Life insurance is something that is vital for every adult, and some children. Life insurance provides a death benefit when one is needed most, when someone has died. There are multiple types of life insurance including term, universal life and whole life. Within those broad categories there are certain subsets like annual renewable term insurance, variable universal life insurance, indexed universal life insurance, blended whole life insurance etc. I try to help people understand how much and what kind they might need to research.
On a day to day basis I am back office support for a wealth management firm. Part of that role is to keep apprised of the on goings of the life insurance and protection world. In an effort to keep the insurance world spinning many companies have changed the way they underwrite policies, which may actually work in favor of certain individuals.
Life Insurance Underwriting is Changing for Many Life Insurance Companies
Many life insurance companies are changing the way they are handing their underwriting in direct response to COVID-19. In some parts of the country (e.g. mine – NY/NJ) it is actually impossible to get an examiner to your home, or alternatively, most clients aren’t going to let a stranger pass their doorway (especially when the examiner is known to be going to other houses before).
For example, New York Life has issued guidance that they would issue permanent or term policies without a limitation on face amount if they have labs from another carrier in the past 24 months (12 months if the insured is over the age of 60). Even if they don’t have labs from another carrier there will still underwrite if they can get blood and urine lab work from someone’s doctor within 2 years (again 12 months if over the age of 60). Somehow, even if there is no lab work done in the past year or two they’ll still go up to $3,000,000 under 70 at standard ratings for a whole life policy! This is by no means a commercial for New York Life, almost every major life insurance company has reduced previously hurdles to underwriting in one way or another.
This could easily lead to bad actors polluting the system. If I knew I had a clean physical a year ago, but have since partook in unhealthy lifestyle habits now would be the perfect time to buy insurance. Maybe you customarily smoke cigars or marijuana, but there is nothing in your medical history to indicate such, you could theoretically be underwritten as a non-smoker without ever having to change. I am not advocating insurance fraud, but there is a gradation happening between increasing the sweets and full on lying on a questionnaire knowing that you’ll never be caught. For those in that gray zone of change it may be time to call an agent.
I should mention that these guidelines could, and are likely to change without notice and suddenly. That NYLife example was from April 21, 2020 but it could be changed by the time you read this post. As such, I would really recommend talking to an agent or broker that is allowed to sell any and all products from all or most major com.