepting higher risks and offering an affordable product with meaningful coverage. The products that sell best are the ones that can optimise the trade-off and overcome challenges related to product, price, and place.
As suggested by RGA’s survey, a significant portion of senior customers will have existing medical conditions. For that reason, the ideal approach would be to build products that would automatically accept – without medical exam or fluid draw – impaired lives with the “4 high” conditions: high blood pressure, high cholesterol, high blood sugar, or high BMI. The level of impairments would need to be carefully studied for cost implications and calibrated to level of insurer’s risk appetite.
When devising pricing strategies for insurance solutions targeting Asia's senior population, affordability and perceived value are critical considerations.
Across markets, affordability is commonly measured by leverage, calculated as the ratio of total sum assured to total premiums paid. Based on well-performing senior products, an ideal leverage ratio exceeds 2, coupled with a product cost below 2.5% of the average senior's income.
One effective approach to enhance affordability is shortening the product term. In Taiwan, traditional whole life senior cancer insurance policies initially struggled to gain traction among those aged 55 and above. However, a leading life insurer in Taiwan recently revamped its offering, limiting the term to 10-20 years. This strategic shortening of the coverage period substantially improved affordability, with the product now experiencing robust sales in the senior demographic.
Beyond upfront pricing, insurers can also leverage surrender values and return of premium features to bolster a product’s perceived value proposition. In South Korea's senior market, dementia products were initially marketed with high surrender values to address affordability concerns and drive adoption among seniors.
By carefully calibrating premiums to income levels, implementing term adjustments, and offering attractive non-guaranteed values, insurers can craft compelling value propositions that resonate with Asian seniors' needs for accessible and affordable protection solutions.
By taking an inclusive, customer-centric approach to product development, closely monitoring aging trends, and designing benefits with medical advancements in mind, the insurance industry can play a vital role in supporting the financial well-being and healthcare needs of Asia's burgeoning senior population while capitalizing on a lucrative growth frontier.
Discover opportunities from RGA's analysis of 1,636 respondents in China, Hong Kong, Japan, Taiwan, India, South Korea, Thailand, and Vietnam. Don't miss this comprehensive look at the rapidly evolving senior market in Asia: "Aging in Asia: Inclusive Insurance Study on Seniors."
