Recent articles about life insurance during the times of COVID-19 might make people think this in an inopportune time to buy life insurance, that you cannot get life insurance at all or that life insurers are in big trouble.
But to do a twist on the famous Mark Twain quote, the reports of the death of the life insurance business as we have known are greatly exaggerated.
Yes. Some insurers are turning away business from some Americans who want life insurance but certainly not all.
Yes. Because interest rates are low it has hurt life insurance companies’ bottom lines, but that does not mean to throw in the towel if you are looking for life insurance.
When life insurers decide how to price policies, they look at how much interest income they will earn when they invest these premiums down the line.
As required under insurance regulations, most of a life insurance company’s investment portfolio is composed of fixed dollar investments, i.e. mortgages and bonds. If they are not earning sufficient returns; their profit and loss statement is impacted and for stock companies so is their stock price.
To soften the blow to earnings either the interest rate credited on policies is reduced or in the case of policies that are already crediting the minimum amount, the other policy expenses, such as cost of insurance (mortality charges) are increased. So yes, some insurance companies are raising rates. Therefore, working with a firm with a long positive track record of monitoring policy performance is important.
Some people over 70 years old are under the impression that they are too old to acquire life insurance. This is false. If in good health, it is easy. If you have health issues, it is more difficult and requires an experienced firm to work on your behalf to obtain the best offer. Shopping is often necessary.
Recently a client, who is also a friend, contacted me about buying life insurance. He is in his late 60’s and has had two heart attacks. He wondered if he could even possibly still get any sort of a policy. Not only were we able to get him life insurance, we got him a policy with a better price than a standard rate. On top of that, because he is now in a specialized exercise program, we got him even a further discount.
On average someone with type 1 diabetes might pay 2½ times what the average person pays in life insurance. Even in this economic climate we were able to find that client a policy that is costing him less than the amount he would normally be charged, and the policy is with a large, long-standing insurance company with a terrific reputation.
We were even able to get someone who is on a high dose of antidepressant medication the best rate offered.
For younger applicants with busy schedules or for those who do not like going to the doctor, it is easier than ever to apply, because some companies no longer require special in person insurance physicals.
Certain companies have changed the plans that they previously offered, but that does not mean that one cannot get a plan that will meet their needs. Once again, it depends on the skill of your insurance adviser.
An obvious question that many clients have been asking us is whether your insurance policy will cover you if you get COVID-19. The answer is yes.
Another question some are asking if in the future I need to travel internationally will I still be covered? The answer is all policies cover international travel unless there is a special exclusion. Typically, this applies to particular countries.
I want you to know that with COVID-19, you should not be overly alarmed if you need to acquire life insurance. It is readily available. The key is to work with an experienced insurance adviser whom you trust.
If you are looking for insurance for the first time, ask your friends or advisers for a recommendation. Make sure you first get the amount of coverage you need at a price you can afford.
Allan Kaplan of Robinson Financial Group is an insurance and financial adviser.
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