Applications for insurance at both extremes of age must be carefully underwritten. In both cases, the basic obstacle is limited insurable interest�which, if not recognized, may lead to speculation and excessive mortality.

In some families there is a demand for juvenile insurance, and most companies will write insurance on the lives of very young children, even down to 15 days old. These insurers attempt to cope with the lack of insurable interest in three ways: (1) by limiting the coverage to amounts much smaller than those available to adults, particularly at the early ages, (2) by seeing that the insurance on the child bears a reasonable relationship to the amounts in force on the other members of the family, especially the breadwinner, and (3) by seeking a large volume of juvenile insurance applications to minimize adverse selection.

From the standpoint of the basic mortality risk, juvenile risks are very attractive. With the exception of the first few weeks after birth, the death rate is very low and does not begin to climb until around age 10. The death rate is high immediately after birth because of the hazards of childbirth to the child, congenital defects, and the naturally delicate physique of a newborn infant. This period of heavy mortality can be avoided by limiting coverage to children who have attained the age of one, 3, or perhaps 6 months. Family economic circumstances seem to have greater influence on mortality at the younger ages than later in life, which makes it necessary to inquire about family finances. In general, juvenile insurance is sold without a medical examination.

At the other extreme�that is, at the older ages�the lack of insurable interest is only one of the complicating factors. In the first place, the volume of insurance issued at ages above 70 or 75 is not large enough to yield predictable mortality results. The restricted demand for insurance at those ages reflects the high cost of the insurance, the general inability to satisfy the medical requirements, and the limited need for new insurance. In the second place, a high degree of adverse selection is associated with applications received at those ages. Low volume in itself is suggestive of adverse selection, but when it is accompanied by burdensome premium payments, the environment is even more conducive to adverse selection. This antiselection may be exercised by the insureds themselves, aware of a serious impairment, or by a third party, perhaps a relative, who seeks insurance on the life of an elderly person for speculative reasons. A third factor, related to the others, is the relative ineffectiveness of the medical examination for elderly people. A routine medical examination does not reveal many conditions of a degenerative nature that can materially shorten the life of the elderly applicant.

Estate tax law changes of the 1980s have led to a dramatic expansion of marketing life insurance, particularly joint-life and survivorship products to applicants of advanced age. This has resulted in the extension of insurable ages to 80 or 85 by some insurers.