The relationship of life expectancy to the development and valuation of life care plans

Abstract

BACKGROUND: A life care plan often analyzes needs up to a person’s life expectancy. Expected present value of necessary funding for such a plan is likewise based on the fixed survival time. If a client should live beyond or die before the life expectancy, a shortfall or excess of funding may seem inevitable. The life table, of which life expectancy is a summary measure, clarifies these issues.

OBJECTIVES: We explain life expectancy and how it is used in tort litigation, economic calculations, and life care planning. We examine the life table, of which life expectancy is one output. We illustrate how a life table provides age-specific probabilities of death and survival, life expectancies, and median survival times, and other information and that every life expectancy must be associated with a life table. We consider the implications for life care planners, forensic economists, and others.

CONCLUSIONS: Life expectancy is a summary of more detailed information provided in a life table. The full life table provides better information for planning purposes. Whether life expectancy or a full life table should be used in developing and valuing a life care plan is not well understood. A multi-disciplinary approach may help clarify these issues.