Aging Populations Create Challenges and Opportunities for the Insurance Industry

The aging of populations in the U.S., Japan, and China, along with much of the EU and many other regions will create both challenges and opportunities for insurance companies. For example, as large segments of the population age and retire, they will rely more and more on asset management and retirement products for income, rather than their previous salaries. The annuity and life insurance business will evolve as these customers age. In America, there will be huge new opportunities to sell health insurance policies that supplement Medicare, as well as long term care insurance. Also, well-run insurance underwriters will create new insurance products or investment and annuity packages aimed specifically at aging consumers.

As America’s 70+ million surviving Baby Boomers retire, a vast amount of dollars in investment accounts sponsored at the workplace, such as 401(k)s, will rollover into individual retirement accounts. This is a tremendous opportunity for the sale of investment products by insurance firms.

Americans aged 55 years or older are a fast-growing segment of the population. 2006 marked the year that the first Baby Boomers turned 60, meaning that many will take early retirement. In fact, approximately 10,000 American Baby Boomers per day are becoming eligible for Social Security benefits.

The term “Baby Boomer” generally refers to people born from 1946 to 1964. When soldiers and war industry workers who were involved in World War II returned to civilian life, they started or added to families in large numbers. As a result, the Baby Boom generation is one of the largest demographic segments in the U.S. Baby Boomers make up a bit less than 25% of the total U.S. population.

In 2011, the oldest Baby Boomers started turning traditional retirement age (65), resulting in extremely rapid growth in the senior portion of the population. The increased load on Medicare is immense. At the same time, this surging senior population will put a greater strain on virtually all sectors of the health care system. Healthy seniors, who will grow in numbers as advances are made in medicine and as some people embrace nutritious diets and regular exercise, are now able to buy life insurance much later in life.

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