The Sydney Morning Herald recently reported that a team of scientists at Boston University claimed to be able to predict – with 77 per cent accuracy – which of us will live to 100. (Also see NZ Herald)

The scientists did this by comparing the DNA of more than 1,000 centurions with that of the general population, finding a “genetic signature” that was linked to “exceptional longevity”.

What would happen if at some stage people are able to be “longevity tested”? What would happen if you knew that, failing an accident or a natural disaster, you’re likely to live to be 100?

And in particular, how would it affect your application for life insurance???

Standard life insurance premiums are based on the expectation that your lifespan will be that of the average person… in New Zealand that’s 82.2years if you’re female and 78.0years if you’re male. When you apply for life insurance, the insurer will ask you a range of questions to assess if you’re likely to die earlier than an “average” person of your age and gender.  If you are, you’ll be charged higher (loaded) premiums.

But Life Insurance companies typically don’t have processes to check if you’re likely to live longer than average… with a view to reducing your premiums.

So if you turned up at an insurance company with a favourable DNA test, you’d still pay the ‘standard’ rate.

Not fair, is it?

Pinnacle Life received notification of a complaint recently that was made to the Advertising Standards Authority.

The complainant (Tom of Auckland) took issue with Pinnacle Life’s assertion that Pinnacle’s 20% lower premiums are due to the fact that they operate “more efficiently” than the other insurers.

Tom’s complaint was based on his view that Pinnacle Life’s lower premiums have little to do with better efficiency, and instead, provided these two reasons for Pinnacle’s lower premiums…

• Pinnacle Life pay little if any commission to brokers to provide advice to clients…  so they save on commission costs and
• Pinnacle Life doesn’t underwrite people applying for life insurance… it relies on the work done by previous life insurers, thus avoiding significant costs.

Both of these points are, of course, nonsense…

Let me explain.

• Firstly, Pinnacle Life spends proportionally more on advertising, so commission costs are simply replaced with increased promotional costs.
• Secondly, Pinnacle Life underwrite every application received. Any suggestion that Pinnacle Life doesn’t undertake its own underwriting is simply a myth.
• Finally, here’s why Pinnacle Life’s premiums are the lowest in the industry… over 60% of policies are issued without touching a human hand (other than the insured person), and without filing a single piece of paper. It’s called ‘efficiency’ Tom.

Unsurprisingly, the Advertising Standards Authority rejected Tom’s complaint.