Risks and Life Insurance

by Mike Darwin 75120.575@compuserve.com

Someone brought to my attention that John Grigg had asked on Cryonet for my experience (and Fred Chamberlain's) on delaying buying life insurance. I have a reputation for always looking at the "worst possible side of things." As one of my dialysis patients once said of me: "Mike's the kind of guy that, if you show him a beautiful rose, he'll immediately tell you about a guy who got pricked by a thorn from the rose his girlfriend gave him on their wedding day, got a horrible infection, had his arm amputated, lingered in the ICU for weeks, and finally died leaving his whole family impoverished."

This not withstanding I would make the following points based on a real but skewed experience in this area:

1) Mike Perry notes the odds:

How slim? Have you checked it out? I looked on the Web just now and found a 1997 mortality table (or "life table" as it's called. If you're interested, the URL was <http://www.cd.gov/nds/data/lewk3_97.pdf>; I believe it pertains to the US only--a good enough start however). Starting with 100,000 people at birth (age 0), there were 96,330 surviving to age 39, and 93,712 surviving to age 49. The fraction dying thus is (96,330-93,712)/96,330 or 2.72% or about one in 37. "Small" maybe, but not what I'd call "very, very small." If I had to attend a lecture that 36 others were attending, and knew a terrorist would shoot one of us but only one, at random, I think I'd wear a bulletproof vest. There are other reasons for signing up too. Strengthening the organization of your choice, strengthening the cryonics movement overall, setting an example for others, putting yourself mentally in a firmer state of opposition to death, contributing to a very worthy cause--all are reasons enough, and others could be found. (end)

These are the odds for death for a 39 year old cohort. These are not numbers I'd be happy with: not 1 in 36!

2) These are not the odds for people who become uninsurable at or before age 39. The number of people who are, for all practical ($$) purposes uninsurable by age 39 has to be much higher. In fact, I know it is and the College of life Insurance in NYC can probably give you the precise numbers.

Leaving really obvious cases of uninsurability aside, there are all sorts of things that can really make it very unpleasant and costly to get insurance: a history of depression (depression has about the same mortality as heart disease over a 5-year time course). Prozac isn't the big negative in getting insurance that it used to be, but if you innocently tell them (or they find out in checking your medical records) that you have been on 3 or 4 different antidepressants you are in deep shit with a lot of the best companies. Incidentally, FYI, it is not at all uncommon for people to have to try half a dozen or more antidepressants or combinations before they find one that works for them. I know people who Prozac works miracles for, but others it turns into "zombies." By contrast, the same class of medications (SSRIs) like Paxil or Zoloft may be perfect for some, and useless or even detrimental for others as individual drugs. If you look at the number of depressed people in the US, it is staggering. This will cause many companies to decline you coverage (especially if something weird like cryonics is in the equation) or to "rate you" (charge more).

3) There are lots of diseases like diabetes, arthritis, in fact, too many to mention here, that are disasters in terms of coverage and costs. These can hit at any time, but the older you get the greater your risk. By the time you are 40, judging from my chart of % of initial function left in various organ systems versus age (From the work of Benjamin Shock) hanging on the wall next to my desk, your risk of having a serious pathology that could interfere with purchase of insurance is probably rising very fast: maybe exponentially.

4) Life insurance as we know it is doomed IMHO. The development of "gene chips" and soon to come CD-ROMS with thousands of possible antigens, genes, biomarkers, serum enzymes, metabolites, gene products, etc. which can be tested for on one CD-ROM.

This latter technology will allow a physician to test for literally several thousand things with a very small sample of blood using a standard CD reader at a very low cost. Even as it is, insurance companies are using increasingly sophisticated assays to assess risk. People buying life insurance in the past, and to a great extent today, are either overpaying or underpaying for their risk. This averaging is "fair" as long as as you can't quantify risk very well. But that is about to change. And, already, people with bad HDL/LDL ratios, high homocysteine levels, certain drugs in their blood, etc,. are going to find they are quietly declined coverage or quoted a very high rate.

Now, having done lifespan studies with "genetically identical" animals I can speak from experience that they do not die all at once, or even in a tight "squared-curve" cluster. They die all over the place and from an amazing array of things. It is certainly true that they die more "clustered" and of more of the same pathologies (say a large number of lymphomas for one strain versus renal failure for another) than do genetically heterogenous animals. But, the stunning fact is that only about 50% of their mortality is obviously gene-linked. The other 50% is chance and "that which is not seen:" extragenetic environmental influences.

Examples of chance are getting hit with a cosmic ray at just the right spot on your DNA to cause cancer, or eating a peanut with an alflatoxin molecule that just happens to kinetically react with your DNA at just the right time and place and cause a primary hepatoma (liver cancer). Extragenetic influences are things like womb conditions (access to placental nutrition, etc.), competition for food after birth, whether you are on the top of the cage rack close to the flourescent lights in the ceiling and the UV they emit, or lower down and farther away frm the UV. Mice and rats at the top of the rack get cataracts and skin cancers (ears, nose) at a far higher rate than animals at the bottom of the rack. Thus, a GOOD lifespan researcher rotates cage positions on a tight schedule to avoid these effects.

I bring this up to point out that genes are NOT everything, and that foolish people who do know they are doing self-damaging things like smoke or drink excessively, will often say things like: "Both my parents smoked 3 packs a day since they were kids and they are still alive and well at age 75." This used to be my colleague Jerry Leaf's standard line to me: Jerry is now pushing up bubbles in LN2 in Phoenix, AZ, having had an MI at age 50 which resulted in sudden cardiac death (no standby and transport and lots of ischemia). It's OK to smoke if you want to, but be realistic about the risks and above all realize mom and dad ain't you! And neither are your cousins or your uncles or you aunts..."

So, I guess, on purely calculable bases, the odds of becoming "uninsurable" are really bad compared to dying at a given age.

5) First hand-experiences: lots in the cryonics business. It's hard to say if this a skewed population or not since people who decide to sign up may have a clue "something isn't right." Or, more directly, they may have had next of kin who died unusually early, sensitizing them to their own mortality; this again might well be a marker for increased risk of death for THEM, thus skewing the numbers. I can tell you that if I were to guess, about 1 person in 15 who tried to sign up (age ~30) were either uninsurable or had MAJOR problems finding insurance or paying for it.

6) Insurance sucks as any kind of reasonable investment. You'd do lots better with the NYSE listing of stocks and a dartboard to make your investment selections. However, insurance DOES have these unique advantages:

a) It is almost never successfully contested (It can be contested, but rarely is because the odds of success are terrible, at least now, and in the historical past).

b) It is immune from asset seizure for debts and is not part of your estate, with one important exception: the IRS or federal government can take your life insurance for tax liabilities or for certain drug-related penalties (i.e., they can argue you used money made from selling illegal drugs to pay the premiums and take your insurance benefits under the seizure laws).

c) It is a quick and complication free ( in the US) way of conveying assets after death, and since it was created to protect family values (money for the widow and the semi-orphans) it enjoys speciality status in this regard.

7) There is another tremendous advantage to life insurance which is sadly overlooked by all to many people. Let's say you "win" and the life insurance company stands to lose. Bad news, right? Well, yes, generally. But, with viatical settlements you now have options. Unless you are Jim Neighbors or Larry Hagman and you get end-stage liver disease it is going to cost you $250K (US) for a liver transplant and follow up care. You will note that BOTH these guys had liver transplants years ago and both are alive and doing well. They HAD the $250K. Most of us don't. Life insurance companies will cash in your policy or others will buy it for a good fraction of its face value IF you are terminal (usually up to 80% of face value). I know a LOT of guys who were on death's door from AIDS, cashed out $500K of term and whole life (work and private coverage), travelled all over, bought gobs of "toys" (cars, luxury condo, etc.) and then along came HART therapy. They are now pumping iron (literally), have normal T cell counts, undetectable viral loads, money left to pay for the meds (which are not cheap), and in a few cases, money enough to invest so that they don't even have to work anymore!

In any event, the ability to use life insurance for viatical purposes means expanded treatment options, money to pay for up-end cryonics services like remote standby, relocate to a good hospice facility, or get better end-of-life medical care. Skilled registry nurses who can pronounce death cost $30.00 an hour on the cheap-side. If you don't die on schedule you could rack up $5, $10, or even $15K in nursing bills in a few days! The alternative is to wait till the hospice nurse drives out (after you are dead) and pronounces you: I've had this range from 30 minutes to over an hour. In the meantime you sit there with no ice, no meds, no nothing.

Finally, you don't have to cash out the whole policy, and life matters now, at least to most people. You may want to cash out $5K to take that dream trip to Sri Lanka, Hawaii, or wherever. Both Mary Naples (New York Life Ins. agent) and I have see friends fulfill one of their greatest dreams, like taking that dream trip they never quite got around to taking when they were well.

I was lucky; I've always wanted to go to Egypt, preferably in style and for awhile! In other words, really see it all and do it all, and not from a tourist bus. I took the time and money to do it while I still had my health. For many people that is not an option. I'm grateful that for me it was! It was a life-transforming experience that was worth every penny of my hard come by savings. I spent the first morning of the "third millennium CE" floating in a hot air balloon over the Ramasseum and the Valley of the Kings in Luxor as the sun came up across the Nile. I landed to a sumptuous breakfast, crossed the Nile by felucca from the West bank (the side of death) to the East bank (the side of life and the rising sun), and spent the rest of that wonderful day listening to the soundtrack from 2001: A Space Odyssey on an in-ear CD-player (immersed in the sound) and viewing some of the most magnificent Egyptian sculpture still in existence which is housed in the seemingly modest and cooly-darkened, windowless Luxor Museum.

Cryonics aside, these are some of the other options that help make life insurance a reasonable buy despite its lousy capital return rate. There's more to life (and death) than price to earnings ratios....

Editorial notes:

Some of the legal points raised about life insurance many not apply in the UK or anywhere outside the US. If you are contemplating life insurance, always ask whether the options you are considering using are available under the jurisdiction in which you live.

Of course anyone choosing investments instead of life insurance would have much more money available to "cash in" for the options suggested. As the first year or two's premiums of life policies (less life cover costs) go to the selling agent (or life company if bought direct) life policies only build value after decades, whereas all the money in successful investment is yours whenever you want it. It is the first years of a regular saving plan that are the most important, and the front slicing of the investment portion of life policies has a very serious effect on the investment value at maturity.

Also in the UK and probably in the US as well you can now buy critical illness insurance that pays out money if you are diagnosed with terminal but not immediately fatal diseases such as cancer.

Although there are pitfalls with life insurance - nothing in the world is totally safe - anyone who is unsure of technology growth or indeed general stock market growth will have a much more predictable outcome with a life policy. They will know it won't do as well as investment, but if investment does badly, then the investment side of life insurance won't do quite as badly either. Of course if the stock market completely collapses so will the life company and your policy will be worthless anyway. But a collapse of this magnitude is unlikely.

Cryonicists by their very nature have an optimistic view of technology growth, and this needs to be factored in to the choice of insurance or direct investment.

I think the best way of looking at life insurance (or fixed interest investment) is as a luxury for those with the earning capacity (and employment security) or capital wealth that is sufficient to maintain their lifestyle without the work and worry contingent upon making their savings earn for them at maximum pressure all the time.

Last Word from Mike Darwin:

Catastrophic health policies are available in the US but only for medical treatment, not as discretionary cash!

Also, in the US anything other than life insurance is subject to postmortem legal attack: inter vivos trust, will, etc. No other mechanism seems to be as secure. This is the major reason to use it for cryonics in the US as virtually everything else tried has had a high failure rate.

In the US we have only partial socialized medicine. This means that in order to get government medical care (nursing home care etc,) once your private insurance is exhausted you must "spend down" to no more than $2,000 in total assets. If you have given or transferred money or other assets prior to two years before the spend down point is reached, those assets can be seized. Prepaying for a cryonics would count as an asset, just like owning a house, a car, ore prepaying for mortuary services. Only if you gave the money or irrevocably paid for the service in advance prior to 2 years before you reach your $2K spend down limit would your assets be exempt from seizure by the government. Most people end up using Medicare/Medicaid to cover the cost of extended terminal or nursing home care and many are now getting nailed by the Feds for asset transfers to relatives, friends, charities, etc. which occurred after the two year limit.

Life Insurance, by special law, is immune from this. Big $$$ companies with BIG political influence.