Since Covid has impacted everything else, how about its impact on Life Insurance?
Every few years there’s an event that stimulates us to consider our life insurance needs. Covid is prompting people to think about their need to be better protected. A few years ago a family member suffered serious injuries from a fall. It prompted everyone he knew to consider their life insurance needs. The Bombings of 911 was another such event. All too commonly such occurrences make us realize that death can hit us anywhere and anytime. Without suitable protection, your premature death can devastate your family’s future quality of life. Do you, and your family, have the peace of mind that comes from knowing you have things covered, no matter what life throws at you?
General Patton is quoted for having said “a bad plan is better than no plan at all.” The quote’s origin may stem from military activities but it applies to life insurance; some life insurance is better than none at all. It has the ability to provide a foundation for your family’s financial future.
When the AIDs epidemic hit, the life insurance industry went crazy raising rates, putting on restrictions, and even excluding coverages when aids was the cause of death. Many of their activities were challenged and later discontinued. As the dust settled, they made actuarially sound low impact rate and policy changes. Probably the biggest change involved the health questions asked before qualifying you for coverage.
It appears the industry learned something from the AID’s epidemic. The industry seems to be stepping back a little before reacting with a heavy hand in their Covid response. That however maybe because of the financial impact they are experiencing; or lack of a financial impact.
As Covid was barely drawing any interest on the world stage, the actuarial departments of most life insurance companies were already in a panic. Initial predictions were for millions of all ages worldwide to fall victim to it. Now the CDC mortality statistics show that of the 500,000 US Covid fatalities, 58.92% were for people over 75. Only 37.29% have been for those 25-74 year olds. That number is misleading because the majority of our population falls into that age bracket.
A point to notice is that the 25-74 age group is the most common buyer of a life insurance policy. Very few of the “Over 75” fatalities had active life insurance policies. Also, the majority of fatalities in the 25-74 involved individuals with a history of compromised health conditions. Bottom line, when you read between the lines, so far the Covid loss of lives has financially had a substantially lower impact on the industry than expected to date.
That however may change as this virus spreads and mutates.
Some individuals contracting the virus have struggled to survive; others never knew they had it. The post Covid symptoms being experienced by victims are the industry’s biggest concern today. Will these be short term or have a chronic impact on their remaining lives? Long term, will other health issues arise that are related to current Covid exposures? now?” There are many variables whose impact have not yet been fully identified and actuarially studied to conclusion.
Simply, we don’t yet know the impact on future mortality rates. Since that’s the basis of life insurance rates, we have no idea what Covid’s long term impact will be.
There is one thing I can tell you that has come about from Covid already; all new life insurance applications include questions about whether you’ve had a positive Covid test; whether you have been diagnosed with Covid; what post Covid symptoms remain; and if you have been vaccinated for the Covid Virus. Basically any person that has had Covid will be closely scrutinized by the underwriting process before a policy is issued.
Despite all of this, life insurance is still available; rates have not dramatically changed and coverages remain accessible. As conditions change so too will the underwriting process for new policies. Those of you with a current policy, make sure to stay current and not let it lapse.