A couple of weeks ago, we wrote about the call for car insurance companies to reduce premiums during COVID-19. Since that time, a handful of companies answered that call to action. Meanwhile, another sector of the insurance industry is operating with less confusion and delay during this unprecedented period. Term life insurance premiums, and the process to apply for such coverage, remain stable through this crisis. This may come as welcome news to those who are considering additional safeguard measures for their families at this time.
Term life insurance, or life insurance provided at fixed-rate payments for a limited period of time, is priced and available as it was before the crisis. The underwriting process for drafting and approving these contracts remains the same as before COVID-19 and its worldwide effects began. Term Life Insurance works slightly differently than Whole Life Insurance. Whole life insurance offers lifelong coverage, consistent premiums, and a guarantee of return on the policy’s total value. Term life instead is coverage for a set period of time, often offering value through affordability and flexibility as the policyholder transitions through different occupational, health, or familial life stages.
There are a few primary reasons that people obtain term life insurance, but all are related to the fact that a policyholder wants to plan for the well-being and security of a beneficiary after their death. Parents of young children may want to provide resources for surrogate caregivers, while parents of older children may want to provide a nest egg or cushion for early career financial stability. Individuals owning expensive property or sharing a business together want to make sure that their partner in life or business would receive supporting funds in the event of their death. Less commonly in the case of term life insurance, elderly couples may obtain this coverage to help with caregiving and end-of-life arrangements that become more difficult to manage in advanced years. Anyone can be a victim of an accident and may suffer a wrongful death, so making plans for life insurance is not just a task for parents or individuals with considerable assets. Planning for the care of your loved ones in the event of a family member’s passing is a wise and responsible choice, and requires periodic reevaluation based on changing life circumstances.
While it’s a difficult conversation to have, and a tough choice to consider, obtaining life insurance during this time may be a very wise option for you and your family. If you are an at-risk individual for severe consequences following viral infection, taking the time to safeguard your loved ones by adding or increasing your insurance coverage could make an enormous difference.
Term life insurance is regulated by individual states. State Insurance commissioners are the highest authority in this regard, and this can be extremely complicated for insurance companies that operate nationally. These large insurance companies may be subject to more than 50 different iterations of laws and regulations for their products and services. There is no federal level governing body tasked with regulating insurance. The NAIC, or National Association of Insurance Commissioners, is a standard-setting and regulatory support agency for the state commissioners. Its mission claims to protect policyholders and provide a variety of peer review and oversight for state regulations. The III, or Insurance Information Institute, is an independent, 80-year-old institution intended to provide data-driven insights about insurance and educate consumers. These two agencies have power to set the tone of national discourse about insurance regulation, but do not have regulatory or oversight power.
Insurance Commissioner of the State of Texas, Kent Sullivan, has focused crisis response on health insurance, with very little information or public pressure on motor vehicle insurers or life insurance practices. The full list of coronavirus response measures taken by the commissioner’s office may be viewed here.
Car insurance premium pricing is typically subject to more changes than life insurance. Car insurance rates are set based on local trends near the policy holder over the past couple of years. The current pandemic is having an impact on these calculations, however. Consumer and consumer advocacy group outcry, as well as state regulator intervention, has spurred insurance providers to acknowledge the changes to safety and risk on our nation’s roadways during this time of shelter-in-place. While so many people are off the road, we are already seeing motor vehicle accident rates dropping. Accordingly, many providers have already issued statements to customers about specific refunds and credits they will be receiving over the coming couple of months. While it may have been an inelegant and slow response, hopefully the reductions and credits that have finally started will bring welcome financial relief to those in need.
It’s unclear how long the lockdown is going to last, and there will likely be a range of approaches to reopening parts of the country based on the severity of the crisis in these locales. One thing that does seem to be getting clearer is the response of insurers to the crisis. The insurance industry, famous for opacity, becoming more communicative and clear feels like an indication of the confusing times in which we are living.
Questions and considerations when planning for end of life are never easy conversations. Nevertheless, this planning is critically important for your loved ones. Challenging times like the present bring these important issues into focus. What our real essentials are, how we take care of each other, and how we prepare for the worst, are top of mind for many of us these days. In this space of time, it may be well worth your efforts to investigate life planning options for yourself and your family. Resources are available to help with these decisions, and the financial impact of taking on this insurance coverage is not exacerbated by the current climate, according to industry experts. Financial stability is welcome news these days.
Resources for Term Life Insurance:
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