It’s a scary time right now. We’re working from home, watching the news and washing our hands obsessively, and hoarding paper goods.
If these unprecedented times have you thinking, “Should I buy life insurance?” rest assured — you’re not alone.
“Typically, life insurance sales spike after any kind of a catastrophe,” says Steve Parrish, co-director of the Retirement Income Center at The American College of Financial Services in King of Prussia, Penn.
It's too early to say how the coronavirus has affected life insurance sales, according to a spokeswoman for LIMRA, a membership organization for life insurers. The organization surveyed members this month and found that a quarter of life insurance companies saw an uptick in online applications in the month of March, she notes, but that's not a definitive look.
The Importance of Acting Fast
While it might come as a surprise, you can absolutely buy life insurance right now (as opposed to, say, hand sanitizer), even while we're in the midst of a global public health crisis. Don't delay, though— the situation is changing rapidly and carriers' underwriting guidelines are subject to change.
Although the coronavirus pandemic is new and alarming in its scope and rapid spread, this isn’t the life insurance industry’s first rodeo when it comes to unexpected, life-threatening dangers. “They have the experiences in modern history of the AIDS epidemic, 9/11 and SARS,” Parrish points out. “If you’re asymptomatic, I think basically the insurance companies at this point are accepting that risk.”
That said, be aware that you might run into some logistical challenges buying a policy via the traditional channels in today’s battened-down environment.
“There are 200 million really healthy people in this country,” says Jason Lea, president of Brokers’ Service Marketing Group in Providence, R.I. “From a consumer perspective, they absolutely can buy life insurance. The challenge is, how do you do this in a paperless, non-face-to-face world?”
For instance, brokers are most likely working from home right now, which could make meeting with one in person difficult or impossible. “Traditionally, they’d go to an insurance agent, but now there are options online, as well,” Parrish says. “The insurance industry has been comparatively slow to embrace some of the sales technology, but some are taking applications online rather than in person.”
The other hiccup involves the medical exam that has long been a staple of the evaluation process for obtaining life insurance. (FYI, if you're worried about using limited health resources during this time, don't be. There are dedicated examination companies contracted by the insurance companies to perform these exams, so it’s not as if you’d have to take up your regular doctor’s time for an elective visit.) But current recommendations around social distancing as well as local shelter-in-place regulations might mean that it takes you longer to get coverage if you can’t make an appointment or get to the office of someone who performs these exams right away.
The good news is that some insurance companies had already begun, pre-coronavirus, taking steps to phase out the in-person medical exam in favor of technology-based risk assessments. “A lot of that has taken care of itself as technology has advanced,” Parrish says.
“About five years ago, the life insurance industry decided it needed to evolve and get away from the traditional medical exam and blood draw,” Lea says, predicting that COVID-19 will accelerate the industry’s embrace of more tech-centric underwriting practices. “What I see happening here is companies trying to innovate. This global event we’re in the beginning stages of is going to catalyze that. It’s going to force carriers to get better at those underwriting offers without the traditional exam.”
The Limits of Digital Evaluations
Whether or not a digital evaluation will suffice in your search for a policy depends on your health and medical risk factors along with the amount of coverage you’re seeking. (As you might imagine, you have a better shot if you’re on the younger side and don't have pre-existing conditions or a chronic illness.)
“It puts a lot of pressure on the carriers not to miss something from an underwriting perspective — how do they get to an underwriting decision without a full medical exam and blood work?” Lea says. Insurance companies that let you apply for and generate quotes online combine the information you provide with details they can obtain through publicly available data and (with your permission) evaluate your medical records to gauge your risk profile.
Your health status and your desired coverage amount also are the two key determinants of the turnaround time you can expect between requesting a quote and having your life insurance policy in place.
“If you’re talking about millions, it might take a few days or a few weeks,” Parrish says. “If we’re talking about less than a million dollars of insurance, with some shopping around, there's probably a way to acquire that insurance within a week.”
Although the cost of a life insurance policy is relatively stable right now, Lea forecasts that prices will creep up in the wake of the pandemic, although how much and how quickly is impossible to predict right now. The world is still waiting to see how the trajectory of the illness will unfold — if overwhelmed hospitals cause an uptick in mortality rates, if the virus retreats initially only to return after a period of time, or if scientists are quickly able to develop and distribute a vaccine.
“The economic side of it is somewhat unknown,” Lea says. “What you can say for sure is that for the next six months, products are going to be cheaper than for the following six months.”
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