Life Insurance Companies Go To Plan B During The Coronavirus Pandemic

Life insurance companies are open for business, but the coronavirus pandemic has forced many of them to find workarounds and new solutions in order to maintain their sales and meet increased demand. Amid health concerns and the inability to get life insurance medical exams done, many life insurers have had to go to “Plan B.”

“Each day, since we monitor the rates and rules of dozens of insurance companies, it seems we’re seeing memos cross our virtual desks with new rules, exclusions and rate changes,” observes Byron Udell, CEO of AccuQuote, a national online life insurance agency. He says it has become a full-time job to keep up with the changes coming from life insurers.

If you’re shopping for life insurance right now, a company’s Plan B might shut you out of buying a company’s insurance policies, or it may even turn out be to your advantage.

Here’s a look at the newest trends that could affect your life insurance choices.

Closing the Door on Certain People and Policies

Some life insurance companies will no longer sell policies to folks age 70 and older. Penn Mutual, for example, won’t take applications from people 70 and older and has postponed applications that were already pending from people in that age group.

Long lengths of term life insurance can also be a victim of the pandemic. Prudential PRU , for example, has stopped selling 30-year term life insurance. Shorter term lengths are still available.

Temporary coverage is also harder to get now. In the past you often had the option to attach a check for an initial premium payment to your application. This serves to give you temporary coverage while the application is being processed. Now insurers such as Assurity will no longer provide this temporary coverage.

Going Without a Medical Exam

The life insurance medical exam has become a huge sticking point in the sale of life insurance. Understandably, life insurance buyers don’t want the personal contact required for the life insurance medical exam. The availability of getting an exam is also limited in some areas of the country.

The life insurance medical exam is becoming, by necessity, non-essential.

“In the current environment, no one wants a stranger coming into their home who has been in five to 10 other homes that day, and who needs to stick you in the arm with a needle, take your blood pressure, weigh you, measure you, etc. . . . none of which can be done while maintaining a safe distance!” says Udell of AccuQuote.

The life insurance medical exam is becoming, by necessity, non-essential.

“Insurance companies have had to get very creative in adjusting to this new reality and make sometimes uncomfortable decisions about how they underwrite new business, and which processes and procedures they considered essential,” says Ryan Pinney, President of Pinney Insurance, a distributor of insurance and financial products that specializes in digital sales, service, and support.

Plan B is to use more data instead of an in-person medical exam. Many life insurers were already relying on data as part of “accelerated underwriting” processes, and the COVID-19 pandemic has spurred other insurers to switch to data and abandon exams.

This data typically includes information from electronic health records, prescription databases and motor vehicle reports.

Haven Life is also finding workarounds when it can’t quickly get a person’s physician statement. Instead it’s using an applicant’s most recent blood work—for example, from a past preventive care visit—and past medical claims. Medical billing claims data is provided by a third-party service and becomes available to an insurance company when you sign the HIPAA release that’s a standard part of applications.

International Travel? COVID-19 Exposure? Expect Delay

Nothing sparks a life insurance application postponement faster these days than international travel or having had exposure to the coronavirus.

If you’ve recently returned from international travel, expect your application to be postponed at least 30 days. If you plan international travel, expect a postponement that starts when you return.

If you’ve been exposed to COVID-19, you can also expect a postponement of your application for at least 30 days. What constitutes “exposure”? That may not be clearly defined, but having someone in your household with a coronavirus diagnosis is a clear-cut qualifier.

Going Online

You likely handle many parts of your life online, from shopping to communicating to education. For many life insurance companies, steeped in a history of slow and manual processes, doing everything online is another Plan B.

In addition to gathering electronic data on applicants, life insurers have had to quickly ramp up to electronic applications, e-signatures and electronic policy delivery.

“Consumers might be surprised that those things weren’t already widely in use, but the life insurance and financial services industry has been slow to adopt these tools for a wide array of reasons, including regulatory concerns and the fact that they are often dealing with large sums of money and doing things in a manual process aids in fraud detection and prevention,” says Pinney of Pinney Insurance.

A Tremendous Buying Opportunity

Don’t try to shop this life insurance market on your own, advises Udell of AccuQuote. He recommends dealing with an experienced independent broker rather than contacting individual companies on your own.

“Independent brokers typically have a much larger menu and are more likely to know each company’s rules and help their clients navigate which companies may still be issuing policies in situations where others may not,” Udell says.

“For consumers concerned about or needing life insurance, I would tell them now may be one of the best times to obtain it.”

– Ryan Pinney

The situation isn’t all negative. While life insurers have had to leave their comfort zones, consumers can find opportunities for buying life insurance that they’ve never had before.

“For consumers concerned about or needing life insurance, I would tell them now may be one of the best times to obtain it,” says Pinney. “For the first time, coverage amounts of five or even 10 million dollars can be had without the additional step of a medical exam. Six weeks ago, the most you could hope for without an exam was typically a million dollars or less. This is a tremendous opportunity to get the life insurance you need and to have one of the most streamlined and non-invasive processes for purchasing it that has ever existed.”

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I’m the Insurance Analyst for Forbes Advisor. I’ve been writing about insurance for consumers for more than 20 years. Insurance intersects with many parts of our lives, yet it’s tough to untangle, and wrong choices can make a financial mess. I’m here to help you make sense of it. I’m especially interested in how data is affecting the price you pay for all insurance types.

Source: Life Insurance Companies Go To Plan B During The Coronavirus Pandemic

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