Underwriting Among Early Effects Of COVID-19 On Life Insurance – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Life Insurance
Top Stories RSS Get our newsletter
Order Prints
May 1, 2020 Top Stories No comments
Share
Share
Tweet
Email

Underwriting Among Early Effects Of COVID-19 On Life Insurance

By Susan Rupe

COVID-19 has had the biggest short-term effect on life insurance in two ways:

  1. Insurers extending grace periods for paying premiums.
  2. Placing a greater emphasis on accelerated underwriting.

Those were among the insights from Nancy Bennett, senior life fellow with the American Academy of Actuaries. Bennett was among the presenters at a recent webinar describing how COVID-19 will affect insurance and retirement plans. She spoke with InsuranceNewsNet on the pandemic’s short-term impact on policy management and underwriting.

COVID-19 has prompted a number of insurers to voluntarily extend grace periods, while some states have mandated those extended grace periods. This creates a challenge for insurers, Bennett said.

“It’s one thing to say you have to set a grace period but then their systems would normally be set up to automatically process a policy lapse after a specified period of time. So they have to go in and make adjustments to their system so the lapse does not happen. And then there’s also the issue of, OK, the policy hasn’t lapsed but the premium hasn’t been received. So what do we do to the contract values and how is each company going to change or modify the contract values?”

Bennett said carriers could respond in a number of ways. Some companies may take out an automatic policy loan, other companies may reduce the face amount of coverage. Other carriers may take no action. “But they’re still going to receive the premium, only it will take a longer time to receive it,” she said.

Policyholder behavior also will be a challenge to life insurers, Bennett said. In addition to taking a longer period of time to pay premiums, policyholders are taking out more policy loans.

Accelerated Underwriting

Accelerated underwriting already was gaining traction in the life insurance world before COVID-19 hit, but the restrictions placed on nonessential medical treatment as a result of the pandemic have moved accelerated underwriting more to the forefront, Bennett said.

“Many life insurers are changing their criteria, as well as their process, for underwriting,” she said.  “A lot of this starts out with the fact that with many policies that are traditionally fully underwritten with full medical information, it’s really difficult because so many doctors are not available to provide a full medical exam or there isn’t a paramed who can go to people’s homes or offices to get the information.”

Carriers that already have an established accelerated underwriting in place may have an advantage in the current situation, Bennett said. But now carriers who didn’t have such a program in place have an incentive to implement or pursue one.

In addition to implementing accelerated underwriting, carriers also are taking a new look at risk, Bennett said. Many are changing their retention limits. “So if an applicant wants to take out a $2 million policy, for example, the insurer might say they only afford to cover, say $1.5 million and reinsure the remaining $500,000.”

Some insurers also are reducing the age at which they will issue coverage to an applicant, she said. “Maybe they've historically issued up to age 85 but not they are pulling back and only issuing up to age 80, for example.”

Bennett said some insurers are changing their applications to obtain more information on whether an applicant was exposed to COVID-19. “That's a little dicey because some states are a little skeptical of that or want to make sure there's an actuarial basis for asking these risk classification questions.”

These short-term changes serve two different purposes, Bennett said. “One is to adapt to the inability to do underwriting in the traditional manner, and the other is to limit their exposure right now to an applicant who may have greater exposure to COVID-19.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

© Entire contents copyright 2020 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Let The Sunshine In, Scott Brennan Tells Insurance Professionals

Newer

The Power Of Social Media Can Help Clients Through COVID-19

Advisor News

  • What Rising Prices Could Mean For Your Clients’ Retirement Plans
  • 38% Of Investors Pulled Money From Stock Market In The Past Year
  • Financial Focus: Retirement Money Management
  • Americans Spread Their Money Across More Firms, Survey Finds
  • Now Is A Good Time To Buy This Inflation Savings Bond
More Advisor News

Annuity News

  • LibertyMark Freedom Fixed Indexed Annuities Launch
  • Nationwide Adds BNP Paribas Global H-Factor Index To FIA
  • Transamerica Launches Structured Index Advantage Annuity
  • Recommending FIAs: Start With The Client’s Objective
  • NC Man Wins First $5 Million Prize In Scratch-Off Game
Sponsor
More Annuity News

Health/Employee Benefits News

  • AHIP’s Policy Roadmap Aimed At Increasing Health Care Access, Affordability
  • Don’t Fall For Joe Namath’s Ads
  • Health Insurance Can Now Help Some Californians Find Housing
  • $2.7B Settlement In CalPERS Long-Term Care Insurance Lawsuit Is Canceled
  • Virginia Poised To Review Eligibility Of 2 Million In Medicaid ‘Safe Haven’
More Health/Employee Benefits News

Life Insurance

  • The 5 Secrets To Retaining Financial Sales Professionals
  • Life Insurance Activity Continues Dip In April But Still Stronger Than 2021, MIB Reports
  • Transamerica Adds Execs To Annuity And Life Insurance Team
  • Northwestern Mutual Invests $5M In Black-Led Financial Institutions
  • Protective Life Closes On AUL Acquisition
More Life Insurance

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

Get Linked INN to your industry Connect with INN on LinkedIn to be first on all the news and insights that matter to your industry.

Press ReleasesAll press releases

  • OneAmerica Commits $1 Million Toward Financial Literacy
  • Transamerica Structured Index Advantage Annuity Offers Investors More Certainty with Upside Growth and Downside Protection
  • Senior Market Sales Creates First-of-Its-Kind Lead Acquisition Platform
  • Growing financial services firm Kuvare opens Des Moines office in East Village, continuing expansion in Iowa
  • BetterLife Selects iPipeline® to Digitally Transform Its Business & Better Serve Future Generations
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • Sitemap
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.