COVID-19 has made many New Yorkers and providers take a second look at life insurance. Learn more about what’s changed and how it could impact you.
COVID-19 has changed how we interact socially and professionally and rewritten the rules for almost every market sector. The pandemic has done more damage to New York than almost any other state in the nation. We’re second overall (at the time of writing this) for the number of deaths, with over 50,000 people having lost their lives.
The life insurance industry deals with illness, accidents, and death on a daily basis, but it typically takes something of the pandemic’s scale to seriously adapt how they do business. Let’s look at how COVID-induced changes to life insurance are taking shape and how they could affect New Yorkers’ policies.
How did the government and insurers react to COVID?
The New York Department of Financial Services (NYDFS) took emergency steps to make life insurance a little easier to manage in March 2020. NYDFS mandated deferrals for paying life insurance premiums, along with those for casualty and property lines. The state’s major insurers complied with the emergency regulation for a 90-day grace period on the payment of life insurance premiums for individuals experiencing financial hardship.
New Yorkers had the chance to make up missed payments over the next 12 months, a provision that expired in March of this year. There has been no new COVID-specific forgiveness put in place as of yet. Nevertheless, this has not slowed demand for policies.
Interest in life coverage has increased during the pandemic
Getting life insurance rose to the top of many consumers’ to-do lists. People felt more vulnerable, and a May 2020 survey estimated that 83 million Americans considered “buying life insurance or increasing their life insurance coverage.” The Wall Street Journal reported a 4 percent national increase in life insurance sales during 2020, driven mainly through younger buyers (under age 45).
An NBC News report highlighted one very important factor about life insurance during COVID-19: millions had coverage only through an employer. And New York saw roughly 10% of its citizens lose their jobs during the pandemic and any employer-provided protection they had along with them.
More New Yorkers had to look for self-managed policies, and others needed to ask more questions about the coverage they had, such as if life insurance covers death by COVID-19. It does, in almost every case. But a payout could still be invalidated through inaccurate filing, unpaid premiums, or withholding relevant information, such as a health status when obtaining a policy or future travel plans.
How buying and managing life insurance is changing
COVID-19 caused issues with traditional life coverage models, like the need to obtain a physical exam to get a policy. This somewhat off-putting factor for prospective insurance buyers became a far more difficult proposition—and sometimes an impossible one—with quarantines and social-distancing rules in place.
The industry responded by relying on digital health data and telemedicine. The adoption of digital solutions—”from marketing to claims submissions to digital policy servicing”—grew by 20 percent across the insurance industry last year, according to a TransUnion survey. And far more policyholders used apps, email, and websites to manage and apply for coverage.
Unfortunately, the increased use of digital platforms means COVID-19 is attracting cybercriminals, forcing New Yorkers to be extra careful when handling life insurance online. The National Insurance Crime Bureau warns everyone to be aware of scams and bogus “agents” who are out to capitalize on the pandemic.
And life insurance paperwork—even when no paper is involved—still had some issues. For example, any New Yorkers locked down in another state and seeking life insurance had to contact their providers and determine if the paperwork should match NY or the state in which they currently resided.
The timing of getting life insurance remains important
New Yorkers currently unaffected by COVID-19 may view this as an excellent opportunity to get a policy. Many of the application rules, such as those demanding in-person health screenings, have been loosened. But applicants could experience some pandemic-specific hurdles based on factors like age and pre-existing health conditions.
Some insurers have new cut-off points for policies if you’re a certain age. And pre-existing health conditions that make someone particularly vulnerable to COVID-19 can negatively impact eligibility and premiums.
Conversely, New Yorkers in good health and with positive life habits (non-smokers and those with clean driving records, for example) may pay lower life premiums. Healthy individuals with good credit can also take advantage of accelerated underwriting. Note that life insurance policies that are already in place are unlikely to undergo any significant changes.
Further complications to getting a life policy
There are specific challenges if a COVID-positive person wants to buy life coverage or if an applicant has recently traveled to a pandemic hotspot and failed to follow New York’s state travel advisory. Any New Yorker falling into those categories may find it more difficult and expensive to secure coverage.
COVID-19 varies in severity from person to person, but insurer attitudes toward these applicants are similar. For example, many accept applicants who have a COVID-positive status without symptoms for 30 days after diagnosis and no need for hospitalization. But a COVID-related hospital stay could delay the life insurance application process for up to 6 months.
An essential factor to note
If you are thinking of getting a policy, all providers expect full disclosure while considering you. Any New Yorker knowingly exposed to a COVID-positive individual or having visited/expecting to visit a pandemic hotspot must declare this in their application. Any oversight or deliberate omission could lead to a denied claim.
Contact your provider if you currently have life insurance to discuss all of the COVID-19 implications.
NICRIS Insurance is here to help New York navigate the new life insurance processes. Our team will look at your circumstances and find a policy that suits your current and future needs. Contact us at the link below to learn more.
NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some advice or would like a free, personalized insurance review, just drop us a line, visit our offices Monday to Friday 9 to 5, or call (516) 544-0006.