As an insurance agent, I am interested in the way new risk factors affect my industry. I searched the internet for news stories of life insurance and Covid-19. One news story seemed to paint a dire picture for people trying to get term life insurance. I wrote an email to the author explaining that term life insurance is traditionally the most difficult type of life insurance to qualify for, even under normal circumstances. Part of the appeal of term life insurance is low premiums. The only way to maintain low premiums is through a low rate of claims. To give you an idea, one life insurance company (I promised not to mention their name) told me only about 1% of their term life policies result in a claim. With a claims rate that low, any new risk factors could dramatically increase premiums. So it stands to reason that term life policies have additional underwriting restrictions for Covid-19 in order to protect premium rates.
My email continued by mentioning another type of life insurance policy that has been relatively unaffected by Covid-19: simplified issue whole life. Most simplified issue whole life policies haven’t made any changes to their underwriting guidelines. One of the few companies that made changes added a Covid-19 questionnaire and they temporarily reduced the maximum issue age to 75 (they normally issue policies to age 85). However, it’s important to note that even if a company doesn’t change its underwriting guidelines for Covid-19, people can still be denied coverage if they experience damage to major internal organs. Recent damage to internal organs usually has underwriting consequences regardless of the pathogen that caused the damage. Some insurance companies may not feel the need for Covid-19 restrictions because they already deny coverage for anyone with a recent hospital admission. If you have any questions, don’t hesitate to contact me.