What challenge do insurers face when insuring older individuals?

Insurers face significant challenges when insuring older individuals primarily due to the increased risk associated with health issues that are more prevalent in this demographic. As people age, their likelihood of encountering health problems generally rises, which can lead to a higher probability of claims being made. This increased risk is a crucial factor in underwriting decisions, as insurers must assess the likelihood that a policyholder will require benefits due to medical conditions or other health-related events.

Healthcare costs tend to escalate with age, and chronic illnesses can become more common, requiring more frequent medical attention. Therefore, when insurers underwrite policies for older individuals, they often anticipate a higher claim frequency and severity, which directly affects the pricing and terms of the insurance products offered to them. This understanding drives the need for careful risk evaluation and management strategies to ensure that the insurance pool remains sustainable while still providing necessary coverage to clients.