LIMRA, the Life Insurance Marketing and Research Association conducted a survey of American and Canadian life insurers to assess the effect of the global pandemic on business practices. In all, 47 U.S. carriers were surveyed to see if any changes were being made as a result of state and federal social distancing guidelines and 12 Canadian carriers were surveyed to see if parliamentary and provincial guidelines necessitated any changes.
The survey found that there were no significant changes in the number of applications for life insurance it is no surprise that face-to-face applications were down while online applications increased. deVere Group, one of the world’s largest financial advisory firms, recorded a 76% jump in demand for wills in the two weeks to the end of March. Meanwhile, life insurers have reported a spike in new business of as much as 50%.
The uptick is not surprising given the severity of the pandemic, which is supposed to easily pass between 60,000 and 200,000 in the United States alone, while it infects over one million people globally, according to data from Johns Hopkins University.
But it has “focused people’s minds” on an area of financial planning that is often neglected, according to deVere CEO Nigel Green – Mortality.
While LIMRA reports there has been no significant change in call center and mail in applications during the pandemic, others report surges in wills and life insurance applications.
Social distancing measures have caused less than 25% of all companies to either waive or postpone paramedical exams. Companies that have waived exams have wisely set face amount limits on policies in which exams are waived. The majority of life insurers both north and south of the border have merely postponed paramedical exams until social distancing guidelines are relaxed enough for them to be completed.
The good news is that the COVID-19 pandemic has not had as negative an impact on the life insurance industry that it has had on other industries. At the same time, the pandemic has not improved cash-surrender values of life insurance policies in the United States and Canada. Of course, the bad news is that the cash surrender values of variable life insurance policies have been negatively impacted as the stock market has declined.
While the Dow Jones Industrial Average dropped by a third of its value when the pandemic hit North America, the market has already recouped some of those losses. Policyholders should not only know the current cash values of their policies, they should also know their policy cash-surrender values. More importantly, policyholders should know the entire value of their policies by including the value of their policy face amounts in a secondary market. Now is the time to obtain no-cost policy appraisals to determine the actual value of life insurance assets.