Underwriting Clients During a Pandemic

The COVID-19 pandemic is widespread, affecting millions of people around the world as well as numerous businesses, including those in the life insurance industry.

(Related: 6 Rolls of Toilet Paper v. Life Insurance)

While the full effects of the virus are still unknown and life insurance carriers are updating their underwriting guidelines on a regular basis, there are a few things to keep in mind — in terms of limitations and opportunities — when considering submitting a life insurance application during this unprecedented time.

Restrictions

Depending on the carrier, the following restrictions may apply:

• Decreased retention limits are dependent on age. However, the majority of auto-bind and jumbo limits have remained intact.
• Table shave programs may be modified, suspended, or discontinued.
• Life insurance medical exams may be dependent on current state lock-down guidelines, and in some cases, may be unavailable.
• Foreign national and foreign residency programs may be suspended, especially in areas that are considered COVID-19 hot spots.
• Future foreign travel plans will likely result in a postponement of coverage or approval and/or a suspension of underwriting. Underwriting decisions involving applicants with past travel to certain hot spots may also be postponed for a period of time. Note that certain states prohibit adverse underwriting action based on an applicant’s future or past legal foreign travel.

A postponement of coverage/approval/suspension of underwriting may occur for applicants:

• Who have visited a foreign country. Postponement is for a minimum period of 30 days after they return to the U.S.
• Who plan to visit a foreign country. Postponement is for a minimum period of 30 days after they return to the U.S.
• With a COVID-19 diagnosis. Postponement is for a minimum period of 30 days and up to six months, depending on if the applicant was hospitalized.
• With known exposure to COVID-19. Postponement is for a period of up to 30 days.

In addition, rate class availability may be limited and is age-dependent.

Medical conditions that make a client more susceptible to COVID-19 may be postponed. The conditions now on that list include coronary artery disease, metabolic disorders, respiratory impairments, and underlying malignancies.

Attending physician statements (APS) may be delayed due to office closures.

Requirements to include attestations and/or amendments confirming a client has not been exposed to or diagnosed with COVID-19 may be requested either during the underwriting process and/or as a policy delivery requirement.