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Your Clients, Life Insurance and COVID-19

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What You Need to Know

  • Life insurers are collecting less fluid.
  • Underwriting procedures are more flexible.
  • Clients who get in-person medical exams may still get more coverage.

While the month of March used to primarily be associated with seasonal events like collegiate basketball tournaments and Women’s History Month, this year it bears a grim reminder: the two- year anniversary of the COVID-19 pandemic.

While much progress has been made in the fight against COVID-19, I don’t think I’m alone in saying that it has been a life-altering experience.

As we strive toward a future where masks are no longer required and we can all be in-person again, it’s important to recognize that the pandemic has touched each of us in different ways.

As someone steeped in the life insurance business, it is no surprise that I’ve witnessed a significant change in how people think about and discuss mortality. While discussing end-of-life needs and death remains an uncomfortable topic for many, I’ve noticed a slow, but steady, change in people’s willingness to discuss.

How this conversation plays out and evolves is different for everyone. But, as a financial advisor, it’s likely many clients are approaching you with corresponding questions about life insurance.

It’s no secret that COVID-19 has led to a rise in life insurance applications: MIB reported a record-breaking 4% increase in year-over-year applications in 2020 and a further 3.4% year-over-year increase in 2021. But, what is less clear for financial advisors and their clients is how available life insurance offerings have been impacted.

As a digital life insurance agency committed to working with partners to make life insurance more accessible to clients, let me offer you a peek behind the curtain.

The Law of Large Numbers

For the life insurance industry, mortality has historically been relatively easy to predict.

While there are always unique considerations for every applicant, mortality rates have historically followed the law of large numbers and seen minimal volatility.

Enter COVID-19. While every life insurance organization has been impacted by COVID-19 in different ways, there is no denying the impact of the pandemic on claims.

According to the American Council of Life Insurers, for example, life insurance death benefit payments rose 15.4% in 2020, mostly due to the pandemic and the largest increase since the 1918 influenza pandemic.

What does this mean for consumers looking to buy life insurance? Most importantly, there has been no corresponding increase in policy premiums. In fact, Haven Life actually lowered our premiums during the pandemic.

What is happening, however, is that the pandemic has accelerated how insurers leverage applicant data.

This is manifesting itself in a few ways:

1. How Data Is Analyzed

While underwriters have long had access to personal data like prescription history and driving record, the pandemic necessitated that such data be utilized in new ways.

While this certainly includes better use of AI and machine learning technology, it also includes smarter human-powered intervention.

For example, when an algorithm identifies an ambiguous data point in an application that might traditionally trigger a medical exam requirement (more on that below), some digital insurtechs have expanded their “light touch” underwriting practices to instead automatically flag that data point for human review.

That way, the application is routed for human underwriting review to determine if an instant offer can still be provided, and not delayed by the need for a medical exam.

2. An Increase in Fluidless Coverage

As the industry gets better at how they use the data they have access to, some are moving away from requiring the completion of a medical exam to offer coverage.

This shift was also made possible during the pandemic as underwriters better leveraged recent applicant medical tests for things like preventative care, disease monitoring and diagnostic purposes (as opposed to ordering new tests).

It’s important to note, however, that policies that don’t require a medical exam usually offer a lower face value than ones that do.

That said, for some clients, the convenience and coverage levels provided could be sufficient.

3. More Flexibility to Complete the Application

In the cases where a medical exam is still required for coverage, many insurers extended the timeline for when the test needs to be completed due to the pandemic. Understanding that folks still needed immediate coverage, some also offered temporary coverage even while a medical exam was pending.

Many in the industry also looked for ways to further condense the underwriting timeline internally, including by better utilizing medical claims data–which is faster than ordering the standard attending physician statement (think: reaching out to an applicant’s doctor for further clarification or confirmation of their medical records).

In many ways, the pandemic has actually had favorable impacts for consumers when it comes to life insurance.

With the assurance that pricing has not changed and applying is easier than ever, our hope is that advisors feel well equipped to answer clients’ questions and help them understand their coverage options.


Wade SewardWade Seward is head of distribution strategy at Haven Life.

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Pictured: Doctors treating a patient with COVID-19 in a hospital’s quarantine room. (Photo: Mongkolchon Akesin/Shutterstock)