In addition to everyone’s lives being most likely permanently altered by Covid-19, I think it is fair to say that it has or will alter every business model as well. The life insurance industry is no exception. Life insurance carriers are best off when people are healthy and paying premiums and currently there is a deadly virus spreading around the globe, which has greatly decreased, or brought to a screeching halt many peoples incomes. Consequently, it would be fair to assume that life insurance carriers would respond by altering their product offerings. You might expect them to increase premiums or discontinue products for certain employment categories, like nurses and doctors. At a minimum, one would expect them to increase the scrutiny on the underwriting process. Could you blame them for asking applicants if they have recently tested positive for Covid-19? Would anyone be shocked if insurance carriers decided to drag out the underwriting process until the healthcare community had a better handle on the virus? Probably not.
However, that is not what we have seen. In fact, we have seen quite the opposite. Almost unanimously, life insurance carriers have favourably adjusted their processes to be more accommodating and accessible. They have limited, or in a lot of cases completely removed, the requirement for a face-to-face meeting with an agent. They have increased their non-medical requirements, which means many applicants can secure up to 2 million dollars of life insurance coverage without doing a physical. This is unprecedented.
For an industry that in many respects has been in the stone ages up until now, their swift, forward-thinking response has come as a shock to me. To put it in perspective, up until this point the majority of applications I did had to be done on paper, face-to-face with the client and required a face-to-face delivery of the policy once approved. In addition, a physical cheque was required to pay the first months premium. A lot of my clients had to go digging in a box in the back of their closets to find their cheque book and it often meant a trip to the bank, which they had not been in months or maybe years, to ask for a new cheque.
But that has all changed. Insurance carriers are making exceptions. A lot of them. They are streamlining their processes and making themselves more accessible. They are adapting to the times and rethinking their rigid and outdated policies. A number of my clients that are practicing doctors have been approved for life insurance within 24 hours and I didn’t have to meet them face-to-face at any point in time. More importantly, the cost of insurance has not changed. Covid-19 is going to change business as we know it. For the life insurance industry, this is a welcomed change.
Andrew Webster is a partner at Webster Benefit Consultants. He has been advising on insurance & investments strategies since 2011. You can reach him at awebster@websterbenefit.com. and visit the website websterbenefit.com
