Life insurance companies tighten up approvals in response to COVID-19

Posted: 18 May 2020 12:24 pm
News

Close up of Life Insurance Policy

As the coronavirus spreads, major insurers have pressed pause on approving high-risk applicants.

With the coronavirus sweeping through the US at a rapid rate, life insurance companies are seeing an influx in death claims — and taking action to protect their bottom line.

As of mid-May, a handful of major insurers are no longer accepting applications for seniors.

Mutual of Omaha and Penn Mutual have stopped issuing policies to those aged 70 or older, while Prudential, Protective Life and AIG have drawn the line at age 80.

Some insurers, like SBLI, are imposing stricter requirements for new applicants. To apply for a policy, seniors over 60 must be in good or excellent health. This means those with common health conditions like heart disease, diabetes or asthma are likely to be denied coverage. Similarly, AIG has suspended applications for any individuals with serious health issues.

These measures are temporary, but the insurers’ concerns aren’t unfounded. Adults aged 65 or older account for 8 out of 10 coronavirus-related deaths in the US, according to the Centers for Disease Control & Prevention (CDC).

Other changes to life insurance applications

Age requirements aside, some insurers are now asking applicants about their exposure to the coronavirus.

For example, John Hancock requires applicants to detail their recent travel in the “Special Instructions” box, and confirm whether anyone in their household has tested positive for COVID-19. If you’ve had close contact with the virus or recently traveled aboard a cruise liner, your insurer may postpone your application for 30 days or more.

At the same time, insurers are reassessing their term lengths. Prudential has halted applications for its 30-year term life insurance policies until at least June, according to Reuters — though you can purchase a policy lasting 10 or 20 years.

Buying life insurance during the coronavirus outbreak

It’s still possible to buy a life insurance policy. But more insurers are likely to adjust their approval processes, so move quickly if you want to secure coverage.

If you’re young, healthy and haven’t been exposed to the coronavirus, you can apply for a traditionally underwritten policy. These policies have the lowest premiums and typically require a medical exam.

Insurers have stepped up their safety precautions in response to the coronavirus. But if you’re unwell or uncomfortable with taking a medical exam, speak to your insurer. They may be willing to postpone the exam or issue a temporary policy to carry you through the health crisis.

Some insurers — like AIG and Cincinnati Life — will accept an Attending Physician’s Statement (APS) with the results of your recent physical in lieu of a medical exam.

If you’ve contracted the coronavirus or have a pre-existing medical condition, consider applying for a no-medical-exam policy.

These policies skip the medical exam, but prepare to pay higher premiums for coverage.

Photo credit: Getty Images

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