The novel coronavirus is continuing to leave its trail.
Life insurance underwriting is the crucial step of the life insurance process. A group of people, known as underwriters, examine life insurance applications and determine how much of a “risk” they are. Age, health, occupational work, medical history and the applicant’s gender are specific factors underwriters evaluate.
Underwriters play the most important role in the life insurance application process (besides the actual applicant) because they have the power to accept or deny someone for a life insurance policy. Another purpose that underwriters have is to determine the appropriate level of premium based on the risk of the particular applicant.
So, how does COVID-19 impact future life insurance underwriting?
The underwriting process is stricter.
This is because insurers bear an increased risk of the policy holder dying that typical mortality tables would normally predict.
We do not know complete future implications of COVID-19.
If the applicant is older and has preexisting conditions, they are more at risk for contracting the coronavirus, which could pose a risk to life insurance policies. In addition, when an applicant contracts the virus, it is impossible to know what the future may hold and whether it could affect their risk of dying. Ultimately, it is difficult for underwriters to predict the future health of someone who has contracted the virus. This identifies many challenges you may face when applying for a life insurance policy.
When an underwriter cannot accurately predict mortality, they tend to get a little more conservative in their underwriting decision, i.e., They are not as willing to take as many risks.
What changes have we seen so far with underwriting?
Susan Rupe’s article, Underwriting Among Early Effects Of COVID-19 on Life Insurance, says, “COVID-19 has had the biggest short-term effect on life insurance in two ways: Insurers extending grace periods for paying premiums and placing a greater emphasis on accelerated underwriting.”
Accelerated underwriting means that the insurance company does not require someone like a paramedic to visit the applicant’s home to take blood, urine and vital signs. Due to the pandemic, underwriters are limiting exposure to applicants.
It’s important to remember that when applying for a life insurance policy during a pandemic, you must disclose whether you have traveled or if you will travel to affected areas. If an applicant plans to travel out of the country, or if they recently returned from abroad within the last month, life insurance companies may delay approval. Some companies even have travel restrictions in place that could prevent application approval. If you are not truthful, underwriters can choose not to write you a policy.
The main takeaway of this article is that life insurance underwriting is becoming stricter as no one knows future implications that the virus may pose. If you have contracted the virus, or you are at a higher risk, underwriters might take this into account and deny you for a life insurance policy, especially if you have other conditions.
We highly recommend that you apply for a policy now in case new restrictions arise or conditions worsen. If you plan now and buy life insurance today, your family will be protected, and your beneficiary will receive the death benefit even if you later get COVID-19 and pass away.
How can we help you?
We offer Term Life, Return of Premium, Whole Life and Universal Life Insurance.
We know that understanding life insurance can be difficult and having it now is more important than ever. Give us a call at (864) 467-8738, and we can answer any questions that you may have, and we can do a free life insurance application for you.