This is a call to action.
Sunday, the New York Times published an article titled “Surviving Covid-19 May Not Feel Like Recovery for Some”. The gist of the article (byline Italy) is that, even for many of those who were not hospitalized with the virus, there is a significant and evolving list of post-infection symptoms and malaise with unknown long term health ramifications.
What does that have to do with the eye of the storm?
I am a partner in a financial services practice that includes brokering life and living benefits insurance, including disability and critical illness insurance. Our practice has access to over 20 insurance companies. My role is to produce long term financial plans with clients while my colleagues underpin those plans with appropriate risk and wealth building solutions.
In Canada, social distancing has forced the insurance companies to use their nascent AI underwriting platforms to accelerate their ‘non-evidence’ (read no medical samples) approvals and increase the limits that they will entertain without those samples for healthy individuals. Instead, they are fully relying on AI analysis of their traditional health questionnaires.
To date, few insurance companies have incorporated any questions about potential insurees exposure to COVID-19 and until there are widespread antibody tests, many people will not know whether or not they have had the virus.
What does that have to do with the eye of the storm?
Here is my prediction about the near future of life and living benefit insurance:
- As the long term residual effects of the virus are studied and catalogued, the insurance companies will adjust their underwriting for its effects (shortened life span, periodic disability, increased risk of secondary conditions) resulting in decisions to not insure or to ‘rate’ (surcharge) people who have had COVID-19.
- In anticipation of a worsened claims experience in the future for existing and new insureds as a result of COVID-19, it is highly likely that base premiums for new policies will increase.
- The global economic slowdown will likely result in lower investment earnings for the insurers, requiring to them raise rates on new policies.
To date, none of the above have come to pass.
What does that have to do with the eye of the storm?
Based on the epidemiology discussed daily in the press and the urgency of re-opening our economy it seems likely that many more people will be infected with the virus on our way to necessary herd immunity in the 2-3 years, vaccine notwithstanding. It is in fact the specific strategy being adopted by some countries, notably Sweden where, in Stockholm, by some accounts, as much as one third of the population has contracted the virus.
What does that have to do with the eye of the storm?
Imagine being a home or business owner in the eye of a hurricane the eyewall of which has thankfully just spared your home and business. You know there is more to come. Now imagine that in the false lull of the eye, despite your exposure, you determine that you can still get hurricane insurance to protect your property at the same price that it was before the storm was even named and that, after the storm has passed, you can choose to cancel the insurance.
I urge you, in this lull before economic re-opening and the insurance companies taking what will be inevitable steps to secure their profitability, that you:
– Call your advisor to review your current life and living benefits coverage, in particular life, critical illness and disability.
– Take out additional, cost effective coverage to protect yourself from whatever outcome the pandemic creates for you. You can, 2 or 3 years down the road, decide not to retain the protection.
Submitted by Jim Pelot, B.Comm, CPA, CA; CFO and Co-Founder of Podium Prosperity Group
This article is provided for information purposes only. Although the content is believed to be reliable when posted, Podium Prosperity Group cannot guarantee this information is current, accurate or complete and does not assume any liability. The information is not intended to provide any insurance, financial, legal, accounting or taxation advice and should not under any circumstances be relied upon without consultation about your specific situation. The information is subject to modification and updating from time to time without notice.
