The insurance industry has been talking about longevity for years, but it’s focusing on the wrong phase. It’s not long life that’s the problem, but the years leading up to it, when the body no longer functions as it should.
Nadine Esposito, founder of Wellthspan Advisory, sums it up: Insurers plan for “lifespan” – mere years of life, and for “healthspan” years of good health. What lies in between is hardly addressed. The “sickspan” that decade characterized, on average, by chronic illnesses, the need for long-term care, and cognitive decline, remains a gap in product design. Yet it is precisely there that costs rise the steepest. Those who serve the 50-plus generation today with rigid, one-size-fits-all solutions are missing out on a market segment that demands flexible transitions between phases of health, long-term care planning, and cognitive support. Longevity literacy is therefore no longer a “nice-to-have,” but a strategic necessity.
Life Insurance in Transition
Demographic change is also transforming the role of traditional life insurance. What was once purely a wealth-building tool is increasingly becoming a vehicle for the structured withdrawal of savings in old age. The Insurance Supervision Act and the Investment Regulation are raising regulatory requirements, which means more documentation and greater due diligence. Anyone who views this solely as a burden fails to see the other side of the coin: By 2050, the number of older people is expected to rise by 122 percent. This is a growth market, not a dying industry. Insurers are responding with unit-linked products and asset classes that are more closely tailored to the aging population of policyholders, supported by technological process integration.
The pension gap is becoming a reality
Figures from Switzerland show just how urgent this issue is. Since 2002, pensions in this country have fallen by an average of 16.4 percent. While AHV pensions have risen by 22 percent, occupational pension plan benefits have fallen by 40 percent. This divergence affects middle- and high-income earners in particular. The original goal of replacing 60 percent of one’s final salary through the second pillar is, for many new retirees, effectively a thing of the past. The Lucerne University of Applied Sciences and Arts also points out a risk that is regularly underestimated in retirement planning: living longer than average. Anyone who lives ten years longer than anticipated will see their capital needs grow not linearly, but at a significantly disproportionate rate especially since health-related limitations in old age tie up additional funds.
Counseling: Between Algorithms and Listening
The industry’s response lies not only in new products, but also in the way advice is provided. A study by Synpulse confirms a trend that has long been evident in practice: Digitalization and automation are taking over simple, standardizable tasks, while complex, emotionally charged decisions—such as those involved in retirement and long-term care planning continue to require people who can listen. The “Paul the Insurer” podcast illustrates this with Francisco’s story: In the end, it’s not just the rate that matters, but the trust in the advisor. Artificial intelligence can prepare, summarize, and recognize patterns here, but it cannot replace the conversation in which a client first voices what they are actually afraid of.
A Matter of Positioning
Those who view health insurance as a standalone segment rather than tacitly subordinating it to traditional retirement or long-term care planning gain a competitive edge. This ranges from flexible long-term care insurance and cognitive support services to personalized health plans based on data analysis and predictive models. Demographic trends provide the tailwind for this, while the pressure to act stemming from declining pension fund benefits creates the sense of urgency. What is still lacking in many places is the courage to treat Sickspan not as a footnote, but as a strategic field in its own right.
Binci Heeb
Listen to and read: LBC Insurance Radar #15: Between Tradition and Technology
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