You can still buy life insurance during the coronavirus pandemic.
“This is counterintuitive, but in many ways, it’s actually easier to get a policy now,” says Matt Luckey, an Atlanta-based adviser with WealthWave.
He notes that, because many people (and insurance companies) are honoring the CDC’s social distancing guidelines, in-person blood or urine tests and weigh-ins aren’t possible now. That means insurance companies currently have fewer potential reasons to reject applicants for coverage.
“To make it easier for consumers to apply for a policy under these unusual circumstances, more than a quarter of U.S. life insurers have expanded their automated underwriting practices,” says Catherine Theroux, director of public relations for LIMRA. “One in 5 U.S. companies have postponed or waived paramedical requirements.”
Life insurance applicants, however, are still expected to fill out a thorough health history questionnaire, which allows insurance companies to evaluate an individual.
Some insurers are adjusting their coverage options
It’s also important to note that some insurance companies are adjusting their offerings and limiting coverage options based on age or the term of coverage. For example, Reuters reported that Prudential Financial would suspend taking applications for 30-year term life insurance policies from April 13 through June in response to “unprecedented market volatility.”
Likewise, it reported that companies including Mutual of Omaha Insurance and Penn Mutual Life Insurance have temporarily suspended applications for individuals aged 70 or older. Some other insurers are also temporarily suspending life policy applications for people in their 60s who might previously have been approved for coverage despite health issues like diabetes and asthma.
The insurance industry determines rates and risk based on long-term mortality and health-related data. But the information related to the coronavirus is limited to months, rather than the years it normally takes to significantly shift the industry’s underwriting guidelines.
“I think it’s premature at this point for the industry to be setting tougher restrictions on either age or pre-existing conditions,” says Ray Farmer, who serves as South Carolina Department of Insurance Director and sitting President of the NAIC (National Association of Insurance Commissioners). “It’s got to be data-driven, and there’s not enough data yet to tell you what the long-term effects will be. For a regulator, I think the answers to those questions are still a couple of years away.”
If you don’t currently have life insurance or have questions about your existing policy, speak with your insurance agent or broker to begin searching for a policy that suits your needs.
Traveling to a high-risk area could impact your approval for coverage
Questions about where you have traveled or are planning to travel have long been a part of the life insurance application process. That’s because the cost for life insurance coverage is based on risk analysis, and travel to some countries, such as those deemed dangerous by the U.S. Department of State, could mean higher premiums.
That’s especially true now. Planned or recent travel in some countries with large coronavirus outbreaks could mean a denial or a delay in gaining life insurance coverage.
“Some companies reported they have added questions on COVID-19 exposure and travel to the underwriting process,” Theroux says. “Individual companies have different policies in place.”
Those who choose to travel outside of the country during the pandemic may need to delay applying for life insurance coverage 30 days or more from their date of return. Alternatively, an insurance company might delay approval from the time you return from a trip to confirm that you have not contracted an illness while abroad.
It’s important to be honest when filling out your life insurance application, both about your health history and travel, global pandemic or not. Lying on a life insurance application can invalidate the coverage, even if you’re approved.
“There’s no increased expectation (for honesty on a life insurance application). Insurance companies always expect people to be honest when they’re answering questions,” Luckey says.
Should you still apply for life insurance?
The short answer is yes. “We’re actually seeing an uptick in the life insurance business right now,” Luckey says. “I’m even telling my clients that if there was ever a time to apply for life insurance, it’s right now because this is going to be the easiest process from an underwriting standpoint.”
Says Farmer: “If someone thinks a life insurance policy is going to benefit them or their family in the long run, there’s no reason not to apply right now.”
For applications with life insurance companies that have waived their in-person medical exams, the length of time it takes to be approved for coverage might even be shorter than normal. Speak directly to an agent or broker to determine the process and length of the approval process with the company you select.
An existing life insurance policy may cover coronavirus
In most cases, life insurance policies will cover a person if they lose their life due to COVID-19. “Existing life insurance policies in good standing will provide the death benefit to one’s beneficiaries should the policyholder die of coronavirus-related complications,” Theroux says.
There are exceptions:
- The life insurance industry has something called a “contestability period,” a window of one or two years during which an insurer can investigate and deny claims. If it’s determined that the insured lied on their application or otherwise misled the insurer to defraud them, coverage — in the case of life insurance, the death benefit paid to the family — may be denied.
- Another exception to a payout due to the coronavirus is for those who have purchased an accidental death policy. Those policies generally don’t cover death by disease. There are some exceptions, though, like if an injury causes someone to be hospitalized and the disease results directly from that hospitalization. It’s wise to discuss the specifics with your insurance agent.
In general, provided you’ve been honest on your life insurance application and are current on your life insurance premium payments, you should be set. “Once you’ve secured a life insurance policy, you’re covered. It’s not going to affect your current coverage at all,” Luckey says.