How Long Will Pre-COVID Life Insurance Rates Last?

As the COVID-19 pandemic continues to disrupt the world, life insurance carriers are challenged by maintaining a profitable business.

One looming fear for consumers is the cost of life insurance. Will it go up as insurance companies are anticipating more death claims than they otherwise would? They are also affected by the protracted low interest rate environment. Insurance companies typically invest premiums in high grade bonds, and with interest rates so low, returns are expected to be lower as well. These factors can translate into higher rates for new life insurance.

According to Byron Udell, founder and CEO of AccuQuote.com, “Over the past 25 years, life insurance rates have fallen dramatically, to record lows. For example, a 20-year level term policy on a perfectly healthy 40-year old male can be found today for as little as $309 annually. That’s almost 70 percent less than what the same policy cost just 25 years ago. This has made life insurance affordable for almost everyone.”

The future of how life insurance companies will manage COVID-19 is unknown; however, moving forward, some could decide to suspend the issue of new policies, or possibly add a temporary surcharge on new policies due to the expected mortality (risk of death) related to the COVID-19 pandemic. If insurers determine surcharges are needed, the increase could be significant. The more pressing question then becomes, what does that look like for consumers?

According to Byron Udell, “If one assumes that half of the population will be infected - the CDC predicts more than that- and that one half of one percent will die, that could add a temporary surcharge of $1,250 annually in addition to the current rate of just $309 for a $500,000 20-year level term policy. It’s important to understand that the insurance companies can’t add these types of surcharges to existing guaranteed level term policies.”

Despite the COVID-19 pandemic, and arguably because of it, life insurance purchases are surging. Those that have life insurance, want more. And many that don’t have coverage, are now seeking and/or exploring life insurance for the first time. In light of social distancing, and in some cases, state ordered stay home quarantines, more consumers are looking for simple ways to get coverage that do not require a face-to-face meeting with an agent, and that don’t require an in-person medical exam. Fortunately, there are several highly rated life insurance companies that issue competitively priced policies without those two requirements.

As of today, according to Udell, “Folks that want guaranteed low cost, high quality, life insurance coverage can still get it at pre-COVID-19 pricing, but no one really knows for how long. For those who are thinking about new coverage or adding more coverage, the message would be to get it now, while you can, before they change the rules or the pricing. And obviously, before you get sick!”

The folks at AccuQuote.com have been serving customers for over 33 years. With over 200,000 individual clients, and over 100 billionin life insurance placed, AccuQuote is a highly experienced independent online broker that compares dozens of products and can make meaningful recommendations over the phone or online – more relevant now than ever. Contact AccuQuote at 847-442-9899 or via mail at 1400 South Wolf Rd., Bldg. 500, Wheeling, IL 60090.