Life insurance companies may decide to charge higher rates or even temporarily suspend sales due to uncertainties surrounding the spread of COVID-19
The financial markets and low interest rates are also roiling life insurance companies, which have substantial investments. ... [+]So what’s a life insurance company to do in the face of COVID-19? Right now, in a growing number of cases, they’re asking more questions and hitting the pause button on some applications to buy themselves time. It’s standard for life insurers to request medical records from your doctors.
Pacific Life, for example, will postpone the application of anyone who intends to travel internationally in the immediate future. The company will also wait for 30 days after an applicant returns from international travel. If the person then tests negative and is cleared, they can submit an application or take delivery of a policy.
“As life companies out of necessity seek to protect themselves from potential adverse selection, we expect carriers to implement underwriting procedures designed to identify applicants who have either contracted or been exposed to the COVID-19 virus,” says Thomas Rosendale, a director with A.M. Best who follows the life and health insurance industries.
“We’re kinda being forced into recommending a shorter term no-exam [policy], such as 10 years, with the thought of getting a lower cost exam-required plan at a later date,” says Bland., including instant life insurance, with a range of pricing. Younger and healthier applicants tend to qualify for these policies. But taking a life insurance medical exam has typically been the pathway to the best rates.
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