These are tough times and the COVID-19 impact on underwriting life insurance is seen in two areas:
- insurers extending grace periods for paying premiums
- insurers placing a greater emphasis on accelerated underwriting.
Underwriting Premium Grace Periods
COVID-19 has prompted a number of insurers to voluntarily extend grace periods because of the economic hardships resulting from mandatory shut-downs and lay-offs. Some states have even mandated those extended grace periods. This creates a challenge for insurers when coupled with the evolving behavior of policyholders, who in addition to taking a longer time to pay premiums are now taking out more policy loans.
COVID-19 Impact on Underwriting Acceleration
Accelerated underwriting was already gaining traction in the life insurance world before COVID-19 hit, but the restrictions placed on nonessential medical treatment as a result of the pandemic have moved accelerated underwriting to the forefront.
To review here’s what accelerated underwriting looks like. If you are in good health and have good credit, you may be able to qualify for a fully underwritten, regularly priced term life insurance policy of up to $1 million without a medical exam. This speeds up the process of underwriting significantly saving you time and worry.
Many life insurers are now taking a deeper look at and changing their criteria, as well as their processes, for underwriting during the COVID-19 situation.
(Source: InsuranceNewsNet)