With the arrival of COVID-19 vaccines, we finally have a light at the end of the tunnel! Still, it will be months before daily life starts to look normal for many of us.
How has the pandemic affected life insurance? I’ll talk about the most common questions we’ve received in the past several months.
Can I still get life insurance?
The answer is yes for most people. In fact, life insurance applications for people under the age of 44 were up 3.4%. Most people will find that their life insurance options are not affected by COVID-19.
There are some groups of people who will find their options are more expensive than they would have been before COVID-19, or they might have to wait to apply until the pandemic subsides (more on this below), but most people will find the life insurance application process flows normally for them.
Can I get life insurance if I had COVID-19?
Yes, if you have recovered from COVID-19 and do not have severe ongoing symptoms, there are options available for you.
Different carriers are taking different approaches. Carriers taking a more severe approach are imposing a limit on the pricing that someone who has recovered from COVID-19 can get. For example, a healthy person who previously would have qualified for Best-tier pricing might be limited to Standard-tier pricing (2-3 notches more expensive than Best, depending on the carrier) if they’ve had COVID-19.
Other carriers are willing to consider applicants who have recovered from COVID-19 for the same pricing they would have been eligible for before COVID-19. For example, a healthy person in their 30s who recovered from COVID-19 more than a month ago can be considered for Best-tier pricing levels, just like before.
Does life insurance cover deaths from COVID-19?
Yes. Individual life insurance policies would cover death from COVID-19.
Here you need to be sure that the coverage you choose is truly life insurance and not “accidental death and dismemberment insurance,” which would not cover death from COVID-19. Some super-sketchy companies market accidental death and dismemberment as life insurance—so misleading!
AboveBoard doesn’t handle accidental death and dismemberment policies because they don’t pass our test for “delivering excellent value to the insured.” Whether you die in a car crash or from a heart attack, your loved ones need the same amount of money, so why buy a policy that only helps in the instance of a car crash?
Have insurance companies changed their rules about who they will cover?
For people with conditions associated with higher COVID-19 risk, such as asthma, diabetes, or sleep apnea, there are often still coverage options available, but they may be more limited—and sometimes more expensive—than before COVID-19.
Some carriers that have historically been super-favorable toward people with these conditions are now treating the same kind of applicants pretty harshly, probably because the carriers became nervous about having a bunch of unexpected risk with COVID-19.
For clients with a life insurance option that’s more expensive due to COVID-19 risk factors, we advise getting something in place to take the worst-case scenarios off the table and then trying to improve upon the coverage after the pandemic subsides. If you might be in this situation, we can help you smartly balance your budget and protection goals by defining your Minimum Acceptable Coverage.
While it’s not typical, some people will have to wait to buy coverage until life is closer to normal and life insurance carriers have lifted their COVID-19 restrictions. Some carriers are currently not offering coverage to anyone who would have a surcharge to Standard-tier pricing above a certain level, regardless of whether the reason has anything to do with COVID-19. For example, someone with a fairly recent hospitalization for mental health matters which are now well-managed with medication may find they get deferred, even though this is not related to COVID-19 risk. Luckily, this blunt approach to adjusting coverage options is not happening at every carrier.
Does the life insurance application process work differently now?
The application process is largely the same as before, with a few exceptions:
- Delays in getting life insurance: while many applications sail through quickly, keep in mind that people working at the carriers are struggling with the same work-from-home havoc that so many of us are experiencing, and there has been a mild increase in processing delays.
- Medical exams: I’ve been super impressed by how cautious the examiners are. They’ve always worn gloves when taking blood pressure or blood samples, but now examiners also wear masks and face shields. Many examiners have empathetically accommodated a wide range of requests from our clients, including giving exams on a porch or deck, in a yard, at a friend’s home in the suburbs, on a building balcony or roof deck, or in a garage with the door open. This flexibility has been so heartening and keeps the medical exam process on track. There are also expanded options for skipping the medical exam altogether, although some carriers are pulling back on those exceptions now that lockdowns have eased up.
I go into more detail on how the application process is different in Life and Disability Insurance in the Time of COVID-19.
Have life insurance prices gone up?
Yes, some carriers have raised prices since COVID-19 first began, but others have not.
Insurance pricing is not like the stock market, where prices can fluctuate wildly based on how people feel. Insurance prices have to be filed with the state regulator, which means that price changes take time to go into effect. At this point, some price increases have started to filter through to consumers.
Should I wait until prices go down?
No. It is very unlikely prices will decrease after COVID-19; in fact, pricing overall is likely to continue to increase with time.
If your pricing is higher because of health conditions associated with higher COVID-19 risks, that is likely because carriers are assigning you to a higher pricing bucket, not because prices went up overall. In that case, we can help you smartly balance your budget and protection goals by defining your Minimum Acceptable Coverage. You always have the option to try to improve on your coverage and pricing in the future without penalty.
My life has been turned upside down—how do I decide where life insurance fits in my priorities?
AboveBoard offers you a free Financial Action Plan to help you see your total financial picture when making life insurance decisions.