COVID-19 has impacted individuals as well as different industries.
One sector that saw a lot of change due to COVID-19 is the life insurance industry. These companies face challenges both in the short and long term that impacts their profits.
Economic Impact
Due to COVID-19’s impact, the Federal Reserve lowered interest rates. This impacts life insurance companies as they invest much of their premiums into equity and bond markets. While equity markets have increased in general, new bonds now pay a lower premium. Insurers tend to invest their premiums in safer investment and as a result, may be facing smaller investment gains in the years to come.
The uncertain nature of financial markets means insurance companies are also under assessment. They must look at how well balanced and protected their investment portfolios are. They must also consider their projected cash outflows over the next few years as a result of COVID-19.
Has COVID made it Harder to Get a New Life Insurance Policy?
Getting COVID-19 may make it harder for you to get a policy. This is also true if you have visited travel destinations where the virus has been rampant. It may take longer to get a policy and it also may end up costing you more per month. As a result of the pandemic, some companies have even stopped selling the policy to people who are over a certain age.
Other insurance providers have better adapted to the situation. They have opted to extend the life insurance medical exam deadline for new customers. But in doing so, they provide a temporary coverage plan that usually kicks in immediately.
Potential Long-term Impact
The long-term effects of COVID-19 are still unknown. This is why its effects on the insurance market in the future can also be uncertain. There have been cases where COVID patients have shown signs of permanent lung damage. Medical professionals are still trying to better understand its long-term effects.
As we learn more, insurance companies may make adjustments. In this case, the cost of insurance coverage for a coronavirus patient may increase. There is also speculation that COVID-19 may become a recurring illness. In this case, you might expect to pay higher premiums for life insurance.
Has the Pandemic Made it More Important to Have Life Insurance?
This point is unique to every individual’s requirement. If you have family that depends on you financially, life insurance during a pandemic may be essential. In the case of an unforeseen death, it is important to make sure your loved ones can replace the income you provided. If you have children or a spouse, life insurance can ensure they can maintain their standard of living.
As COVID-19 continues to unfold, life insurance companies are adjusting their business practices. Most important is to consider these changes the world has gone and adapt towards the future.