Uncertainty and life insurance were made for each other.

While many clients were deeply concerned about how their investments were faring when the deadly COVID-19 hit Canada, a great number – not surprisingly – were asking their financial advisors about buying life insurance.

Clients who had already had paramedical tests taken prior to the COVID-19 outbreak and had submitted their applications were asking their advisors why everything seemed stuck in the insurance pipeline. “What’s happening is that insurance companies are all in the process of figuring out what risk they’re willing to take and how to spread that to adjust for unusual times,” said Heather Freed, an insurance and employee benefit specialist with Insure your Freedom. “The problem is: most of them don’t know yet.”

Like most everything else, many of the standard practices of the industry have been thrown into disarray. Blood and urine tests have been put on hold for lack of paramedics. Attending physician statements were fine when doctors were working out of their offices, but many are working from home during the pandemic and may not have full access to their records, says Freed.

On top of that, people are wary of touching paper applications with many now asking for scanned documents only, she adds.

“The world has changed,” says Freed. Just like when the country was hit by a mail strike a few years ago when piles of paper were replaced with electronic documents, so too are changes taking place now.

Simplified issue

Still, Freed says she has a fiduciary responsibility to her clients to make sure they are appropriately covered and has now adjusted her once standard practices with new ways to get life insurance, especially those with no medical tests required – simplified life or no medical issue as well as guaranteed issue.

Some insurers, like Kingston, ON-based Empire Life have temporarily increased the amount of life insurance people can apply for with no medical examination or fluids.

Mike Stocks, vice-president and chief marketing officer at Empire, said the company has also introduced a number of enhancements to its virtual platforms and processes, including its Fast and Full life app that has features like integrated screen sharing, an electronic health questionnaire, ePayment and eSignatures to make it easy for people to get the insurance coverage they need virtually.

Empire Life is also extending the grace period for premium payments to 60 days until further notice for one monthly or one annual premium payment on individual life and critical illness policies for any policy owner who asks for it.

A spokesperson for Canada Life says it too is making some temporary adjustments to its normal underwriting rules to better assist customers to get insurance coverage. It is also temporarily relaxing its requirements to expand the range of applications it will underwrite without vitals and fluids usually obtained by the paramedics.

“We will also work with our customers and their advisors to assist whether other information may be helpful in assessing a clients’ application for insurance. We’re looking to leverage existing medical information that may be available.”

Canada Life notes that the COVID-19 situation is “fluid” and the insurer may change its position to respond or adapt to changes.  “We will continue to review our response regularly to ensure we're doing the most we can to support the physical, mental and financial well-being of Canadians.”

Group benefits

Just as advisors say not all life and health insurers are taking the same tack, neither are they on the group benefits side.

While most insurers had normally adhered to the same rules, COVID-19 has changed all that, and many companies now have separate ways of doing business, says Dave Patriarche, president of Mainstay Insurance and founder of the Canadian Group Insurance Brokers.

“The insurance companies are doing things now that they have never done in their history...For example, some insurers are letting group insurance clients suspend their benefits for up to 90 days with no penalties...” - Dave Patriarche

Some insurers are extending the grace period after a company decides it no longer can pay the premiums, while some may not; as well, some laid-off employees will receive benefits from the insurer, while other insurers are not offering that advantage.

Patriarche does give a nod of approval to some of the steps insurers have taken during the crisis.

“The insurance companies are doing things now that they have never done in their history,” says Patriarche. For example, some insurers are letting group insurance clients suspend their benefits for up to 90 days with no penalties, hoping that after that time things will return to so-called normal. “No one has ever allowed that before.”

Some benefits are being deferred, like a regular dental appointment during the pandemic. But when COVID-19 is over, employees will then want to go to the dentist for that check-up and the bill has to be paid. “You are going to have three months where you didn’t have any premiums and didn’t have any claims but in the last half of the year they’re going to come back and they didn’t collect a premium. Time will tell how this shapes out,” he says.

Added flexibility

Traditionally insurers have said that an employee needs to be working a certain number of hours to be eligible for benefits. But now, says Patriarche, most insurers are allowing employees to get full benefits, despite having their hours reduced because of COVID-19.

In addition, people who are now on disability may receive full benefits even though they’re not working the same hours as before, he says.

Empire Life also says that a company can maintain its health benefits for its employees, including life insurance, for a period up to six months, says Vanessa Lycos, vice-president group product and marketing.

“We are also allowing in some circumstances short-term and long-term disability to be included if an employee is laid off for up to three months if the business requests it and on the advice of their insurance advisor.”

However, Patriarche cautions that every contract is different and advisors should look to see what the insurer is doing before advising their group benefits clients.