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Life Insurance Review - COVID-19 pandemic is bringing a lot of unknowns to the insurance market

If you’re planning to buy life insurance in the near future, then there is no harm in starting the process at the current low levels of sums assured available.

In recent weeks, one of the largest insurers Aviva has reduced the level of cover that it is prepared to offer during the covid-19 on its new business offering for life insurance, income protection and critical illness cover. Depending on your age, the sums assured on protecting your life, income or on diagnosis of a critical illness have reduced significantly.

You might ask Why?

Well insurance companies do not like uncertainty. They operate on numbers, gathering information about applicants, asking a lot of pertinent medical questions relating to the clients health and family circumstances and using extensive underwriting and actuarial tables to help decide the specific rates for each applicant.


Now however the COVID-19 pandemic is bringing a lot of unknowns to the insurance market business. Trying to find accurate numbers for COVID-19 mortality could prove nearly impossible. Numbers of total cases are likely to be under-reported because people with mild cases are not likely to seek medical care and there have been limited supplies of testing kits with a limited capacity for labs to process tests worldwide.


Recent Changes to the Life Insurance Buying Process

So what is a life insurance company to do in the face of COVID-19? Right now, in a growing number of cases, they’re asking more questions and hitting the pause button on new larger applications offering limited cover only to buy themselves time and ensuring that anyone who has been diagnosed with coronavirus is clear of any symptoms before proceeding with their application.


A few reasons why insurers have reduced their levels on new business

Doctors’ Records

At certain sums assured, product providers will automatically request medical records from the applications GP so in current circumstances the sum assured’s are set at a level where a GP report will not be required. A GP report allows them to verify your health information in conjunction with the application.

Obtaining medical records is perceived to be problematic during the COVID-19 crisis and insurers clearly feel that surgery staff will be at full capacity dealing with COVID-19.

Medical screening

Many life insurers use a life insurance nurses’ medical screening as one tool to gather information about applicants. The test is often done by having an assigned nurse come to your home or place of work to collect information on your height, weight and blood pressure, and possibly take blood and urine samples.

The prospect of that when social-distancing is at the forefront of everyone’s mind at the moment is the another reason that lower sums assured only are possible at present.

As a solution, in the future, insurers may introduce plans that do not require a screening, however these are likely to be more expensive than policies that require a test.


Exposure to COVID-19

Life insurers are assessing their guidelines constantly as the situation evolves. New questions about COVID-19 are making their way into the application process.

You might also now be asked if you’ve been exposed to COVID-19 and if you have diagnosed with COVID-19 your application might be postponed, to be reconsidered when there are no further COVID-19 symptoms evident.

Application guidelines will vary by insurer and not all insurers ask specifically about COVID-19, however we would expect others to follow Aviva’s recent move. SaSo expect more life insurers to start asking about COVID-19, especially to identify applicants who may already have coronavirus symptoms and decide they would like life insurance.


Are Life Insurers Shutting the Door?

If you’re planning to buy life insurance in the near future, then there is no harm in starting the process at the current low levels of sums assured available.


We do not know what new restrictions may come in the future or they could even be lifted, however whilst we see insurers justifiably concerned right now, life insurance is still possible for consumers who want to obtain rates at pre-COVID-19 pricing and, for most people, pre-COVID-19 underwriting rules. As this situation evolves, it could certainly mean a change to obtaining life insurance post-COVID-19 which will make life insurance harder to obtain, and possibly more expensive.


The door has closed for large sums assured for the time being and it is possible that companies could continue with this approach for the foreseeable future.


John Leonard

Head of Business Development

SaSo Strategic Advisers

21st April 2020

The commentary has been prepared solely for informational purposes for the recipient, it does not constitute an offer to buy any service, financial product or make any investment or a solicitation of offers to buy any service, financial product or make any investment nor should it be considered as investment advice. Any offers to buy any service, financial product or make an investment or solicitation of offers to buy any service, financial product or make an investment through the provision of investment advice will be made only pursuant to definitive agreements and other documents and information that may be subsequently provided.

Investing or dealing in any financial product should not be considered unless its nature and the extent of the exposure to risk is understood. All investments and financial products involve risk which include (among others) the risk of adverse or unanticipated market, financial or political developments and may include currency risk. Some investments and financial products might carry greater risks than others. Past performance is not a reliable indication of future performance. Investments can go down as well as up and involve the risk of loss.

The commentary is based on information generally available to the public and does not contain any material, non-public information. No representation, warranty or claim is made that it is current, accurate or complete.


SaSo Strategic Advisers Limited is regulated by the Jersey Financial Services Commission for the Conduct of Investment Business.




#lifeinsurance #protection


About the Author


John Leonard, Head of Business Development

john.leonard@sasostrategic.com

01534 488773


Should you wish to discuss your life insurance, income protection or critical illness needs then please contact SaSo via any of the links on our site.




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© 2020 SaSo Strategic Advisers Limited is regulated by the Jersey Financial Services Commission for the conduct of Investment Business.

Company Registration Number: 123013