Are Life Insurance Companies Capable Of Handling A Pandemic?
These are certainly crazy times and the truth is we don’t know how bad things will get or when this will resolve and life will begin to return to normal. I had a customer call a few days ago asking if his life insurance would cover a death due to COVID-19, or any other similar or worse scenario that could come along in the future. The short and completely accurate answer to the question is YES!
The life insurance industry has been very profitable for a very long time and life insurance companies are sitting on huge reserves. They are capable and stand ready to pay out whatever claims are submitted even if those spike dramatically. There are rumors that life insurance companies may “step back” from approving new policies or make it harder to get approved, until this blows over or that the challenges of this pandemic may undermine their financial strength. The opposite is true as financially strong life insurance companies reach out to help.
How Are New Life Insurance Applications Being Handled?
It might just be business as usual, but there are a few wrinkles that have popped up. It seems there are some examiners who aren’t willing to go out to homes to do paramedical exams for life insurance. Understandable I guess when you look at the way nurses have to be protected just to do swabs, and it would be asking too much for a person to be tested for COVID-19 just to prove they are negative so they can take an insurance exam.
It also appears in the short run (the next month or two?) that life insurance companies may have problems trying to acquire medical records. Acquisitions of medical records is a standard procedure, at least in cases where there is a significant health history. With most medical facilities cutting back on “non-essential” employees, this vital source of underwriting information, at best, will be slow coming. What used to take weeks could now takes months.
Will Life Insurance Applications Require A Negative COVID-19 Test?
At this point we know for sure that the answer is no, in almost all cases. In the big picture it wouldn’t make sense to require the test for those under 60, the population that may test positive but are less likely to acquire a life threatening illness from the virus. Life insurance companies haven’t provided a clear stance on what testing, if any, they will require in older ages. I’ll be quick to get that information out as soon as possible. On the side of not requiring that testing is the company understanding that those tests are critical in fighting the disease and they don’t want to take lab focus off of that end.
How Can You Get Life Insurance NOW Without An Exam Or Medical Records?
For those that are healthy and have a good health history there are several sources of of quickly approved, no exam life insurance. It’s important to note that this is only available to those 60 or under. At this point there are at least three companies that will approve life insurance with just an electronic application and from minutes to a few days to underwrite. There are several more companies who will process applications after a phone interview, an electronic application and, again, a few days to underwrite.
Another important note is that these are not “guaranteed approval” products. These are traditional term and universal life products with limits as high as $2.5 million. Because they aren’t guaranteed issue policies, what starts as simple could morph into requirements for records and medical exams, the very “choke spots” that the products and process are meant to avoid.
Avoiding The Pitfalls And Getting Life Insurance Fast
It’s hard to ever emphasize the importance of honesty and transparency when applying for life insurance where you are asking a company to bypass their mainstays of underwriting, exams and medical records. Whether it is on an electronic application or in a phone interview, think about your answers. If you’ve truly never had a medical issue, nothing, then you can breeze right through and more than likely all of the health questions will be answered NO. All I’m saying is, think before your answer.
Having a health issue in the past, or even being treated for minor health issues currently, may not keep you from being approved quickly. Not admitting to the issues can, and likely will, change the dynamics of your application process. While it probably won’t lead to a decline, not admitting that you are taking medication for something or that you have been medically treated or tested in the past, may lead the company to prudently require medical records. Not answering yes to a health question because, in the whole scheme of things, you and your doctor felt like it wasn’t a big deal can lead to an exam and medical record requirement. Answering yes to that same question and providing details could well lead to an approval without further requirements.
Foreign travel has always been a question in applying for life insurance. In the past the focus was more whether you were planning on traveling to politically unstable areas. While I can’t imagine planning foreign travel right now, any plans should be openly and honestly discussed and answered as part of your application.
We Can Help!
This whole surreal experience of a global pandemic may lead a lot of people to consider or reconsider their stance on life insurance. Whether it is for you, your children or your parents, take it seriously. Hinerman Group has 20 years experience making the life insurance application process faster and easier, and most importantly, successful. COVID-19 will be a challenge, but we are here to help and have the expertise to get the job done. Call, text, email or use our contact forms. My name is Ed Hinerman. Let’s talk.