The Estate, Legacy and Long-Term Care Planning Center of Western NY

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How To Buy Life Insurance During The COVID-19 Pandemic

If you’re shopping for life insurance, you might encounter some new processes and temporary roadblocks due to COVID-19. If you’re new to buying life insurance, you may not realize that those who shopped a few months ago may have had a different experience.

How To Buy Life Insurance During The COVID-19 Pandemic

“The coronavirus pandemic, coupled with social distancing, has made common elements of life insurance underwriting—including in-person face-to-face meetings, and paramedical exams—problematic.  It is a challenge all carriers are facing,” says Thomas Smoot, Vice President at Guardian Life.

One of the most important things to know is that life insurance companies are open for business and are taking applications. Now more than ever, life insurance is an important element of many people’s financial plans.

“You can imagine the kind of financial insecurity that people have, staring at these uncertainties,” says John Grogan, Executive Vice President and Chief Product and Innovation Officer at Northwestern Mutual.

Life insurance companies have been making changes to respond to changing demands and problems.

You May Not Need a Life Insurance Medical Exam

Companies that required a life insurance medical exam a few months ago might have alternatives now. For these exams, a paramedical professional typically comes to your house and takes a variety of measurements such as height, weight and blood pressure. Getting blood and urine samples is also a standard part of a life insurance medical exam.

As a substitute now, life insurers will rely more heavily on data. This could include past doctor’s records, prescription data and other types of personal information that they routinely gather.

“Having an exam is not feasible or practical.”

– John Grogan of Northwestern Mutual
MassMutual, for example, now has alternatives. “Given the challenges paramedical examiners are facing and customer concerns about COVID-19, MassMutual is offering to substitute information from medical records for the insurance labs/physical measurements in order to continue to offer life and disability income insurance,” says Dr. Jacki Goldstein, Head Medical Director at MassMutual.

Pacific Life says that it may be able to “use alternative data sources” instead of a medical exam when stay-at-home orders prevent an exam.

Northwestern Mutual is also relying more heavily on data. “Having an exam is not feasible or practical,” says Grogan of Northwestern Mutual.  “The process has changed but the standards have not changed. We’re moving from paper, fluids and records to data.”

Depending on the insurer, alternatives to a medical exam may be less available if you’re seeking a very high coverage amount, you’re older (above age 60, for example) or you have medical conditions.

“If you need to take a medical exam, don’t be discouraged,” says John Latona, General Manager of Haven Life, a digital life insurance agency backed by MassMutual.

“For medically underwritten coverage, which is usually the most affordable type of term life insurance, you often need to take a medical exam,” says Latona. “This exam can usually save you a lot of money over the 10 to 30 years you have a policy. If you find out you need to take a medical exam to finalize your coverage, many life insurance companies will provide eligible applicants with temporary coverage until the exam is taken. That’s real coverage that would be paid out to your loved ones if you died.”

The time frame for completing the exam may also be longer now. Haven Life, for example, is extending the time frame that its applicants have to take medical exams, to up to 120 days from the date of the application.

Options for no-exam life insurance policies were growing even before the outbreak of COVID-19. Many life insurers use “accelerated underwriting” for at least some of their applications. This process uses data about the applicants and cuts the approval time down to less than a week or even 24 to 48 hours.

Fast life insurance options, such as those from Haven Life, also include instant-approval policies, where providers use algorithms to quickly process term life insurance application information.

You Might Get New Application Questions

Have you recently been on a cruise? Have you been in contact with anyone who has been diagnosed with COVID-19? Have you been tested or treated for COVID-19?

You might now see questions like this on your life insurance application.

You might be asked if you’ve been tested or treated for COVID-19.

John Hancock, for example, has started asking whether applicants or their household members have traveled by cruise ship in the last 30 days, and whether applicants have been in close contact with someone who has tested positive for COVID-19.

You might also be asked if you’ve been tested or treated for COVID-19. Expect a postponement on your application for a certain time period if you have.

The important thing is to be honest on all application questions.

“If you’re feeling symptomatic, disclose that proactively,” advises Latona of Haven Life.

A dishonest answer that’s discovered later could void your policy. And these types of questions result in a postponement of your application, not a higher rate or outright rejection.

Expect Postponements for International Travelers

International travel is understandably a significant concern for life insurers. If you’ve recently returned from international travel, expect your life insurance application to be postponed for at least 30 days.

If you plan international travel, expect your application to be postponed for at least 30 days after you return.

Expect No-Contact Meetings and Policy Delivery

There should be no need to meet face-to-face with an insurance agent or sign a paper document. Agents can offer advice by phone and video conference. You should be able to do an electronic signature for documents, and receive your policies by email.

Look for Financial Strength in a Company

One thing that hasn’t changed is the importance of buying from a company that’s financially strong. Since you’ll likely have a life insurance policy for many years, a solid company is crucial.

“We’d recommend consumers look for a carrier that has strong, third-party validated financial ratings,” advises Smoot of Guardian Life.

Life insurers will typically have their ratings on their websites, such as ratings from A.M. Best and Standard & Poor’s.

Grogan of Northwestern Mutual notes that his company has customers who have had their policies for 80 years. “If you’re going to hold a product that long, you want to know you’re buying a policy from a company that’s safe and strong and that will be there for your decades for now,” he says.

Grogan recommends working with an advisor who can help you plan and work with you through the process.

“Work with an advisor because COVID-19 is going to pass, but people’s financial goals won’t pass,” he says.

Here’s more about Your Money and Coronavirus: A Financial Protection Guide.