The pandemic got a lot of people thinking about how to increase the financial security of their families, now and in the future. And life insurance moved to the top of many to-do lists.
A survey conducted in May and June 2020 by Life Happens, an industry-funded education group, found that 67% of Americans say that the pandemic has been a wake-up call for them to examine their finances. And 30% say that life insurance has been one of the top topics for dinner table discussion.
“COVID-19 has highlighted how important planning for the unexpected really is,” says Aaron Ball, senior vice president and head of insurance solutions at New York Life. “Although more people might be more focused on buying life insurance as a result of this situation, we expect that the importance of building in a cushion—whether that is an emergency fund, adequate insurance or other mechanisms for protection within a financial plan—will resonate with consumers well beyond what is a hopefully a relatively short period of uncertainty.”
Life Insurance Buying During the Pandemic:
If you are wondering if the pandemic is a good time to be buying life insurance, it is. In fact, because some companies have started raising prices, now is the time to snag a good rate before prices are higher across the board.
It is also a prime time to make an application that will not require a medical exam. In the past, buying a no-exam policy usually meant paying more because the insurer had less information on you to assess their “risk” in selling you a policy.
“The labs, doctors’ visits, documentation, and in-person meetings made the whole experience lengthy and cumbersome,’ says Tingle of John Hancock. “The pandemic made all those steps impractical, if not impossible.”
Byron Udell, CEO of AccuQuote, a national online life insurance agency, observes that many life insurers quickly adapted by offering no-exam policies at prices comparable to policies that required an exam. This is giving life insurance buyers more choices for coverage—without worrying about how to get an in-person exam done. AccuQuote has seen a 20% to 30% uptick in life insurance applications.
You may still run into a medical exam requirement if you are looking for a large amount of coverage (in the millions) or you are older or have health issues.
Tingle of John Hancock Insurance thinks innovations that allow a shift away from medical exams will get traction. “There is no question that COVID has accelerated a move toward a less invasive, less burdensome, and more timely purchase process.
International Travel Is Still a Concern:
When the pandemic started, traveling internationally was seen as one of the riskiest things you could do from a life insurance buying perspective. Most life insurance companies instituted postponements for applications until after the travel. Once you were back and healthy, and after a certain period of time such as 30 days, the insurer would consider your application.
Now, of course, traveling even to Florida seems ill-advised, but domestic travel is not an application question. Postponements for international travel remain common.
If you have plans for international travel this year, expect a delay on a new life insurance policy for at least 30 days. And that is assuming you do not have additional international travel plans.
Tips for Buying Life Insurance Now:
If you are ready to buy coverage, life insurance companies are fully open for business. Here are some important considerations.
Be prepared for potential delays due to the pandemic: You may experience a delay in the application process if your insurer wants to request medical records, as many doctors’ offices have reduced staff for doing such tasks. If your application will require a medical exam, you might also experience a delay, especially if you are avoiding in-person contact with strangers.
Now is the time to get in on good life insurance prices: Many life insurance products are priced at all-time lows, but the winds are shifting. Udell at AccuQuote has already seen dozens of companies raising prices because of the low-interest rates. Continued low-interest rates will put further pressure on insurers to raise rates in order to compensate for lower investment gains.
Take time to look at how much life insurance you need as part of your bigger financial plan: It is best to look at life insurance as one of several players in your family’s financial strategy. Seeing it as part of the bigger plan can affect how much you decide to buy, and what type of life insurance to choose.
“While applying for life insurance has become easier than ever, figuring out how much insurance you need and the role that insurance plays as part of your overall financial strategy can be much more challenging,” says Ball of New York Life. “Navigating this with the help of a trusted financial professional can ensure your family’s needs will be covered.”
Tingle of John Hancock says, “My advice is: Have life insurance because things happen. We take the matter of paying claims very personally and having the opportunity to see so many stories and the people behind the claims, you are reminded of all that can happen in life.
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Cara Lovenson is president of Plan Professionals, Inc., a licensed insurance consultant located in New York City. She can be reached at 212-697-2000, or by e-mail at firstname.lastname@example.org Her Web site is planprofessionals.com