Life Insurance Covid-19 Restrictions Then & Now

In January of 2020, I cancelled a trip to Southeast Asia. It was a decision I did not take lightly but ultimately; I did not want to be “patient #1” and spread Covid-19 in Northeast Florida. What followed shortly after was like a Hollywood movie about some virus wiping out humanity. As we all know, in early 2020 the world-just-shut-down…

My kids went on spring break not knowing they will not return to the same class again. The world changed in an instant. As Floridians, we are prepared to work remotely in the event of a hurricane. Our office functioned without disruption when “Stay at home orders” were put in place throughout the country. Unfortunately, the same were not true for a lot of businesses.

Memos from life insurance companies about the Covid-19 pandemic flooded my inbox. There were travel, age and health restrictions wherein carriers temporarily put a halt to accepting people ages 70-75 and up. In some cases, younger ages were not acceptable if the insured is not a true “Standard” risk. People who are highly rated or those with medical conditions such as heart disease, significant history of cancer, pulmonary or autoimmune diseases and diabetes were temporarily unacceptable. Some put a blanket statement that states: any medical conditions or treatments that make a person susceptible to Covid-19 death is not acceptable.

In addition, the regulatory restrictions and economic consequences that came with the pandemic forced some insurance companies to reprice products or take them off from the market completely. On the other hand, consumer demand for life, LTC and disability insurance were very consistent and in some cases, it increased. My experience was that there were no changes when it came to young and healthy individuals. These healthy consumers ages 18-59 were underwritten as usual, regardless of how many Covid-19 positive cases or deaths were happening at any given time or what the news or social media said about the current state of affairs.

By summer of 2020, it was evident that the pandemic brought about a change that was long overdue. Insurance carriers were forced to move to the 21st century. Some quickly adapted, some are still lagging. The early adaptors poured huge investments into technology and upgrading antiquated/legacy systems that hindered the innovation required to process business in a different fashion. Compliance and underwriting processes underwent major overhauls to cater to the new way of doing business. Staff and insurance advisors learned how to work from home.

Actuaries and underwriting professionals worked day and night together to ensure that decisions related to pricing remain equitable. While news of the pandemic brought a ton of negative and scary thoughts to the consumers, brilliant insurance minds across the globe worked hard to get their hands on solid and factual data in order to get "this one right". After all, they are in the mortality and morbidity business. This pandemic is nothing like we have ever seen in this modern world. Actuaries and underwriters are making decisions based on the facts and figures presented to them. I believe they are doing a great job given the situation at hand. Be on the lookout for my article on the future effects of this pandemic to the insurance industry in general.

All throughout autumn and winter of 2020, regular adjustments to underwriting guidelines and Covid-19 restrictions were made by reinsurance and insurance companies to assess as well as accept risks as they received critical data from all over the world and their actuaries.

It is now spring of 2021: a year ago from when the whole world was on lockdown. Today, there are vaccines against Covid-19 that are being deployed. Some States are fully open, some have eased restrictions and there are some that remain "semi-lockdown". After over a year of no travel, I finally got in an airplane, learned how to ski and had an amazing spring break vacation with my family. Here in Florida, restaurants, businesses, school, sports and after-school activities are all fully open for my family to enjoy. Even with vaccines, we do all this with regular mask wearing, social distancing and testing as needed. What a difference a year has made!

From an insurance mortality/morbidity standpoint, some insurance companies remain strict but some have begun lifting more of the restrictions they put in place last spring. For example last spring, someone who is age 51 and is a table D risk cannot get life insurance. Today, that same person would be approved for life insurance. Same goes for a 75 year old who is a table B risk: up until last week, this person would be a "postpone". Today, the same 75 year old would be approved.

Great news for those who are fully vaccinated! Some carriers will underwrite fully vaccinated individuals with few Covid-19 underwriting restrictions. In other words, no matter how old you are (bring on the ages 65 and up) or what medical condition/s you have (think: cancer history or coronary artery disease survivors), if you are fully vaccinated - you will be given an opportunity to go through the full underwriting process instead of getting automatically declined or postponed.

If we use the fact that some insurance companies are lifting their Covid-19 underwriting restrictions as a gauge to returning back to normal, I would say that we are making some progress. Because just as I received a flurry of memos from life insurance companies back in the spring of 2020 about Covid-19 related underwriting restrictions being put in place, I am now getting memos stating the opposite - only difference is that it is slower this time around.

If you (or a client of yours) are age/s 60+ or have some medical history regardless of age and would like to know if you can now get life, LTC or disability insurance, please email me at peachie@peachinsurance.net