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Life cover in the time of Corona – Not a “nice to have”

Every dark cloud, as the saying goes, has a silver lining. In the case of Covid-19, this also applies, thanks to some great footwork by the life offices.

If there is one thing the pandemic has achieved, it is to make the general public so much more aware of the possibility and reality of death, and the consequences for those left behind in the case of no or insufficient life cover.

We were truly impressed by the steps taken by life offices to adapt systems and procedures to enable advisers to offer their clients life cover despite the onerous obligations required by the lockdown.

As recently as last Friday, a joint directive from the Financial Sector Conduct Authority and the Prudential Authority outlined a detailed set of “…appropriate precautionary measures when performing essential financial services as set out in the Schedule”. Please see more on this in the article below.

As we recently indicated, marketing and selling of insurance products are not regarded as essential services, and, in fact, a special notification was published to caution life offices against obtaining blood test samples as healthcare facilities will come under increasing pressure as the tally mounts.

Technology to the rescue

If there is one aspect of doing business which has gained huge momentum since the arrival of Corona, it is the application of technology. Whilst the directive mentioned above refers mainly to precautions where people are required to have a physical presence to conduct essential services, it is actually far easier (and healthier) for us to contact clients from the comfort of our homes. We can conduct business as before, well within the parameters laid down by the lockdown and, in fact, provide clients with much needed peace of mind in these trying times.

Typically, previous constraints such as obtaining signatures have been overcome in a number of ways, obviating the need for physically seeing the client.

Adjusted underwriting requirements

The point of departure for most life offices appears to be one of “let’s get your client covered and concern ourselves with underwriting later.”

In some instances, clients in certain qualifying categories will be able get life cover up to a specified limit, subject to simplified underwriting. In other instances, cover will be provided subject to the provision of the required medical evidence within a specified period after the lockdown.

Cover limits

Most companies have set rather generous caps on the amount of life, severe illness and disability cover. Some actually waive medical requirements such as HIV, Cotinine, Cholesterol and Blood Sugar tests within certain parameters.

Most of these conditions will only apply for a limited period, typically the whole of April.

Extended Lockdown

Most of the requirements we saw were issued prior to the extended lockdown announced last Thursday. A further extension of this nature could of course impact on certain deadline requirements, for instance where medical evidence has to be obtained within a certain period after the lockdown. This is, however, countered by the limited time of this special offer.

Honesty is the only policy

Contrary to industry policy, business issued in this period may be subject to underwriting at claims stage, in view of the relaxed underwriting requirements. It is therefore essential that all questions are answered as honestly as possible.

Buyer’s remorse

Fear can be a strong motivator, but once the fear is removed, the temptation may be there to cancel cover taken out now, with negative consequences for the adviser. It is imperative therefore, that your negotiations with your client should be in the light of the longer term benefits, rather coercing him into something he will regret the minute the dark cloud lifts.

We hereby invite all life offices to provide us with a link to their offering in this regard which we will make available to subscribers to this newsletter.

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