Shopping for Life Insurance During the Pandemic

It may come as no surprise to learn that there was a jump in life insurance applications during 2020.¹ While contemplating one’s demise may feel like something you can delay when healthy, financial planning clearly weighed heavily on the minds of Americans during the current deadly pandemic.

Rest assured that for anyone who already owns a life insurance policy and then passes away due to a COVID-related condition, their beneficiaries will receive the death benefit (as long as premium payments are current). Once you purchase a life insurance contract, the terms are set and cannot be changed after purchase.

However, if you’re considering applying for life insurance while the pandemic is still ongoing, you can expect a few challenges. Because the coronavirus has had a high fatality rate among people age 65 and older, some insurers have temporarily limited the age for which they will issue a new policy. Some won’t issue policies after age 70; others have cut the age limit to 60.²

If you have traveled out of the country recently, particularly if you’ve been to a country with a substantial outbreak, the insurer may require a quarantine period before considering your application. The same goes for if you are currently infected with the virus; you’ll have to wait until you are fully recovered to apply for life insurance.

Traditionally, life insurers generally required a physical exam as part of the application process to ensure the candidate wasn’t facing imminent death when he or she applied for a policy. However, because of today’s social distancing guidelines, many insurers have delayed that requirement — relying solely on a medical questionnaire. Those questionnaires will very likely ask if you have been treated for COVID-19.³

Even pre-existing health conditions such as diabetes and asthma, which are high-risk factors for serious COVID-19 cases, may be heavily weighted when determining your policy premium. While medical underwriting is no longer permitted to determine health insurance terms and rates, it is baked into the life insurance application process and can affect individual premiums.

In fact, in upcoming years, as insurers amass and evaluate medical data related to the coronavirus, they are apt to adjust policy terms and rates, particularly in anticipation of subsequent medical conditions suffered by COVID-19 survivors. This is perhaps reason enough to go ahead and apply for life insurance now — assuming you are relatively young and healthy — before those factors become an issue.

Finally, if you’ve lost your job and are worried about being able to keep up with life insurance payments, call your insurer about alternative payment options. Considering today’s high unemployment rate, some carriers are offering to defer premiums for up to 90 days.⁴

Give us a call at 801-990-5050 if you would like guidance on life insurance solutions.

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. 

¹ Megan Leonhardt. CNBC. Sept. 1, 2020. “Applications for life insurance are on the rise—here’s what you should know before you buy.” https://www.cnbc.com/2020/09/01/what-to-know-about-buying-life-insurance-during-the-covid-19-pandemic.html. Accessed Feb. 23, 2021.

² Cynthia Paez Bowman. Bankrate. Oct. 29, 2020. “Can you get a life insurance policy during COVID-19?” https://www.bankrate.com/insurance/life-insurance/coronavirus-and-life-insurance/. Accessed Feb. 23, 2021.

³ Sterling Price. ValuePenguin. Jan. 15, 2021. “How Is the Coronavirus (COVID-19) Affecting Life Insurance? An FAQ.” https://www.valuepenguin.com/life-insurance-coronavirus-faq. Accessed Feb. 23, 2021.

⁴ Ibid.