Life Insurance and COVID-19
Life insurance applications have spiked over the past month as COVID-19 spurs people into action. Here’s what you need to know about COVID-19’s effect on life insurance.
1. I already have life insurance.
Life insurance is a great way to provide financial protection for your loved ones and if you currently have a policy in place, you are in great shape. Life insurance companies can’t increase your premiums because of COVID-19 and they certainly can’t cancel your policy if you contract COVID-19. If the worst happened and you die from COVID-19, they will be required to pay the death benefit of the policy to your named beneficiaries. Here is a good side tip. Now is the perfect time to pull out your existing polices and check the beneficiary designations. If you have named minor children, you should consider creating a trust to avoid complications with underage children owning assets. Make sure the people listed as the beneficiaries are still the people you want to receive the money from the policy.
As long as you continue to pay your monthly or annual premiums, your policies will stay in force and continue to financial protection for your beneficiaries.
2. I want to apply for life insurance.
The first step in buying a life insurance policy is completing an application for life insurance. While the coronavirus pandemic has wreaked havoc on business operations and shut down many companies, life insurance companies are still operating, and you can still apply for life insurance. The process might take slightly longer than normal as the volume of applications has increased dramatically over the past 6 weeks. And companies might ask you more questions than normal about your recent travel patterns, whether not you are practicing social distancing and any recent medical events you’ve experienced or been exposed to. If you are interested in buying life insurance, there is no time like the present. The sooner you get started, the sooner you will have coverage in place.
3. How do I complete the application if I’ve been traveling or haven’t been social distancing?
Be truthful. Life insurance companies rely on the application as part of their underwriting process and if you don’t tell the truth or you omit relevant information, they won’t have all of the data they need to make an informed decision on your application. Having been around other people or recent travel to certain cities or countries, won’t automatically disqualify you from receiving a policy.
It’s important to understand that life insurance companies will compare your medical records and prescription history with the information you include in your application. If they find inconsistencies between the two and believe that you have been deliberately untruthful, your application will likely be denied. Most, but not all, companies will give you an opportunity to explain or clarify the discrepancy before outright rejecting your application.
Finally, we need to mention the ‘two-year contest-ability period.’ Most life insurance policies include a provision that allows the insurance company to cancel a policy or deny payment death benefit claim if they discover the applicant lied on the application or during the application process. This is another reason to be honest when completing the application. As long as you are honest, an insurance company would have little reason to challenge a claim, even if it were related to COVID-19.
4. Where to start: Pick an online-only application process
One of the bright sides of the current social distancing reality is that we can avoid doing some of the things we wouldn’t want to do anyway, like getting a medical exam as a part of the application process. Innovations within the life insurance industry now allow for a 100% online application process with no medical exam for many policy types. In a few simple steps, you can start an application, work on it at your kitchen table and complete it at your own pace.
A perfect example of this system in action is Penn Mutual Life Insurance’s Accelerated Client Experience (ACE). Penn Mutual developed ACE to provide a 100% online experience. At Willingworth, we like the ACE program so much we decided to partner with Penn Mutual to make it available to Willingworth customers. You can check them out here.
Thanks for reading and stay safe
Team Willingworth.