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By Paul Reynolds
November 30, 2020
Arad Golan Coll for Money

There aren’t a lot of ways the COVID-19 pandemic has made our lives more convenient. One small one: The way we shop for life insurance.

Faced with increasing demand, insurance companies have labored to make buying life insurance quicker and easier. Many of these improvements, such as a more virtual approval process, which are likely to last into 2021 and beyond, have been made without necessarily raising the premiums for life insurance coverage — at least yet.

Not that the news is all good for life-insurance shoppers. The coronavirus has complicated getting a policy, at least for certain types of customer. Some insurers have imposed tighter underwriting guidelines on applicants with pre-existing health conditions, on seniors, and on those who have recently traveled outside the U.S.

Still, here are three upsides to life insurance that can be credited to a disease that’s taken more than 250,000 American lives, and whose impact continues to intensify. We’ve also suggested steps you can take to capitalize on these improvements.

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More Americans are getting insured

One grim truth of the COVID pandemic is that more and more Americans have realized they need life insurance.

The number of Americans saying they felt a heightened need for life insurance rose from 49% earlier in the year to 58% in the third quarter, according to insurance research company LIMRA. And people acted on that awareness, LIMRA reports, by buying 10% more term-life policies (the most common life insurance type by far) this summer than in 2019 — the largest sales surge in 18 years.

Some of that interest comes from those seeking to insure other loved ones, according to Assaf Henkin, co-founder and president of Sproutt, an online broker of life and disability insurance. More people than before, Henkin says, are opting to insure their spouses, and even their kids, as well as themselves. “We now see a father or mother contact us and want to cover as much of the family as they can.”

One drawback to the surge in insurance applications is some slowing of approval times, Henkin says, especially from bigger insurers who may have exhausted the number of policies their underwriters allow to be written in an expedited way. 

While faster life insurance options are increasingly available — more about that later — you’ll get the widest choice of policies if you start the shopping process early and, at the very minimum, allow the three to six weeks that it usually requires from applying for a policy to having it approved.

You may be able to e-sign

If you’ve signed official documents recently, chances are good that you did so electronically, rather than mailing signed originals or even sending images of the pages you signed. Yet many life and health insurers weren’t yet accepting such e-signatures, at least early in the pandemic.

That’s changed, according to insurance agent and Money contributor Chris Huntley and online life insurance broker Henkin.

As the volume of applications picked up in the spring, Sproutt and other online brokers “leaned hard” on the companies who were holdouts for the use of tools such as DocuSignTake, Henkin says. The result is a “a big change due to COVID….that you can complete an application that was once all paper” within minutes, due largely to more insurers accepting electronic signatures, Henkin says.

You may no longer need a medical exam

Early in the pandemic, it became easier for many other people to acquire insurance without the inconvenience of a medical exam. Restrictions on face-to-face meetings forced insurance companies to discontinue in-person medical exams, an important requirement for many life insurance applications. (The exams have now returned, albeit with masked examiners.)

“No exam” offerings have been expanded, too.

 But life insurance policies that require no exams are traditionally more expensive than those that do, because the insurer assumed a higher risk of death by the applicant. The absence of an exam also often results in a lower maximum death benefit — in the hundreds of thousands, rather than the million dollars or more that many applicants seek — again due to higher perceived risk.

As applicants have sought policies urgently during the pandemic, Henkin noticed an increased willingness for them “not to do the exam when that’s necessary…to opt for that faster route, even if it meant paying $10 or $15 extra per month.” It’s a strategy he applauds, since “we can always switch you to another policy…when things stabilize” with the pandemic later, one with better premiums or a higher benefit.

Yet Henkin also noticed, encouragingly, that COVID-19 seems to have prompted more of his customers than ever, during the application process, to grant permission for access to their medical records. And more insurers to accept use of those records in new ways.

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Medical records have long been used by life insurers, but often primarily to verify identity and head off any potential fraud. Now these records are also being used in sophisticated ways to substitute, at least in part, for what a medical exam might reveal.

Sproutt, for example, runs the medical data through algorithms it has developed to pre-qualify some of its healthiest applicants without need for a medical exam. Presented to potential insurers, the qualification, he says, can allow applicants to get “up to a million dollars in term life insurance very quickly.”

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