The true cost of COVID-19

I received an interesting letter from the Prudential Insurance Company, my life insurance company.  Based on "positive financial experience," they are authorizing a three-month "premium holiday."  At first, this seemed counterintuitive.  After all, we are told we are in a COVID-19 pandemic.  One would think life insurance companies would be hard hit by the pandemic.  Then it occurred to me that unlike the media and our politicians, life insurance companies understand that we all are going to die sometime.  Life insurance companies stay in business by correctly estimating how much longer we can be expected to live based on data and actuarial tables.  The fact that Prudential is authorizing a "premium holiday" means that the COVID-19 pandemic could not be having an appreciable negative effect on life expectancy.  

Let's look at that more closely.  The life expectancy for an 85-year-old might be nine additional months.  If an 85-year-old contracts COVID-19 and dies in six months, that individual will have died three months short of his actuarial life expectancy.  This would have only a slight negative effect on the "financial experience" of a life-insurance company.  On the other hand, the life expectancy for a 40-year-old might be 35 additional years.  If he contracts COVID-19 and dies within a year, he will have died 35 years short of his actuarial life expectancy.  If many 40-year-olds die 35 years short of their actuarial life expectancy, that will have a dramatic, negative effect on the financial experience of life insurance companies.  And nothing like that has happened.

The overall effect of the COVID-19 pandemic is a small reduction in the life expectancy of the elderly.  Those who follow the CDC website already knew that.  What we did not realize is that as a whole, Americans are living longer.  We know that because of the financial experience of the insurance companies.  And why are Americans living longer?  We are living longer because we are getting better health care, which includes more and better screening, better diagnostics, and better and earlier treatment.  Therein lies the rub.  Because of the COVID-19 hysteria, panic, and lockdowns foisted on us by the media and our politicians, Americans have either decided to forego or have been forced to forego "wellness" doctor visits and "elective" procedures such as mastectomies.  The inevitable consequence of those missed doctor visits will be an across-the-board reduction in life expectancy.  Do those in the media and do our politicians understand this?  Do they realize that they are jeopardizing the health of their fellow Americans just to sell a few more newspapers or to get a few more votes?  

Image: Ythlev

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