Getting Life Insurance During the COVID-19 Pandemic | 5 Reasons to Act Fast


The COVID-19 Pandemic in Canada

The number of people affected by Coronavirus (COVID-19) around the world exceeded a million by April 3rd, and the death toll continues to climb. Canada still affected with thousands of cases and multiple deaths daily which is terrible for all Canadians.

How is this affecting the life insurance industry?

Insurers protect against risk and use data and records to determine those risks. Unfortunately, COVID-19 is a new disease with no previous data. This leaves many underwriters unsure of how to cover this risk.

The current uncertainty, along with the constant evolution of the issues caused by COVID-19, have a current and future impact on life insurance and how the companies will service their clients.

We checked in with several life insurance professionals for a look at what has changed, what may change at a future date, and the reasons you should act now to get the insurance you need.

Reason #1: Changes in life insurance applications and underwriting processes

The COVID-19 crisis arrived quickly, spreading around the world at record speed. This fast evolution and spread did not leave insurance companies time to prepare. Many are still using old applications and sets of questions, but quickly adding a few additional ones about travel to high-risk countries (e.g. China, Korea, Italy) or asking if the applicant has been exposed to or is exhibiting COVID-19 symptoms.

The situation is evolving fast; more and more countries show signs of a broad COVID-19 spread including the neighboring USA and many European countries. Increasing exposure in Canada is also important to consider. As the spread continues, researchers gather more knowledge about how the virus acts and what its long-term consequences are.

This will ultimately lead to life insurance companies reworking their applications and questionnaires, and the new ones might pose greater obstacles in your ability to get insured. That it is why it makes sense financially to take advantage of the current applications if you are thinking about getting life insurance. Things will change quickly.

Reason #2: Changes in pricing

We predict that the way various insurance companies evaluate and underwrite life insurance applications will change from company to company. Each insurer will be forced to rework their risk models while relying on limited sets of COVID-19 data. Some insurers might take a more conservative approach and exclude people with respiratory pre-conditions or outprice certain groups of customers by putting a high life insurance price on policies for particular customers, effectively “discouraging” them from getting a policy with that provider.

In general, we expect that policy prices will go up to account for both the higher risk life insurance companies will be taking on, and also to compensate for unexpected economic impacts insurance companies will feel (declining business, need to enable own employees to work remotely, etc.).

Reason #3: Increased coverage amounts for no medical life insurance

Though insurance is considered an essential business according to this list, the way customers interact with insurance professionals changed very quickly. It is not a business that is conducted in physical proximity anymore, but rather over the phone or online.

It is important to understand that most life insurance products historically included a physical medical exam, or a test conducted by nurses/paramedical specialists who would come to your house. With COVID-19, that is not an option.

That’s why we predict some no medical life insurance coverages (or traditional life insurance without medical exam) will go up. People will still need good coverage amounts (e.g. to cover mortgages) but without being able to do a medical exam, getting a standard, simplified or guaranteed issue policy may be their best option.

It is important to remember, though, that no medical life insurance comes at a cost and you’d pay more for the same amount of coverage than you would to get a standard or traditional life insurance policy.

Reason #4: Need to protect yourself and your loved ones

With the arrival of COVID-19, many Canadian families found themselves in a very high economic pressure situation as numerous industries and jobs have been impacted. As per CBC, the number of monthly EI claims between August and December 2019 was around 240,000, meaning an average of ~50,000 per week. Contrast that to now where we recently saw nearly 1,000,000 EI claims over a matter of days.

Many families are down to one bread winner. The risk of losing the income of the breadwinner has increased dramatically. That alone is a strong reason to consider getting at least some kind of protection in the form of life insurance. That can be just a simple Term Life insurance policy which is very affordable, e.g. a female without health pre-conditions, non-smoker (36 years old), can get a coverage of $400,000 for ~15/moth.

Reason #5: Time to adjust: if you have a life insurance policy, you can take steps to ensure you don’t overpay

In times of an economic downturn, it is important to ensure that you minimize your unnecessary expenses. Are you sure that your life or disability or critical illness policy came at the best possible price? It is important to check all possible alternatives – it is very likely that you can get the same policy for less; our brokerage can help with this as we work with over 20 Canadian life insurance providers.

Another aspect to consider is, has anything has changed in your situation? You may not actually need the same amount of coverage. Examples of cases when you can reduce coverage and save are: kids grew up and are financially stable on their own, mortgage has been paid off partially or in full, you have a reduction in debt, and changes in your business situation (if you are a business owner). Those changes may impact your coverage needs and allow you to reduce your insurance costs.

Thinking about getting life insurance? What should you do next?

It is up to you to decide if you want to wait to get life insurance or not get it at all, but you should consider getting coverage. Our experienced life insurance brokers will help you get a life insurance policy without you leaving the comfort of your house. Get a free quote or simply ask us a question – our team is happy to assist you.

  • We have already mentioned that we are able to serve you remotely – we have been doing so for 25 years in Canada.
  • We work with more than 20 life insurance companies and have in-depth knowledge of their policies along with the changes/nuances of each company with respect to COVID-19.
  • We are able to save you more than many other insurance agents or brokers based on the number of companies we work with as opposed to agents who only work for one insurer or for smaller insurance brokers.

Our team of life insurance professionals is looking forward to hearing from you – we are just a click away.

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