Life Insurance Application Procedures Changing Amid the Pandemic

Life Insurance Application Procedures Changing Amid the Pandemic

Some insurers postponing, waiving the need for a physical exam
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While life insurance coverage is still widely available amid the COVID-19 pandemic, some insurers are adjusting certain processes to accommodate the new norms created by social distancing.

Life insurance applicants have traditionally been required to pass a physical exam to get a policy. However, the need for social distancing due to the pandemic has led some insurers to begin offering significant levels of coverage without an exam. That was one of the findings of a recent conversation ValuePenguin had with two life insurance brokers from The Robinson Financial Group, a financial services company based in Skokie, Ill.

That sentiment was underscored by a recent survey by LIMRA, a membership group for insurance and financial services organizations. LIMRA found that insurers were implementing ways to do business while cutting down on face-to-face interactions throughout the entire underwriting process.

Implementing new procedures

With COVID-19 sickening millions of people across the globe and killing hundreds of thousands, it’s not surprising that some consumers are reconsidering their need for life insurance during this time. In fact, a recent ValuePenguin survey found that a quarter of respondents said the coronavirus outbreak has made them more likely to buy life insurance.

However, the way consumers reach out to life insurance companies may be changing. According to the LIMRA survey, a third of life insurance companies in the U.S. and Canada reported a decrease in face-to-face applications in March. On top of that, a quarter of respondents noted an increase in online applications that same month. Among U.S. insurers that accept online or mobile applications, 24% reported an increase in applications.

When it comes to the physical exam requirement, LIMRA found that 1 in 5 U.S. life insurers have either postponed or eliminated their paramedical requirements since the pandemic began. Other insurers are finding different ways to get medical information. For example, some are accepting electronic health records and others are letting applicants submit past medical exams and lab work results instead of conducting a new physical examination.

Screening for COVID-19

Some changes reflect the unique risks posed by COVID-19. According to the LIMRA study, some insurers have added questions designed to find out if applicants have traveled to places that might increase their exposure to the coronavirus. Life insurance brokers with The Robinson Financial Group have also seen clients get declined because they had recently traveled to an area that had a high risk of coronavirus infection.

However, executives with The Robinson Financial Group tell ValuePenguin that underwriting requirements have not been impacted too heavily by insurers looking for health factors that have been found to increase COVID-19 mortality, such as asthma and diabetes.

Life insurance coverage will continue to be available despite the pandemic, the executives added. While some insurers have temporarily stopped selling life insurance to older customers in their 70s and 80s, the reason for that is not because of the coronavirus — rather, it’s because interest rates right now are too low to make such policies a profitable option for some insurers, according to The Robinson Financial Group.

Methodology: LIMRA surveyed 47 life insurers in the U.S. and 12 life insurers in Canada about their practices in March 2020.