Survey: How COVID-19 could affect Life Insurance

How COVID-19 has affected peoples outlook on life insurance

It’s only natural that people think about life insurance more during times of uncertainty, and the past year has been one of the most uncertain times that many of us have seen. To gauge perceptions about how the pandemic might affect life insurance in a variety of ways, True Blue Life Insurance issued an online survey to 1,500 people.*

Almost half of the respondents said they already had a life insurance policy, which could explain in part why nearly 70% said the pandemic had not changed their outlook on life insurance. A slightly larger proportion of people indicated that they were more eager to buy life insurance (4.2%) than those who said they were less eager (4.0%).

Less than 5% of the respondents were worried about not being able to buy life insurance because of the pandemic. This was more of a concern among men in the youngest age groups (18-24 and 25-34), which may have been because fewer of them already had a life insurance policy.

Surprisingly, the largest group of individuals whose view is unaffected are seniors.

Brian Greenberg, True Blue’s CEO, said, “We haven’t seen it become more difficult for applicants in general to obtain coverage over the course of the last year, although we usually advised people who’ve been seriously ill with COVID-19 or developed a related serious illness to wait a while before applying.”

COVID-19 is part of the qualifying questions for some insurers

Some insurers now ask questions about COVID-19 in the health history part of their application, and a number of companies are postponing coverage on people who’ve had relatively serious cases of COVID-19.

Overall, more of the people we surveyed were concerned about life insurance rates increasing or insurance companies not paying out the death benefit on a policy than they were about not being able to get a policy.

Premiums have not spiked as of yet

“While we can’t say whether premiums will increase later on, we haven’t seen a substantial uptick in overall rates yet,” Greenberg said. “But people who have had COVID-19 recently will more than likely pay a higher rate. That’s another reason we usually recommend waiting until some time has passed before applying.”

With regard to payouts, people who already owned an active life insurance policy before the onset of the pandemic can expect the insurer to pay the death benefit even if COVID-19 is a factor in the policyholder’s death. As for policies issued during the pandemic, we aren’t aware of any insurers including specific language that mentions COVID-19 as an exclusion for payouts.

The majority of people believe testing positive for Covid-19 shouldn’t affect life insurance

When asked about whether they thought testing positive for COVID-19 would affect their ability to buy life insurance, only 9% of the respondents said they thought it would. Almost twice as many, though — 16.8% — said they believed they would have to pay more for life insurance if they tested positive. More men in the youngest age group than in any other age group thought this would be the case, whereas among women, more of those ages 45-54 thought so than in other age groups (23% for both instances).

Testing positive for COVID-19 results in a 1-2 month waiting period

In our experience at True Blue, people who have tested positive for COVID-19 will have to wait at least 30 to 60 days before they can get coverage. Different insurers have different policies in place with regard to positive test results, and it often depends on whether the person applying had any previous medical conditions.

While the majority of the people we surveyed were not concerned about COVID-19 becoming a pre-existing condition for life insurance, 26 percent did express this as a concern. Among the men who responded to this question, more of those in the 18-24 age group (29.1%) and in the 35-44 age group (30.3%) cited this as a concern. Among the women who responded, more of those in the 45-54 age group (33.7%) than any other said this was a concern. As we noted earlier, some insurers have started asking questions about COVID-19 in their applications. What their underwriters will do with this information, we don’t yet know.

If you have been thinking about life insurance, the time is now to act

We do know that if you don’t have life insurance, or if you plan to buy additional life insurance, now may very well be the best time to apply. The following is true for just about everyone: The longer you wait, the more expensive it is to buy life insurance. At this point, we don’t see the pandemic changing that.

If you’d like to see what your options are, we encourage you to get a free quote (there’s absolutely no obligation) or talk with one of our friendly independent life insurance agents (which costs you nothing). We can answer your questions and shop dozens of life insurance companies to find the right policy and the best price for you.

* The survey was created using Google Surveys and conducted from February 16 to February 28. The overall gender split was 52.5% male/47.5% female.