What COVID-19 means for life insurance customers

How the life insurance industry was affected under COVID-19

The life insurance industry in the United States was affected on a number of levels by the COVID-19 pandemic.

For one thing, COVID made in-person meetings between customers and insurance agents difficult or impossible. Also, many medical exams for insurance applications had to be postponed or canceled because doctors’ offices were also closed or restricted. On top of that, life insurance companies saw the investments they use to pay insurance benefits impacted. Because the global economy suffered, insurance companies’ investments also suffered.

Most critically, many people with active life insurance policies could not afford to pay their premiums, due to COVID-related job losses or reduced working hours.

The life insurance industry’s response to COVID-19

Life insurance providers took a host of measures to respond to the crisis caused by the pandemic.

Some companies expanded their grace periods for late charges. Others allowed life insurance policy holders to put off their premium payments.

To help deal with the challenges of getting exams, some companies expanded the kinds of no-medical-exam life insurance that they sold. Others offered temporary insurance policies for individuals who wanted traditional life insurance policies but weren’t able to get exams or tests because of the pandemic. These policies provided very basic life insurance coverage until the more involved life insurance underwriting could be completed.

In some cases, companies offered free or low-cost term life insurance to frontline workers with a high risk of exposure to COVID-19. These policies typically expire within five years.

Although most life insurance companies covered deaths due to COVID-19, many also factored COVID into their consideration of persons applying for policies, especially those who had tested positive for the disease. (We discuss that in more detail below.)

There was no universal industry response to the pandemic. Every insurance company responded in its own way. At TruStage®, we honored the life insurance policies of customers who died of COVID and provided many financially struggling customers with extensions on the due dates of their premium payments to help them keep their policies from expiring.

What COVID-19 means for your life insurance policy

If you already had an active life insurance policy when the COVID-19 pandemic erupted, your policy probably will not have been affected at all. So, in most cases, if you caught COVID-19 tomorrow, your loved ones would still be covered under your current plan. However, if you’re concerned about your coverage under that circumstance, you might want to double check with your company. It may be addressed in the FAQ section of the company website. If not, you can always contact the company or your agent.

Can I get life insurance after being sick with COVID-19?

Things might get more complicated if you were in the process of applying for life insurance when you caught COVID-19 or if you have had COVID-19 and now want life insurance.

If you are in the process of applying for life insurance when you catch COVID-19, a number of companies may ask you to postpone your application until later, sometimes offering you temporary life insurance instead. The same might hold true if you came in direct contact with someone with COVID-19.

If you have recovered or mostly recovered from COVID-19, your life insurance possibilities could vary.

If you have totally recovered from your illness, and your doctor gave you a clean bill of health, most companies will probably treat you as they would any other healthy applicant.

However, if you have lingering effects from COVID, the life insurance premiums on the policy you apply for could turn out to be higher than they would have been otherwise.

It may also be harder to get life insurance if you have an underlying condition that could threaten your life if you caught COVID-19.

Should I get life insurance because of COVID-19?

It’s not possible to say how or if COVID-19 will have a long-term effect on insurance rates. However, since most life insurance companies have not finished determining the full effects of COVID-19 on their profitability, now may be a good time to shop around for life insurance.

This could especially be true if you have children or other loved ones who are dependent on you financially.

There is a possibility that the insurance industry could introduce rules or restrictions around pandemics in the future, so purchasing a policy before this happens might protect you from any changes that are introduced.