Taking out life insurance during COVID-19 lockdown

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In a recent ASISA media release, Hennie de Villiers, deputy chair of the ASISA Life and Risk Board Committee, states that, while medical testing is an important part of the insurance process used to assist the insurer to accurately assess and price for the risk, ASISA indicated to insurance members last week that the collection and testing of blood samples, as well as medical assessments for insurance purposes, should not be conducted during the lockdown period for the following reasons:

Laboratories should be allowed to focus on activities to combat the virus and other essential medical activities;
Doctors or nurses consulting multiple clients would increase the risk of spreading the virus and therefore goes against all social distancing guidelines.

De Villiers says the long-term insurance industry supports the Government’s efforts to fight the COVID-19 pandemic and is therefore committed to doing business remotely. He says there are still a number of options available to consumers wanting to buy risk cover during the lockdown period:

Most life insurers offer “limited underwriting” or “simplified underwriting” risk cover. These products typically do not require medical examinations, but may still require blood tests to test for instance for HIV and cotinine (smoking). Many of these products will provide cover subject to these tests being performed within a period of a few months, depending on the insurer.
Fully underwritten risk cover generally only requires medical examinations and blood tests from a certain level of cover depending on age and the answers to medical questions completed by the applicant during the application process – this may vary per type of cover applied for. However, life insurers are likely to do stringent checks should they receive early claims on these policies. Insurers might during this time also ask for additional information from other sources to help them better assess the risk.
Some life insurers may accept applications for fully underwritten risk cover during this time, based on the responses by the applicant to the medical questions, but with additional clauses in the contracts allowing them to conduct medical tests when medical facilities become available again. These contracts are likely to contain clauses that will allow the insurer to change the terms of the contract once they are in a position to conduct medical tests. This could include higher premiums, exclusions or a complete withdrawal of cover.

He further urges consumers to continue to remotely consult with their financial advisers to make sure they understand exactly what the life insurer’s approach and the implications will be before taking out cover.

Now may be a good time to talk to your clients about life cover. Just bear in mind that those who buy out fear, may equally easy cancel should the threat reduce.

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