Accredited Actuarial Service Provider | 30+ Years Industry Experience | 100+ Attorney Clients

Loss of Support

Loss of Support – The need for IP reports if the deceased is under the age of 45 years.

The basis for the calculation of the loss of support arising out of the death of a breadwinner essentially involves projecting the deceased’s income until retirement. The income derived from this projection is then split among the surviving dependants according to pre-determined rules. To project the future income of an individual (alive or deceased), actuaries rely on postulations given by Industrial Psychologists. For the calculation of a loss of support quantum, it is standard practice to assume the deceased’s earnings would have increased in line with salary inflation in the absence of an Industrial Psychologist’s report. However, this approach is not fitting for younger lives for the reasons outlined below:

According to Super’s Career Development Theory, vocational maturity tends to correspond with age as given in the table below:

StageAge (years)Characteristics
GrowthBirth – 14Development of self-concept, attitudes, needs, and the general world of work.
Exploration15 – 24Experimenting or “trying out” through classes, work hobbies. Tentative choice and skill development.
Establishment25 – 44Entry-level skills building and stabilization through vocational experience.
Maintenance45 – 64Continual adjustment process to improve one’s career position.
Decline65+Reduced output and, preparing for retirement.

As can be seen from the table above, working individuals below the age of 45 years, will experience promotional increases in salary as they stabilize their careers in addition to cost-of-living adjustments (i.e salary-inflationary increases). If the deceased is below the age of 45 years, it is reasonable to assume that his/her increases in earnings would have emanated from both cost-of-living adjustments and promotional increases. To quantify the promotional increases that an individual can potentially earn, actuaries rely on Industrial Psychologist reports.

In conclusion, it can be seen that if the deceased was below the age of 45 years it is beneficial to the dependants that the deceased’s future income projections be postulated by an Industrial Psychologist.

More Posts

Send Us A Message