Life Happens; Covid Did
As some of you may know, I have been an independent life broker for many years now, and I have shared countless articles about the necessity of having insurance. Why you need it and how much your needs may change throughout your life, such as marriage, having children and buying a home for which you need to have coverage to protect your mortgage.
Most of us don't like facing our mortality and will avoid purchasing life insurance. Some people believe it’s too expensive, while others procrastinate until something happens to someone they know, or themselves.
A True Story
I was speaking to another broker last week. He was telling me how he is losing clients due to Covid and not making their insurance premiums a priority payment. One of his clients called him to cancel their insurance in March. The husband and wife had both been laid off and with a 3-year-old and a 4-month-old, they thought they could save some money by cancelling their life insurance.
This is a broker I have a lot of respect for. Like me, he isn't in it for the money. He decided to pay for their premiums but didn't tell them. He figured it was the least he could do during these trying times. In the first week of April, the client’s husband tested positive for Covid. Six days later, he passed while on a ventilator. She was left alone with two babies. The broker heard about his client's passing and called the woman. She was devasted, obviously, and then realized she needed to do something to maintain their family home. He quietly told her to file the claim for insurance as he had paid the month of April for them. He hand-delivered, with social distance, a cheque for $750K, just last week.
This sounds like a made-up story; it isn't. He is just that kind of broker and though his client suffered a tragic loss; she will be able to continue to live without having to move or change her lifestyle.
Why did I share this story with you? Misconceptions, that’s why.
Myth #1 – Insurance is too expensive
One of the most common reasons why people don’t purchase [life] insurance is because they believe it is too expensive. Here’s the thing though, while universal life and whole life has an investment component to it, which can increase the premium, term life insurance can be really inexpensive, and it does the job of protecting your loved ones.
I recently quoted a 10-year term policy for a couple and for $500,000 of life insurance, for a 34-year-old female, which was a yearly premium of $194/year. That is a total of $16.17 a month. For a 34-year-old male, with the same amount of insurance, the premium was $253/ year, or $21.08 a month. They had to work in a total of $37.25 a month to have coverage for their baby, should anything happen to either one of them.
Guess what? Insurance prices have NOT increased due to Covid. Premiums may rise in the future as they are typically based on interest rates (interest the insurance companies make on their investments), cost of business and mortality rates. All of these factors may initiate a rise in premiums, though there is no talk of that right now.
Myth #2 – The application process is too long
Another reason why people avoid buying insurance is lack of time. Luckily, insurance companies have simplified the application process. Nowadays, everything can be done online or over the phone - no need to meet and carve out an extra amount of time travelling. Once approved, your policy will be e-delivered right to you, instantly.
Myth #3 – Medical insurance is hard to get
Another way insurance companies have made getting insurance easier is by changing the application process for medicals. You would have to undergo a blood and urine analysis for any amount of insurance over $500,000. Most carriers have now changed that amount to $2 million of coverage for people under 50 years of age, without setting up a blood and urine test.
While the need for insurance has always been there, getting a client to sit down and listen to their options has never been easy. Along comes a global pandemic and things change - nothing like a virus to put everything into perspective.
One thing is for sure, Covid has changed our lives, and if it has made you look at getting the coverage you need to protect your family, that is a good thing.
Thanks for reading!
Your insurance pal, Jane
