Wed, Jun 10, 2020 4:00 PM GMT
The coronavirus (COVID-19) pandemic continues to spread around the world at an alarming rate. In April, the virus had infected more than 2 million people and caused over 170,000 deaths worldwide. During April, Canada experienced more than 30,000 infections and over 1,700 deaths. Everybody knows someone that had been affected by the pandemic, be it through illness or job loss or major life changes.
With numbers rising sharply, particularly in the U.S. and Europe, and without a vaccine in place, insurance companies are trying to adjust their approaches, products, and customer service to the new normal.
We talked to veterans in the Canadian life insurance space: Richard Parkinson (15+ years of life insurance experience) and Lorne Marr (25+ years of life insurance experience) to better understand the changes in the no medical life insurance stream.
Let’s find out what they had to say.
Before talking about the role of no medical life insurance in the current pandemic, it is important to understand how this insurance works because it has several very particular properties.
Traditional life insurance (also called fully underwritten life insurance) typically comes with extensive medical tests and a long medical questionnaire. This allows insurance companies to determine, very precisely, the level of risk associated with a policy holder.
No medical life insurance comes without a medical exam and can either have a short medical questionnaire, containing between three and 12 questions (simplified life insurance/simplified issue life insurance), or no questionnaire at all, meaning that you are pre-approved for the coverage (guaranteed life insurance/guaranteed issue life insurance). In most cases, the process for getting no medical life insurance is faster than getting traditional life insurance. However, no medical life insurance comes at a cost. Since the insurer assumes more risk, the premiums are higher.
Right now, the aspect of not having a medical test (no need for a nurse’s visit) makes this insurance type very attractive for Canadians during the COVID-19 pandemic.
Accordingly, no medical insurance providers have evolved their coverage during the pandemic. Let’s see how it has changed.
There are two main developments we are observing during COVID-19 with respect to no medical life insurance.
First, the share of no medical life insurance is going up because Canadians often do not have access to standard life insurance to the same extent as they had before (e.g. due to requirements for in-person medical tests). Strictly speaking, it is possible to get medically underwritten traditional life insurance without a medical exam, but this offering is limited to particular age segments and individuals without health pre-conditions in those narrow segments. Other Canadians find that no medical life insurance is an option that addresses their needs.
Secondly, we see dramatic changes in the no medical life insurance coverage limits. A couple years ago, these were limited to $300,000 for simplified issue. Today, we see increases of up to $1,000,000 – $2,000,000. A table below provides a more detailed breakdown.
How do various insurance companies define coverage limits during the COVID-19 pandemic? Let’s look in detail at what each insurance company offers. One thing to remember is that the data changes daily – please contact our insurance specialists for the most up-to-date information.
No medical life insurance coverage limits vary across companies as each insurer has its own risk tolerance and rules. In addition to that, coverage limits vary widely across different age groups, too. The younger the age of the applicant, the higher the possible coverage is available to him/her (pending the applicant’s good health).
Here is a detailed overview of the no medical life insurance limits offered by different companies during the COVID-19 pandemic. Note that each company has several limits in place varying across different age segments. The table below (for mid-April 2020) shows coverage in the descending order, starting with the largest ones.
It is interesting to note that three companies offer coverage limits of $2,000,000: Sun Life and Canada Life for ages 18-40, and Manulife for ages 18-50. Plenty of insurers offer coverage limits of $1,000,000 with age ranges typically going up to 50. Manulife, as the only exception, offers coverage of up to $1,000,000 to people aged 50-60. These levels of coverage were, in the past, reserved for traditional life insurance policies.
More senior applicant segments can benefit from higher coverage limits as well, though these will not be as high as the coverages described above.
If you are interested in a detailed view of limits by company, please consult the table below (status: Mid-April 2020):
Source: No Medical Life Insurance
