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Life insurance: Getting coverage in the age of a global pandemic

May 18, 2020 / 4 min read

Social distancing requirements and COVID-19-related policy restrictions have created obstacles to getting life insurance. Here’s what you need to know to get your application past the finish line.

The COVID-19 pandemic has been a call to action for many individuals to obtain, maintain, or increase life insurance to protect their families. Unfortunately, in some cases, the application process has been delayed due to difficulties managing paperwork and obtaining wet signatures. And there’s an understandable reluctance to bring a medical professional into the home for a paramedical exam — the personal interview necessary to collect information about your medical history.

But we have good news for those with life insurance on their “to-do” list: Many insurance carriers are responding to this dual challenge with new processes to help get business done while being mindful of social distancing guidelines.

New methods to apply for life insurance

Instead of traditional paper applications, many are rolling out web-based applications, telephone interviews, and electronic signatures. These new procedures are intended to replace existing paper forms and the face-to-face interview.

New methods are also replacing the paramedical exam in some cases. For example, medical record  s and prescription drugs can be checked electronically . Some carriers will use a previous executive physical if it was done at a major hospital system such as the Mayo Clinic or Cleveland Clinic within the past year. The benefits of such procedural changes can be substantial.

Several carriers have stated they’ll issue $1,000,000–$2,000,000 of term life insurance without an insurance physical while others have committed to providing as much as $20,000,000 or more of death benefit with just the recent executive physical information.

Once your application is analyzed and an offer is in hand, premium payments and policy acceptances are still needed. Fortunately, many insurance carriers are adjusting their guidelines for these steps as well. Options include electronic signatures by policy owners for policy delivery, as well as EFT, credit card, or wire transfers for premium payments instead of physical checks.

All of these changes can be particularly beneficial if you risk losing life insurance currently being received as an employment benefit. As unemployment continues to grow rapidly, we should all consider what would happen if we lost our employer-provided insurance coverage.  For some, the answer will be replacing group coverage with a personal policy, and the recent changes could be a boon.

COVID-19 life insurance restrictions

While the above industrywide changes are beneficial to expediting applications, it’s important to note that other developments and impacts relating to COVID-19 can potentially restrict your coverage. Several companies are currently halting applications from people aged 80 or over, with one carrier no longer accepting applications from those 70 or over. Many are also adding restrictions for underlying health conditions and/or travel outside of the United States in the last 30 days.

We’re also seeing some insurance carriers ask if applicants have knowingly come in contact with a person who’s tested positive for COVID-19, and the harshest restrictions are for those individuals who have tested positive for COVID-19. In these cases, expect the underwriting to be delayed until the shelter-in-place restrictions  are lifted or until enough time has passed to show the client is no longer in danger of life-threatening illness.

The COVID-19 outbreak has changed our way of living and thinking, and is forcing us to confront what were unthinkable scenarios only a few months ago. If you have delayed buying — or perhaps upgrading — your life insurance protection, now may be the time to make that call.

If you have life insurance questions, give us a call.

Securities are offered through Valmark Securities Inc. member FINRA and SIPC, an unaffiliated securities brokerdealer.

The material contained in the herein is for informational purpose only and is not intended to provide specific advice or recommendations for any individual, nor does it take into account the particular investment objectives, financial situation or needs of individual investors. Consult your financial professional before making any investment decision. The information provided has been derived from sources believed to be reliable, but is not guaranteed as to accuracy. Valmark Securities supervises all life settlements like a security transaction and its’ registered representatives act as brokers on the transaction and may receive a fee from the purchaser. Once a policy is transferred, the policy owner has no control over subsequent transfers and may be required to disclosure additional information later. If a continued need for coverage exists, the policy owner should consider the availability, adequacy and cost of the comparable coverage. A life settlement transaction may require an extended period to complete and result in higher costs and fees due to their complexity. Policy owners considering the need for cash should consider other less costly alternatives. A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs. When an individual decides to sell their policy, they must provide complete access to their medical history, and other personal information.

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