The world exists in a state of “new normal” as the COVID-19 pandemic continues to keep much of us in lockdown. While businesses struggle to stay afloat and attempt to find ways to operate remotely, the death toll from the virus continues to rise, with no indication of when the crisis may be over.
In between working remotely (for those who are fortunate enough to do so), taking care of our families and maintaining preventative social distancing and cleanliness practices, many of us are taking a moment here and there to think about our loved ones and how we can better protect them during this time.
For the most part, we don’t particularly enjoy visiting the thought experiment of our own death and how it might affect our kids, our brothers and sisters, our parents and our friends; it’s a little too dark-toned for everyday conversation. Unfortunately, the truth of the matter is that COVID-19 has already claimed the lives of tens of thousands, and will likely claim many more. Given this, if there ever was a time to consider a safety net for your family if worst comes to worst, it’s now.
For many, that safety net comes in the form of whole life insurance. Whole life insurance is a permanent form of life insurance that contains a cash-value, tax-deferred investment component, allowing the policyholder to borrow money from the account or cancel the policy in exchange for cash. A whole life insurance policy can be an excellent way to diversify a retirement portfolio, and unlike term life insurance, it won’t expire.
Recent events present a compelling case for life insurance, so there’s no surprise that applications are on the rise. But just how much is COVID-19 affecting the whole life insurance industry? As it turns out, not as drastically as you might think. Here’s what you need to know regarding whole life insurance and COVID-19.
How COVID-19 is Affecting Current Policyholders and Applicants
Undoubtedly, COVID-19 is raising concerns amongst both current life insurance policyholders and applicants alike. For those with an existing policy, there is little cause for concern; there is no pandemic exclusion for life insurance as long as the applicant was honest about travel plans and exposure to illnesses in the application process.
For those in the midst of the application process, things may be a little different. Like all insurance, life insurance is about risk, and as such life insurance companies are experts at risk assessment. Because the risks–in particular, the mortality rate–of COVID-19 are still largely shrouded in mystery, insurers are seeking to mitigate by ramping up COVID-19-related questions on applications, or in some cases suspending applications altogether.
For example, some insurance companies are inquiring more about international travel, with questions specifically regarding COVID-19 making their way into applications. Applicants who raise red flags for being at high risk may have their application process suspended, and those with confirmed COVID-19 cases may be put on hold until they’ve made a full recovery.
How COVID-19 is Affecting the Life Insurance Industry
Despite ongoing events, business is as usual in the life insurance space, for the most part. Currently, one of the biggest challenges has been performing off-site medical exams, which many insurance providers require. Stay-at-home orders and social distancing practices have made this process more complicated.
Life insurance companies make money off of interest by investing premium payments. With markets plummeting and interest rates falling as a result of the COVID-19 crisis, one might expect these companies to raise rates accordingly. Because whole life insurance deals with interest differently than term life insurance, it’s more likely to be affected, but experts suggest that prices should remain the same in the short term.
Aside from possible price increases in the long-term and complications with medical exams, the life insurance sector remains unaffected by COVID-19 for the most part, but it’s still a bit too early to make any rock-solid conclusions.
Now is the Time to Buy
The COVID-19 pandemic has brought to light many things, but if there’s one that stands out above the rest, it’s the need to prepare ourselves for the worst. For many, a whole life insurance policy acts as prevention in action, should the worst occur.
With significant uncertainty in the future of this pandemic, there is no better time to buy whole life insurance than now. Contact Shell Mutual Insurance today to get started.