If you have been debating getting life insurance, now is the time for a variety of reasons, some good, some bad. Here are the good reasons first…
> Almost all insurance companies are not asking for physical exams on applications for less than $1 million, because of Covid. They don’t want to be sending paramedics out and having clients get exposed as a result of the in-person exam.
> A new mortality table, used by all insurance carriers, was updated a few years ago, and the cost per $1,000 of coverage has never been lower.
> The new universal index life policies have been highly successful. They guarantee that in years when the stock market increases in value, you share in it, but when the market drops, you do not take any loss.
> New riders in policies pay a certain portion of the death benefit while you’re alive, if you are diagnosed with any of the major critical illnesses.
Now here are the bad reasons…
> Underwriting has become stricter. It is not because of Covid. That has been a blip as far as insurance companies are concerned, unless they are selling those guaranteed issue policies aimed at the seniors. The fact is 75% of all covid deaths are people aged 65+. They tend to have smaller face amounts. They would have been dying over the next 20 years anyway, so that has already been worked into insurance company calculations. The reason underwriting has become stricter is that interest rates are so low. Part of the calculation for determining insurance prices is the money an insurance company can reasonably expect to earn. With interest rates so low, they don’t want their total exposure to death claims and money out of hand to exceed certain ratios, or government regulators will punish them. The easiest thing for them to do is cut off the spigot and approve fewer policies. I have seen declines and premiums adjusted higher on individuals I’d have never dreamed this would happen to.
> Insurance companies are requiring higher amounts of death benefits be purchased. I know. It sounds counter-intuitive to what I just said, but the reasoning is that it costs an insurance company the same amount to service a policy with a $500 premium as it does one with a $50,000 premium. By cherry-picking and forcing the client to purchase larger amounts of insurance, they can benefit from an economy of scale and not take on any more actual risk, with a healthier group of clients. One company will now not consider an application if the premium is less than $5000 a year. Another well known company has said they won’t sell term policies at all, and yet another has put a $1 million minimum face amount on new applications.
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