A quick internet search for “life expectancy calculators” or “calculate your life expectancy” will lead users to a form, survey, or questionnaire published by a business that is providing a free life expectancy result after the consumer enters their personal data and answers a short series of simple questions. However, most users don’t realize that these calculators are a means of lead generation for these businesses. Consumers also do not understand how self-reported data can create unrealistic expectations and highly inaccurate outcomes. For businesses looking to provide customers with individualized, accurate life expectancy data, a proper life underwriting process is necessary.
Not All Calculators are Created Equal
The purpose of online life expectancy calculators depends on who the promoter is, the label applied to their calculator, and what it actually calculates, and each of these variables can be very different. For example, life settlement brokers, who represent sellers, tend to promote calculators intended to determine if a life insurance policy owned by the consumer has value as a life settlement. Life settlement providers (i.e., buyers) do the same, BUT sellers want the highest price they can get, while buyers want to pay the lowest price possible. Since the shorter the life expectancy the higher the price, calculators promoted by brokers may be inclined to lean toward shorter life expectancy results, while buyer-promoted calculators may lean in the opposite direction.
Calculators as Lead Generation Tools in Financial Planning
If you were to take the questionnaires from five different calculators and compare them, they would all have similar but slightly different questions, thus slightly different answers, and probably different algorithms designed to lead to a different conclusion. Businesses operating in the life settlement industry are interested in finding potential life settlement policies owned by consumers. To do this, they attract people to the calculator on their websites and the questions are focused on determining whether the consumer on the site is or is not a suitable prospect. These tools are not really intended to accurately assess life expectancy. In other words, the results produced by a calculator that you’re feeding your data into is focused on the objectives of the business promoting that calculator.
Results can also differ based on the way in which the questionnaire is worded. For example, when a doctor walks into an examination room and says, “How are you feeling today?”, that question can produce an entirely different response than “How have you been feeling since I saw you last?” Outcomes from such exercises really depend on how each question is written and the variety of response options provided. Are they radio buttons? Can you select all that apply? Is it a written response, a “yes” or “no,” etc.?
Math is Math
When a business says my calculator is better, that is like saying in your geometry class that a Texas Instruments calculator is better than a Samsung calculator. To be honest, it better not be, because math is math everywhere you go and some people can do it on an abacus or a slide rule. In other words, the calculations themselves are simple math and all calculators work the same way; one plus one is two whether you use a TI or a Samsung calculator. If the inputs in a life expectancy calculator are the same, but the output is different, then the driver of that difference is likely to be found in the mortality tables used. Again, the calculation itself is arithmetic, nothing more.
Misleading Customers with Life Expectancy Calculators
Each calculator can produce a very different result for the same individual who completes the related questionnaire or survey. From the way in which the questions are asked, to how many questions are asked, how long it takes to answer them, the granularity of the possible responses, the specificity of the question, and so on, the inputs form a single individual can vary from questionnaire to questionnaire. Most of the calculators in the marketplace are designed to either convince someone that they qualify such that they will take the next step, or eliminate them as a prospect. These tools are not useful for properly assessing life expectancy.
For businesses looking to provide customers with accurate, individualized life expectancy assessments, contact ISC Services. Leverage the power of a thoughtful, expertise-driven approach to ensure that you make the right decisions for your business. Contact ISC Services today to learn more or download a free sample LE report.
