The growing number of older people, their specific healthcare needs and associated costs, and the accelerated rate at which populations are aging present many challenges to the insurance industry.
Could healthy aging promoted through widespread engagement and inclusion of the elderly be the answer to some big problems society and the life and health insurance industry currently face?
The United Nations (UN) Decade of Healthy Ageing (2021 -2030) focuses on ensuring that all older people can live long and healthy lives.1 Governments, policymakers, the private sector (including the insurance industry), employers, and society at large all have an active role to play in reaching the UN’s goals and ensuring the inclusion of older people in all aspects of life.
Healthy aging is defined by the World Health Organization (WHO) as the process of developing and maintaining functional ability that enables wellbeing in older age. It consists of three main components:
- interaction with a person’s environment
- functional ability
- intrinsic capacity
The Power of Work
The pandemic created many new challenges and exacerbated existing problems for businesses and individuals, including people’s readiness for retirement. Some people may need to continue to earn an income to meet their basic needs and cannot afford to retire; others want to remain at work for reasons other than financial. Continuing to work at older ages can have many benefits, including keeping the mind sharp, providing a comforting routine, and fostering a sense of purpose.
The many untapped capabilities of older people can be harnessed to help address the following challenges:
1. Global skills gap
One of the drivers of the global skills gap is the loss of experience and lack of knowledge transfer from retirees to younger workforce members. A potential solution could be to allow people of retirement age to remain at work. Flexible working hours and the increasingly common hybrid work environment provide an opportunity for veteran employees to gradually hand over responsibilities to less experienced colleagues while continuing to bring value to the business and ensuring continuity that is otherwise under threat.
2. Social isolation
Many people in their mid-to-late 60s have spent most of their lives performing a job and building relationships at work. Remaining employed on a part-time basis between full-time employment and retirement provides meaningful contact with others, especially for people who live on their own, and can reduce feelings of isolation and loneliness. At the same time, a career change with reduced responsibilities creates opportunities to develop new interests and hobbies and meet new people. This bridging period allows people to prepare for retirement and establish meaningful relationships beyond work.
3. Rising costs of living and healthcare
A baseline report by the WHO estimates that more that 142 million older people are currently unable to financially meet all their basic daily needs.1 The inclusion of older people in employment allows them to supplement their savings and/or pension with active and continued income rather than having to rely on passive resources alone. Earning an income and saving more can help fund the cost of future healthcare and maintain a desired standard of living.
4. Caregiver burden
The International Journal of Nursing Sciences defines caregiver burden as the strain or load borne by a person who cares for a chronically ill, disabled, or elderly family member over time.2 The negative consequences include a reduction in care provided, a decrease in the caregiver’s quality of life, and a deterioration of physical and mental health. Insufficient financial resources often precede caregiver burden. People leave full-time employment to care for loved ones, which can have a negative impact on financial resources and increase stress while they are providing care.
For older people with the functional ability and internal capacity to work, engaging in a productive work environment and earning an income can help them save money for potential care needs of family members, friends, or themselves. For their loved ones, such employment can make respite care affordable and provide temporary breaks from caregiving to help prevent and alleviate caregiver burden.
See also: Who is caring for the caregivers?
Opportunities for Insurers
Many insurance products do not provide cover for inability to work beyond a traditional retirement age of 60 or 65. Although some products extend cover to older ages, claims criteria can be limited and rather severe, no longer providing standard occupational disability cover. Employer-supported group benefits, including risk cover and savings towards retirement, are tied to formal employment contracts. In many cases, employees above “normal retirement age” can only stay on the job as contract workers and therefore may no longer be eligible to participate in the retirement/pension fund scheme.
These situations are complex and require careful consideration and planning to make significant, lasting change. Nevertheless, insurers are well positioned to work with governments, employers, regulators, and industry stakeholders toward a solution. Changes in policies and regulations can create an opportunity for insurers to innovate and provide meaningful, sustainable cover beyond “normal” retirement.
The financial services industry, as one of the largest formal employment sectors, can also lead by example. This includes insurers, who have the opportunity to change employment practices by allowing people to remain at work and accommodating the changing needs of an older work force.
The benefits of work for an aging individual – being part of a community, continuing to earn an active income, feeling a sense of purpose, etc. – are highlighted above. What should also be clear are the many benefits that life insurers stand to reap as employers by maintaining the expertise and skills of their most experienced and often most loyal employees.
As populations age, society is becoming increasingly aware of the magnitude of the challenges faced by older people, their families, and caregivers. Creating opportunities for older individuals to continue to work and contribute to their own financial and personal wellbeing can help address many of these challenges. The life and insurance industry can play a significant role in helping to make this happen and to advance global efforts to make this truly a Decade of Healthy Ageing.
1. Decade of healthy ageing: baseline report (who.int) - https://www.who.int/publications/i/item/9789240017900
2. Caregiver burden: A concept analysis - PMC (nih.gov) - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7644552/