Door May Be Closing On Life Insurance Buyers Amid COVID-19 - Forbes
Door May Be Closing On Life Insurance Buyers Amid COVID-19 - Forbes |
| Door May Be Closing On Life Insurance Buyers Amid COVID-19 - Forbes Posted: 31 Mar 2020 02:50 AM PDT Life insurance companies don't like the unknown. They operate on numbers: Gathering information about applicants, asking a lot of questions, and using actuarial tables to help decide the rates for each applicant. The COVID-19 pandemic is bringing a lot of unknowns to their desks. "Now because of this black swan event, there are no actuarial tables for this," says Chirag Pancholi, co-founder of Jenny Life and an industry veteran. Pinning down accurate numbers for COVID-19 mortality can be nearly impossible. Numbers of total cases are likely under-reported because people with mild cases likely don't seek medical care, there have been limited supplies of testing kits, and there's a limited capacity for labs to process tests worldwide. Climate conditions, such as warmer weather, could decrease the risk of contracting COVID-19 if the virus degrades in warmer temperatures. Socioeconomic factors can also affect mortality rates, such as pre-existing health conditions and access to health care. "The ultimate rate of mortality from COVID-19 will evolve over time," says a March 16, 2020, report from the Society of Actuaries. The financial markets and low interest rates are also roiling life insurance companies, which have substantial investments.  Life insurance companies may decide to charge higher rates or suspend sales due to uncertainties ... [+] GettyNew Speed Bumps in the Life Insurance Buying ProcessSo what's 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 some applications to buy themselves time. There are now a few reasons a life insurance application might get held up. Trying to Get Doctors' RecordsIt's standard for life insurers to request medical records from your doctors. This allows them to verify your health information and spot issues that you forgot to mention on the application. Getting medical records is "problematic in this COVID-19 world as doctor's offices are notoriously slow in providing these in normal times, and right now many of them do not have what they consider non-essential office staff coming in" to help with tasks like this, says Byron Udell, CEO of AccuQuote, an online life insurance agency. "So cases that require these records are getting stuck in limbo as carriers (once they decide they need them) typically won't issue policies until they get them. That could be many months away," he says.
Asking About All International TravelLife insurance companies have long asked about applicants' plans for international travel. In the past they would generally postpone an application for anyone planning travel to a country pegged as Level 4 ("do not travel") by the State Department, such as Afghanistan. But now the whole world is a Level 4. Many life insurers are responding by delaying all applications for all people who plan to travel outside the U.S. (such as in the next 60 days) or who have recently returned. Expect your application to be postponed for at least 30 days after you return. Pacific Life, for example, will postpone the application of anyone who intends to travel internationally in the immediate future. The company will also wait for 30 days after an applicant returns from international travel. If the person then tests negative and is cleared, they can submit an application or take delivery of a policy. After the 30-day waiting period, if an applicant tests positive for COVID-19, Pacific Life must receive a statement that the virus has cleared before it will consider the application or issue the policy. Asking About Diagnosis of, or Exposure to, COVID-19Life insurers are assessing their guidelines constantly as the situation evolves. New questions about COVID-19 are making their way into the application process.
At least one insurer now says anyone who has been diagnosed with COVID-19 will be postponed for at least 30 days and can be reconsidered when there's proof that their health is back to their regular baseline. You might also now be asked if you've been exposed to COVID-19. If you have, your application could be postponed for 30 days, with proof there's no infection. Application guidelines will vary by insurer and not all insurers ask specifically about COVID-19—yet. Expect more life insurers to start asking, especially to weed out applicants who may already have coronavirus symptoms and decide to get life insurance. "As life companies out of necessity seek to protect themselves from potential adverse selection, we expect carriers to implement underwriting procedures designed to identify applicants who have either contracted or been exposed to the COVID-19 virus," says Thomas Rosendale, a director with A.M. Best who follows the life and health insurance industries. Udell of AccuQuote says, "It's a complicated arena for sure, with so many carriers, so many rules, and the rules changing every week." His company tracks the rules for hundreds of life insurance products. Skirting the Life Insurance Medical ExamMany life insurers use a life insurance medical exam as one tool to gather information about applicants. The exam is often done by having a paramedical professional come to your house to collect information on your height, weight and blood pressure, and take blood and urine samples. The prospect of that is unacceptable to many life insurance buyers now. "We are hearing directly from customers who are balking at meeting with a paramed examiner," says Bob Bland, CEO of LifeQuotes, an online life insurance agency. As a solution, LifeQuote's agents will focus on quotes for no-exam policies. In general these are more expensive than policies that require an exam. "We're kinda being forced into recommending a shorter term no-exam [policy], such as 10 years, with the thought of getting a lower cost exam-required plan at a later date," says Bland. There are also options for fast life insurance, including instant life insurance, with a range of pricing. Younger and healthier applicants tend to qualify for these policies. But taking a life insurance medical exam has typically been the pathway to the best rates. Are Life Insurers Shutting the Door?If you're planning to buy life insurance in the near future, your best bet may be to jump on it. "We don't know what new restrictions are coming tomorrow, but we see the carriers justifiably concerned and scrambling to react," says Udell of AccuQuote. Udell believes that time is of the essence for life insurance shoppers. "At least right now, things still look very good for consumers who want to get life insurance issued at pre-COVID-19 pricing and, for most folks, pre-COVID-19 underwriting rules. As this situation evolves, I believe things are going to change, making life insurance harder to get, and more expensive," he says. The door may be closing for now. Rosendale of A.M. Best predicts, "Depending upon the extent of progression of the disease in the U.S., it is possible that companies could even temporarily suspend their acceptance of life insurance applications." See more about Your Money And Coronavirus: A Financial Protection Guide.  |
| Best Life Insurance Companies of 2020 - MONEY Posted: 24 Mar 2020 12:00 AM PDT  Just thinking about life insurance can be unnerving for many people. It's a reminder that you or someone you love will eventually pass away. Uncomfortable thoughts like these can push buying life insurance farther down your to-do list. But the possibility of an unexpected death is exactly why you need coverage. If you have loved ones who rely on your income, life insurance can help protect them and alleviate financial stress at the time of your passing. The Best Life Insurance CompaniesWith that in mind we've done the research, and here are the top 5 best life insurance companies of 2020:
AIG Direct: Strongest Financial RatingsBy life insurance standards, AIG Direct is relatively young having opened in 1995. Since then, AIG Direct has grown into one of the largest life insurance companies around. AIG Direct maintains an A rating from A.M. Best. AIG Direct offers a full line of life insurance products, including universal life insurance, whole life insurance, accidental death insurance, and more. Its most popular option is term life insurance, which can save you money because the coverage is temporary, lasting from 10 to 30 years. AIG Direct offers three different versions of term life insurance:
The company also provides a range of different riders, which are optional add-ons that can customize your policy. For example, with AIG Direct you can choose a "quality of life" rider that allows you to start drawing from your insurance before you pass away if you're ever diagnosed with a critical, chronic, or terminal disease. If you're a little unsure about life insurance and you want to learn more about it before purchasing a policy, AIG Direct provides a number of helpful articles on insurance products, including how to determine the best type of policy for you, how to calculate the amount of coverage you'll need, and many more topics. How to buy: You can get a quote and buy a policy online. If you like a more personal touch, contact an agent via AIG Direct's Quote Hotline. Health IQ: Best for Health-Conscious PeopleAvid exercisers like Health IQ because this company can save them a lot of money. The agency's name can be a little confusing. The name Health IQ refers to the company's innovative underwriting procedures which lead to the savings. A sophisticated quiz developed by leading experts and health researchers will help the company find your Health IQ. But you won't see questions about how much you exercise and how much you weigh. Instead, the questions will discern your knowledge about health and wellness. The company's research has found a correlation between knowledge about health and actual health. This innovative approach could save you up to 41 percent off standard life insurance rates. You can also qualify for lower rates by proving you're active — by participating in a competition or running a mile within a certain amount of time, for example. Rewarding healthy people doesn't stop with physical fitness with Health IQ. The insurer offers similar plans for diabetics who manage their condition successfully. They could save up to 38 percent on premiums compared to other insurers' rates for diabetics. Customers rave about Health IQ's good customer service from friendly agents, part of the reason why it has a five-star rating on TrustPilot. Bestow: Best for No Medical ExamNeedles and medical exams make a lot of us squeamish, but the medical exam is key to getting affordable rates. Bestow Life offers a workaround. The agency uses proprietary algorithms to judge your health level without the exam. That means no nurses, no needles, and no handing your blood samples over to a faceless corporation. Skipping the exam also speeds up getting coverage. It can take weeks to go through the full underwriting process for a typical life insurance policy, but with Bestow's exam-free application, you may be able to finish applying for a policy in as little as five minutes. The whole application process is online, unlike other insurance companies that offer an online quote and then refer you to an agent to complete the process. Need help along the way? No problem. You can contact Bestow's insurance agents either by phone, email or live chat. It's a business model that plenty of people are happy with, but note that this convenience may come at a price: you may be able to qualify for cheaper rates on life insurance by going through a medical exam with another insurance company, although it's still worth it to get a quote from Bestow to see if this applies to you. Bestow only sells term life insurance in two flavors: short term life insurance for two years, or longer term life insurance for either 10 or 20 years. That's a smaller offering than many other life insurance companies, which typically also offer permanent or whole life insurance. Bestow works directly with one company, the North American Company for Life and Health Insurance, which itself has an A+ rating from A.M. Best. Change your mind about the policy? Bestow offers a full refund within 30 days. Ladder Life: Best for Flexible CoverageTerm life can save you a ton on premiums compared to permanent insurance. But your coverage stays the same throughout your term. What if your needs change? For example, you may pay off some big debts, which could decrease the amount of life insurance you need. Or maybe you have a baby which increases your coverage needs. You can always buy more insurance, but you can't buy less—unless you go with a life insurance company like Ladder. Ladder sells only term life insurance policies from 10 to 30 years, but you can increase or decrease your coverage online without paying additional fees. What's more, the price you pay for a given insurance amount won't ever change during its term with Ladder's "Price Lock Guarantee." The quote and application process is all done online, which means you can get a quote and purchase a policy within minutes – no medical exams needed. Ladder's insurance agents don't work on commission, so they won't try to upsell you a policy with coverage you don't need. If you need help during the process you can get information via live chat. Ladder's 30-day money-back guarantee gives you the option of canceling the policy if you find it's not the right fit for your needs. To offer this life insurance, Ladder has partnered with Fidelity Security Life Insurance Company, which carries an A.M. Best rating of A. If you opt to have your policy renew at the end of its term, the policy will be underwritten by Hannover Life Reassurance Company of America, which carries an A.M. Best rating of A+. American National: Best for RidersIt may not be the flashiest insurance carrier out there. After all, it's an old-school company, having been founded over a century ago in 1905. But American National Life Insurance offers a more robust assortment of products than most carriers, and the coverage has earned an A rating from A.M. Best. You can buy term life insurance as either short-term annual policies, or longer-term policies lasting from 5 to 30 years. American National also offers whole life insurance policies, universal life insurance policies, and guaranteed universal life policies, among other options. Along with its variety, American National made our list because of its wide range of optional riders. For example, you can purchase disability riders, accelerated benefit riders, and guaranteed cash-out riders to help your coverage adapt to your changing needs. As a full-fledged insurance company, American National not only offers a large variety of life insurance products but also a full line of insurance policies – from home, auto and health insurance, to specialty products like credit life and disability insurance, guaranteed asset protection, and more. If you're looking for more than just life insurance, but you'd like to stay with one company, American National may be the best choice for you. How We Found the Best Life Insurance CompaniesThe best life insurance companies offer measurable advantages over their competition. We used these criteria to choose our winners: A.M. Best Rating of A or BetterLife insurance works differently than other types of insurance because it's a long-term commitment. You don't want to lock in your premium now, based on your current age and health, only to have the life insurance company fold later. That's why we selected companies with a strong financial footing, as measured by A.M. Best, a credit rating company for insurance companies. Companies that have an "A" rating or better are among the most solid life insurance companies you'll find. These companies should be around for the long haul. Strong Online PresenceMore and more people use their smartphones to take care of personal business such as buying life insurance. All of our best companies offer a strong online presence and make getting quotes and buying policies easy online. We also favored insurers with multiple avenues of contacting company representatives for assistance if necessary. Unique Business ModelsAfter a while, insurers start to seem the same, especially once you've weeded out companies with less financial stability. So we also favored companies that have embraced new technologies to connect you with quality coverage. Often, these companies still partner with older, time-tested life insurance companies which pairs a stable financial backing with the new tech-driven underwriting. We think it's a win-win combo. Choosing the Right Type of Life InsuranceTo find the best life insurance company for you, it helps to know exactly what type of insurance you need. Knowing the difference between whole, term, and universal life insurance — and knowing which riders you might actually use — can narrow your search for the best policy. Here's a breakdown of the basic types of insurance. Which type would best meet your needs? Let's find out. Term Life InsuranceTerm life provides a fixed death benefit for a specified period of time. Let's say you buy a $25,000 policy for a period of 10 years. If you pass away during those 10 years, the death benefit would be paid to your survivors. If you lived beyond the 10-year term of the policy, your coverage expires and no benefits would be paid. Term insurance policies almost always cost a lot less than other kinds of insurance because your insurer takes less risk. You can buy a lot of coverage for a smaller amount of money. Some insurance providers let term policyholders renew their coverage for a new term, but the premiums will be more expensive because they're based on your age and health when you renew. Your policy's term could range from 1 to 30 years. Most term policies last at least 10 years. Others can be tied to a specific age (commonly 65). There are two basic types of term insurance policies:
Some insurance companies may also provide a "return of premium" feature. If you outlive your term, this feature could refund your paid premiums. This feature will add significant cost to your coverage. Permanent Life InsurancePermanent life insurance covers a variety of policy types, all of which can span the rest of your lifetime. Just like term life, permanent life policies can pay a lump sum of money to your survivors when you die. Unlike term, permanent policies also accrue their own cash value over time. This cash value could be withdrawn, borrowed against, or in some cases used to reduce the amount you pay in premiums to keep your policy. Premium payments on permanent life insurance policies are almost always significantly higher than those for term life insurance policies, so these policies may not be the best option if you are on a tight budget. Here are a few common types of permanent life insurance: Whole Life Insurance: This most common type of permanent life insurance allows you to lock in a fixed-rate premium for the life of the policy. The savings portion of the policy will accumulate cash value at a fixed rate, much like a savings account, and interest earned is usually tax-deferred. Universal Life Insurance: This permanent coverage also provides a death benefit and accumulates value, but universal life offers a lot more flexibility than typical whole life. A universal policy's cash value can interact fluidly with its coverage. As a result you could adjust the amount of your death benefit or use accumulated cash to reduce premium payments later in life. However, once the cash value amount is gone, you either start paying the premiums again or the policy may lapse. People who want the stability of a fixed premium but the flexibility to change the amount of coverage over time should consider universal coverage. Variable Universal Life Insurance: Variable universal life insurance features flexible minimum and maximum premium payments but with a twist: You could invest the cash portion in insurance company-managed mutual funds. Your cash component could grow — or decline — depending on the performance of the funds. Many companies will cap your policy's potential gains and also absorb some of your policy's heavy losses. Indexed Universal Life Insurance: The cash value component of this policy connects to a stock index such as NASDAQ or the S&P 500. Your cash can grow or decline along with the broader market. Types of Life Insurance RidersA rider adds benefits or amends the provisions of your life insurance policy, making your coverage more flexible. Common riders include:
Riders also add cost to your premiums, so try to avoid adding too many. You can add riders only when buying your policy. You can't add them later. Life Insurance FAQsWe get a lot of questions about life insurance. Here are some of the more common questions and their answers: What's the difference between whole & term life? A term policy expires after a set period of time, while whole life insurance is permanent and accumulates a cash value that consumers can borrow against. Many financial experts recommend term life insurance for the average family since that is adequate for most needs. Is whole life insurance a good investment? Whole life insurance is often sold as an investment, but it comes with much higher premiums than term policies. And if you simply want to invest your money in the stock market, buying low-cost index funds is a cheaper way to go. In and of itself, life insurance isn't a good way to invest money. Will I need a medical exam to get coverage? Most life insurance companies will require you to take a free, in-home medical exam as a part of the application process. You can avoid the medical exam but doing so normally makes your coverage a lot more expensive, especially if you're healthy enough to qualify for low premiums. How much life insurance should I buy? There are many ways to estimate how much life insurance you need, such as purchasing a policy worth 10 to 12 times your income or estimating the expenses and debts that need to be covered if you die with those obligations. This topic is important enough to expand on below. Do I really need life insurance? Not everyone needs life insurance — if no one would be harmed financially by your death, it may not be for you. How Much Life Insurance Do I Need?While having the right life insurance provider is important, so too is buying the right amount of insurance. Too little, and your loved ones won't be fully protected. Too much, and you'll be overspending for years to come. Rich Kasparian, financial advisor and president of Garden City Financial Group, says you should consider your debts and your assets when you choose a life insurance policy amount. He suggests buying enough coverage to replace your income for years to come. "There's a misconception about insurance that, instantly, the beneficiary gets the money and then just pays every bill off," he said. "That's all well and good but if they have no money left after paying the bills it doesn't really help them." Luckily, there are a few different methods for deciding how much to buy. Rule of Thumb: 10 to 12 Times Your IncomeAt a bare minimum, many financial experts recommend a quick back-of-the-napkin calculation: buy coverage equal to 10 to 12 times your annual income. For example, if you make $50,000 per year, you'd need to purchase $500,000 to $600,000 worth of life insurance. This is a good starting point for most people, but realize your actual needs might vary. For example, if you're debt-free with no children and your spouse earns more than you do, you may not need as much life insurance as this. That's why many experts recommend crunching the numbers as a better approach. Tally Up Your Financial Obligations and SavingsUnless you're getting fancy with high-net-worth estate planning, most life insurance has a specific purpose: to provide financial support for your loved ones upon your death. For most people, this means paying off any debts, paying your children's college tuition, and providing a supplemental income to keep your family afloat in the absence of your regular paycheck. You may also consider funding your funeral expenses, budgeting enough money for your spouse to take bereavement leave without having to worry about going back to work immediately, and including the costs of raising a child until age 18. Case Study: The SmithsMeet the Smiths, a hypothetical family with a set of twins and two working parents who each earn $50,000 per year. If the Smiths have $500,000 worth of mortgage debt, $10,000 worth of car loans, and $50,000 worth of student loans, their total debt is $560,000. The Smiths also want to save $20,000 each for their kids' college education, and expect that a funeral would cost $10,000. So the Smiths tally up their financial obligations: $560,000 of debt, $40,000 in anticipated college savings, and $10,000 in funeral expenses, for a total of $610,000. In addition, the Smiths want to provide enough income for the other spouse to live on for a full five years if they choose (add on $250,000), and enough money to raise their two children to age 18, from their current age of five. The USDA estimates it costs $14,000 per year to raise one child, so the Smiths will need an additional $364,000 to raise their children. Adding up all these expenses, and the Smiths estimate that they'll each need a life insurance policy worth about $1.25 million. Use a Life Insurance CalculatorYou can also take a shortcut and use a life insurance calculator, which are available for free on many life insurance company websites as well as other insurance advice websites. If you opt for this route, try using several calculators and taking the average life insurance amount so that you're getting the best estimate. Using a life insurance calculator can provide a better estimate than a rule of thumb, but it may not be as accurate as calculating how much you need yourself, or even asking for professional help. Still, it's a reasonable alternative and will give you an idea of how much coverage you'll need to buy. Ask a Financial Advisor or Life Insurance AgentThe best way to find out how much insurance you need is to ask a life insurance agent, or even better, an independent financial advisor. While agents are essentially salespeople for life insurance policies, they can still be able to help you find a policy that meets your needs. An independent agent — one who doesn't work for a specific insurer — has the most freedom to help you. Financial advisors often receive a commission based on the investments they manage for you, but you can find a fee-only financial advisor. These financial advisors provide unbiased financial advice for a flat fee, and they can help you determine how life insurance fits into your larger financial picture. "It makes sense to talk to a financial advisor that can assess your needs based on your assets and on your family dynamics," Kasparian said. Review Your Policy RegularlyThis may not sound like fun, but it should be a part of your financial or estate planning. You should review your life insurance policy regularly to make sure the coverage you initially chose is still the right one for your needs. Circumstances in life can change. Events like getting married (or divorced), having children, and buying or selling a house can all affect how much insurance coverage you need or the number of beneficiaries you have designated on the policy. "I generally say to customers that if there is a life-changing issue, anything positive or negative," says Kasparian, "that's when it needs to be reviewed." In fact, according to the Insurance Information Institute, you should make a habit of reviewing your policy once a year – this way you won't forget to do so if a major event does occur in your life. Having life insurance is important. The buying process can be confusing, but the right information makes the process much smoother — and you'll be able to choose the best options with confidence. How Can I Afford Life Insurance?Life insurance costs will be higher for a shopper with health problems or someone who's 45 or older. Because of this fact, some people assume they'll never be able to afford coverage, especially if they've had health issues in the past, Kasparian says. Yet many companies can evaluate your condition and, in most cases, still be able to provide coverage. These companies will evaluate the risk presented by those suffering from conditions like cancer, diabetes or heart disease, decide the risk is acceptable, and provide coverage. Premiums may be higher, but having the protection of a life insurance policy for your family is worth the investment. Younger shoppers who are healthy often feel intimidated by the potentially high cost of life insurance. In fact, according to LIMRA's 2018 Insurance Barometer Study, Millennials estimated the cost of life insurance at five times its actual price. While people habitually overestimate its cost, in reality, life insurance doesn't have to be that expensive, especially if you purchase a policy early on. Thanks to new technology, you can get quotes and buy coverage more quickly than ever online. In fact, almost half of adults looking for life insurance in 2018 researched purchasing it on the internet, according to the LIMRA survey. "To me, insurance really mostly serves the purpose of protecting loved ones," Kasparian said. Losing a loved one is hard enough without finding out you'll have to leave your home, he added. Summary: Best Life Insurance Companies
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