Impact of Covid-19 on Life insurance industry

Close up of Life Insurance Policy with pen, calculator

When Covid19 became a pandemic, it hits the news all over the world. One subject that has gained the interest of the public is about life insurance. The coronavirus outbreak has undoubtedly affected the life insurance industry. It also made the consumers wondered how the outbreak will shape the policies they already have. There was an increased in claim costs such as death, disability and drug cost. Since most businesses have been interrupted, potential revenues in the life insurance industry have also been affected. As the pandemic continues to spread across different areas in the world, it brought a rippling effect on financial markets and the economy of the globe. The insurance industry is not exempted. 

The insurance industry is facing some challenges not only on the insurance claims but as well as the economy and the society. However, what the industry is most concern about is they can protect the life and safety of their employees. They are also concern about their distribution partners in the broker/agent community since it would be hard to continue business as usual amidst this pandemic. Just like any other industry, the insurance industry as asked to take a look and amend their management plans in facing this crisis. To continue their operation is also a challenge since they have to ensure that there would only be minimum disruption to their clients.

Life insurance industry remained open for business. But because of the pandemic, many companies were forced to find solutions to make their workarounds effective in maintaining their sales. Also, the demand had increased so the industry must find ways to meet this. Because of the results brought about by the pandemic, some of the insurance companies have changed some things about their policies. This might affect some people negatively, but also, it can work to your advantage. Due to the pandemic, insurance companies have closed their doors to some people. Some restrictions have been applied, such as they will no longer sell their policies to older folks age 70 and above. Applications for people under that age have also been postponed. Long lengths of insurance terms have also been stopped. Only short terms are available. Before, a customer can get temporary coverage while an application is being processed. Now, some insurance companies no longer provide this service. Also, people with underlying health conditions might be ineligible for life insurance.

Although the spread of the virus impacted the insurance business, it will only be for a short time. With how the life of people was affected by the pandemic, there will be likely changes in consumers’ behaviour.  There is an expected increase in demand for pure protection insurance products in the middle of uncertainties. So the pandemic is mostly to impact the medium and long term of the insurance industry in a positive way. The immediate implication of this global crisis is not really on the insurance industry but applicants and consumers. The crisis is expected to result in changes in the perspective of the people. Consumers’ awareness will be improved with regards to how important life insurance is. So instead of having life insurance as an investment, it will then be viewed as something to cover the risks that may arise in the future. This will result in motivation on overall life insurance penetration not only in one country but all over the world. The global economy can surely benefit on this term.

If you are concern in getting life insurance, now would be the best time to purchase one, as advised by experts. However, when shopping for insurance, you should not do it on your own.  It is recommended if you deal it with an independent broker. Do not try to contact individual insurance companies. Independent brokers likely know the companies’ rules and policies. So they can help you navigate through which the company offers policies that you need in your situation.

This pandemic is not really all negative on the insurance industry. While insurance companies have to leave their comfort zones, there are opportunities presented for consumers to buy life insurance. They may not have considered this before, but because of the effect of the spread of the coronavirus, they might see buying insurance as a necessity.