Life insurance costs could rise for COVID-19 survivors
At this time, having had COVID-19 is not a threat to getting life insurance or a reason to be charged more for a policy. But those breaks will end, perhaps soon, and lead to denials of coverage or higher rates for some coronavirus survivors.
This is what life insurance experts say, who also warn that having had the virus will make it increasingly difficult to apply for the policy. Insurers will want to learn more about the long-term health effects of COVID-19 and add other information-gathering steps – such as quizzes and medical exams – to complement this picture.
Some potential changes in insurance for virus survivors will be delayed until insurers have more information, experts say. Insurance companies hate a data vacuum and tend to act smarter when faced with it, says Morgan Tilleman, partner at the law firm Foley & Lardner LLP who deals with insurance and reinsurance.
âLife insurance underwriting moves more slowly than almost any other part of the economy because there is a sort of general requirement that rates and how they are set must be supported by actuarial analysis and c ‘is a high standard. “
This cautious approach is already present when it comes to COVID-19 vaccination status, which is not yet factored into life insurance approvals or premiums.
But as the available data increases, experts say, a COVID-19 infection – especially one with persistent symptoms – could well turn into a black mark when it comes to getting life insurance. This could cause some companies to be at least cautious about approving some virus survivors as early as next spring.
This prospect is a reason to move as soon as possible if you are considering getting coverage. Here’s what to expect over the coming year when it comes to COVID-19 infections and life insurance, and what to do if you plan to purchase a policy soon.
More medical probes from past infections are coming
While some life insurers have started asking questions about previous COVID-19 infections in their questionnaires to screen out potential clients, not all do. That will change, Tilleman said.
He predicts that traditional life insurance applicants will face at least lengthy questionnaires about their COVID-19. The insurers of each insurer will see the virus cases detailed in these questionnaires, “and if questions are not yet asked, they will be.”
And that, in turn, can increase the likelihood that you will have to undergo a medical exam to qualify for a policy, say Tilleman and Paul Ford, CEOs of Traffk, an online insurance underwriting and distribution platform.
This could turn the tide with fewer of these reviews. The ability of life insurers to quantify risk and price policies accordingly has been enhanced in recent years by the deployment of increasingly sophisticated technological tools that rely on machine learning and predictive algorithms. These allowed more life insurance policies to be approved without the need for a full medical examination, Ford says. However, the unknowns around COVID-19 could change that, he says, at least for some patients.
“More insurers have reason to be somehow on the fence [and] pull a bunch of more from your medical records, the more they can say: if you want coverage, you have to undergo a medical exam, âhe says.
Policy denials and price spikes can occur for some
For many, if not most, life insurance applicants, the extra steps needed to explore their experience with COVID-19 will be little more than speed bumps, says Cathy Seifert, insurance analyst at CFRA Research.
A bout with the virus in a candidate’s medical history – no matter how serious – won’t stop them from purchasing life insurance, especially if they’re otherwise young and healthy, Seifert says. This is because “their overall health risk profile probably hasn’t changed significantly.”
On the flip side, people with otherwise fair or poor health who have battled a severe case of COVID-19 may very well find that the history will increase their perceived risk of insurability. If someone already had underlying co-morbidities for COVID-19 such as type 2 diabetes, obesity, high blood pressure, or a history of smoking and then contracted the disease, insurers might be more reluctant to write a font.
Conditions such as pneumonia or sepsis triggered by severe cases of COVID-19 can cause potentially permanent damage to a person’s respiratory system, according to Panagis Galiatsatos, a lung disease expert for the Johns Hopkins Health System.
Galiatsatos adds that the immune systems of people with severe cases can be overwhelmed, exposing these people to secondary opportunistic infections that can also have long-term damage to lung function.
The other big X factor is what’s called the “long COVID.” It is estimated that nearly 12 million people suffer from constellations of symptoms that persist for months and can be debilitating, as well as a potential barrier to obtaining life insurance.
âI think it’s going to start showing up,â Ford predicts.
Ford says it’s likely to become more common for insurers to ask not only if you’ve had COVID-19, but if you have ongoing respiratory illness or difficulty breathing, irregular heartbeat, or other features of a long COVID. Insurers will likely be most concerned about the implications of long-term organ damage: COVID-19 is known to injure not only the lungs and heart, but also the brain and kidneys.
Tips for COVID-19 Survivors Shopping for Life Insurance
Insurance professionals have some recommendations for COVID-19 survivors who are considering purchasing life insurance.
Do not wait : If you’ve survived a COVID-19 crisis and are considering life insurance, there is no time like the present.
âIf you have long-term symptoms, you may want to act sooner rather than later in terms of shopping for a new policy,â says Ford. âI think we’ll probably see some significant changes in insurer models and methodology next spring. By then, he says, “we will have had nearly two annual cycles of COVID infections” to study.
If data from those cycles suggests that people who have had COVID-19 face a higher risk of death, he says, it could become more expensive or more difficult to purchase a life insurance policy.
Tell the truth: One mistake you absolutely shouldn’t make, experts warn, is trying to lie or hide a case of COVID-19 in your medical history. When an insurer accesses your medical records, they discover the inaccuracy – and that could trigger a cancellation of the policy or, if you were to die, a denial of your beneficiaries’ claims, Ford says.
“They’re going to go back and say, ‘Well let’s pull this guy’s medical records and make sure he hasn’t faked,'” he says – and they won’t hesitate to terminate the policy. ‘a customer who didn’t tell the truth, he adds.
Get the jabs: Finally, get a full vaccine, if you haven’t already, and stay up to date on recalls as advised by your doctor and public health authorities. Vaccines remain humanity’s greatest weapon to prevent COVID-19 from causing serious illness, hospitalizations and death. And resisting them can also be costly.
âJust as a non-smoker is a lower risk and cheaper to insure, I think consumers should assume that their insurability [will be] reinforced by their vaccination status, âsays Seifert.
âIn fact, I think vaccine status is probably the thing that life insurers, if they aren’t already looking at, are most likely to be looking at,â he says. “There is fairly clear evidence of the positive impact of vaccination, even for people who end up contracting a COVID breakout.”
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