Over the last two years, we have observed the dramatic effects of COVID-19 on businesses, communities, individuals and the world-wide economy. Just like any other business, the insurance industry has also faced severe consequences. Insurers are doing everything they can to respond to the pandemic efficiently and swiftly. Although the industry has encountered many challenges, we believe that Insurance companies will also flourish with the new opportunities presented from the pandemic. Throughout the article we will look at the impact of COVID-19 on life insurance policies, answer fundamental questions and check out the responses from insurance companies.
Has the process of applying for a new life insurance policy become more difficult?
Unfortunately, applying for a life insurance policy can be more costly if you have previously been ill with COVID-19 or have recently travelled to a heavily infected country during the application process. In fact, there are more insurers that have refused to sell policies to clients that are older than a certain age. Lastly, with the COVID-19 travel restrictions it has become more difficult for international clients to sign their life insurance contracts in Hong Kong. Thus, we can expect the terms and premiums of life insurance policies to gradually fluctuate as insurance companies continue to respond to the crisis.
Is COVID-19 covered by life insurance?
This is one of the most frequently asked questions about life insurance now and the answer is simple, yes. Insurance companies are not allowed to change the terms of your active life insurance policies. Although depending on your policy there can be some exceptions. For example, if you were infected by COVID-19 or travelled to a heavily affected region without informing the insurance company during the application, you will most likely not be covered.
What are the long-term repercussions of COVID-19 on life insurance?
Although it’s too early to finalize any long-term effects on life insurance, there are reports of COVID-19 survivors who are experiencing persisting lung afflictions. If this continues, we can theorize that life insurance companies can add relevant terms to their underwriting standards. This of course could impact the life insurance premiums for those who have survived COVID-19. In future, if COVID-19 does correlate to respiratory sickness, we can expect an increasingly more expensive rate for life insurance policies.
Despite the harsh impact of COVID-19, we don't believe that the pandemic changes the importance of having life insurance. Whether or not premiums or mortality rates are increased due to COVID-19, Apeiron Hong Kong urges people to purchase life insurance if their death were to have a monetary strain for their loved ones. Everyone who provides significant financial support for their family should have sufficient life insurance to make sure their loved ones are always protected.