A major news service recently reported that some life insurers are adjusting policy application processes due to COVID-19.
Insurers have an obligation to assess threats to individuals and society. While today’s circumstances may delay coverage in some situations, insurers are legally required to make underwriting decisions based on “sound actuarial principles” – a term that essentially means fundamental insurance tenets. Arbitrary decisions are prohibited.
It’s also a matter of fairness and being responsible. When a significant public health crisis arises, life insurers need to consider its potential impact on all those applying for coverage. This helps ensure premiums are set properly, and that insurers will have the funds available to pay all claims.
Similarly, improvements in health and mortality over time may help lower prices for coverage.
Life insurers typically consider a variety of factors that impact life expectancy: a person’s age, sex, health, smoking status, lifestyle, and family health history are common. Life insurers conduct holistic evaluations, where these factors and possibly others are considered before any decision is made.
Sound underwriting supports life insurers’ guarantees to policyholders and their beneficiaries. Life insurance companies are careful in setting premiums. They invest conservatively in order to make sure they can meet their commitments on all policies, whether a claim is made tomorrow or 20 and 30 years from now.
But, even as COVID-19 creates unprecedented conditions throughout the economy and society, life insurance coverage is available. Agents and other financial professionals offer assistance. And delays in the application process don’t mean a rejection.
Much is uncertain right now, but not life insurers’ commitment to financially protecting as many families, individuals and small businesses as possible.
Jack Dolan is Vice President, Public Affairs at the American Council of Life Insurers (ACLI). A former journalist and Capitol Hill aide, he joined ACLI in 1991. He has represented ACLI in print, broadcast and online news outlets on a wide range of financial and retirement security issues facing American families.
