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Financial Planning

How Life Insurance Has Changed Due to Coronavirus

By
Rebecca Griffith

Why It Matters:

  • A recent Life Happens survey shows that because of the pandemic, 30% of families are now talking about life insurance coverage.1

  • In the same survey, 25% of respondents said they’ve bought life insurance for the first time because of it.1

  • Likelihood-to-buy is at its highest point to date, with 36% of LIMRA’s 2020 study respondents saying they intend to purchase life coverage in the next 12 months.2

It’s safe to say that 2020 has been a year like no other, and the coronavirus pandemic has many people rethinking things. Not only about their inevitable mortality, but about the costs of getting sick, what happens if they’re not working, and how having money to tap into in case of an emergency is something most everyone could use.

The good news is, it’s increasing general and personal awareness about life insurance. According to a Life Happens survey, 66% of respondents believe that COVID-19 has helped them better understand life insurance.1 Plus, the “need-gap” for life insurance grew to 16 percent in 2020, which suggests that there are 41 million consumers who say they need life coverage, but don’t have it. What’s more, awareness of their personal “need-gap” prompts consumers to seek coverage.2

That’s where you come in. In the midst of all this uncertainty, the protection provided by life insurance can help provide them with much-needed peace of mind. And for your clients who already have a life insurance policy, be sure they know that companies are making it easier than ever to keep it.

Here are some best practices for conducting business in 2020.

Provide assurance and alternatives for clients

As you know, many insurance agents have found ways to move forward despite the current challenges. That said, we know that states can vary dramatically in how business is being conducted right now. If your office has reopened, be sure potential clients know that you’re strictly following local public health guidelines.

For clients who may have concerns about an in-person visit, be sure to provide other options. Many insurance agents are successfully conducting business while working virtually and are providing consultations and reviews by phone or videoconference. These days, it’s even easier to sign and submit documents electronically, and some companies are even mailing policies directly to clients. Assist new clients with a secure solution for completing their paperwork.

Reassure them that it’s possible to get coverage during a pandemic

The fact is, many companies have made it even easier to get life insurance right now. And developments such as combination products, continuous underwriting, and simplified underwriting can increase a consumer’s likelihood to buy life insurance by as much as 50 percent.2

Seek ways to help those who are experiencing financial hardship

It’s common for consumers to overestimate the cost of coverage, with as many as half the population estimating the cost of life insurance at more than three times the actual cost.2 It’s a fact most potential clients would be happy to learn.

During these unprecedented times, financial uncertainty and constrained budgets are common. Now more than ever, it’s important to have protection in place, and there are protection choices for all budgets. Ask them what their spouse, children, or even business partner would do in case of loss of income from an unexpected death. Life insurance could be the lifeline that provides them with the resources they’ll need to pay off mortgages, college, or simply maintain their quality of life.

For those who already have policies, many companies are extending customer grace periods for payments. This can help accommodate coronavirus hardships without them having to worry that their policy will lapse. If this is the case, encourage them to contact their insurance provider directly to discuss available options, get a copy of their policy, and review their current coverage.

Let them know they may not need a medical exam

In response to COVID-19, many life insurance companies have expanded face amounts and rate classes available for non-medical options.

The impact of these underwriting changes shouldn’t be underestimated. The consumer appeal of simplified underwriting has increased over the past year, suggesting over 7.6 million more consumers find the perceived benefits “very” or “extremely appealing” than they did in 2019. Remind potential clients of the benefits, which include being fast and easy, unbiased and objective, and that it provides transparent explanations of risk and pricing, avoids medical exams, and avoids face-to-face conversations.2

Plus, as you know, many companies have always had a range of coverage that doesn’t require a physical. Advise new clients that if they elect coverage over the maximum amount, they may still need an exam. Provide reassurance that if that’s the case, anyone involved in that process would be following local health protocol.

Share other ways they can protect their loved ones

Don’t forget to let potential clients know that some life insurance policies offer optional add-ons called living benefits.* Communicate what’s available, the extra cost, and how it could help provide an additional layer of protection by allowing them to access the money under special circumstances while they’re still living.

If this year has shown us anything, it’s that we can’t predict the future. The good news is we can prepare for it. And in the current environment, there are more opportunities than ever to help potential clients get the protection they and their family need.

For more information on how Transamerica is conducting business during 2020, please visit Transamerica Insurance COVID-19.

Things to Consider:

  • Increase your prospecting efforts to accommodate an increased level of awareness of and need for life insurance during the pandemic. 
  • Provide a variety of ways prospective clients can connect with you, discuss their needs, and determine next steps.
  • Remind potential clients that some coverage is better than no coverage. Review their individual situation and budget with them to uncover the possibilities.

1 “COVID-19 Is Prompting Families to Rethink Their Finances,” Life Happens, July 2020

2 “2020 Insurance Barometer: Top Trends of the Decade,” LIMRA, 2020

*Riders and rider benefits have specific limitations and may not be available in all jurisdictions. Benefits paid under accelerated death benefit riders will reduce the life insurance policy’s death benefit and policy value.

Neither Transamerica nor its agents or representatives may provide tax or legal advice.  Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal professionals regarding their particular situation and the concepts presented herein.

Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker-dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.

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