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Monday, October 08, 2012

Life Expectancy and Health Insurance - Is there a connection?


Life expectancy is defined as the expected (in the statistical sense) number of years of life remaining at a given age.

World life expectancy levels (source: Google Public Database)



Life expectancy in the developed world (US and Canada is close to 80 years of age. The world average for life expectancy is 70.  The developing world average, particularly India is 62. What does this have to do financial planning you would say?

Well, for the developed world living to long translates into the need for better retirement planning

For countries like India, where the life expectancy is 65 and most individuals continue working way past the retirement age of 60, this translates into the need for "insurance", so that the ones who you care about are financial secure. But is it only financial security that matters, can life insurance be a solution. 

Can leaving large sums of money left behind ensure that the problem of people dying young go away? There is more to this crisis that is only getting worse..

Life expectancy in India by state:

State
Life expectancy at birth (2011)
74
69.4
67.2
67
66.2
66.2
65.3
64.9
64.4
64.1
63.5
62
61.6
60
60
59.6
58.9
58
58
58

On diving deeper and looking at the life expectancy, region wise you should also ask why? Now I have added one more column to this region wise data i.e. per capita income

State
Life expectancy at birth (2011)
Per Capita Income (INR) Regionwise
74
83725
69.4
78171
67.2
83471
67
73608
66.2
94680
66.2
72993
65.3
60946
64.9
48536
64.4
62912
64.1
75115
63.5
53331
62
42434
61.6
20708
60
26355
60
66368
59.6
40412
58.9
30569
58
29786
58
41167
58
32222


So the regions that have low per capita income à Fewer people have access to Health care à Low Life Expectancy

Conclusion

The point of this article is too make you realize that "YES" life insurance should be a number one priority for poorer regions. Saving is good but securing the life on people who matter to you is also important. 

But to solve the puzzle, its important that people in these regions have access to health Insurance. Hospitals are not profitable in regions where people earn less and when they do not have health insurance this only increases the burden on the state. 

Solution

Financial companies that sell health insurance should be encouraged to or mandated by the government to sell health insurance in these poorer regions. Marketing budgets and message from the government educating people on "Why health insurance is important should be the focus".  

Health Insurance coverage --> Profitable hospitals --> Better Life expectancy Rates --> More productive work force --> Higher tax collection for the government --> Higher amount allocated towards healthcare spend --> WIN WIN FOR ALL