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The Impact of COVID-19 on Life Insurance


Servicemembers, especially those deployed overseas, might think a bit more about life insurance than the average citizen, but it’s still not a top-of-mind topic in most day-to-day situations. For many, the COVID-19 pandemic has changed that, especially among the younger demographic. With the pandemic causing increased uncertainty, individuals are looking for ways to protect their loved ones and better understand how they are covered.

RelatedKeep Your Family & Finances Secure During COVID-19

How has the pandemic affected the life insurance industry?

Since the onset of COVID-19 in early 2020, trends surrounding how individuals purchase life insurance policies have changed. There has been substantial growth in the number of people taking out new life insurance policies, though these increases were not immediate. According to a JD Power Study of US consumers, most Americans remained unmotivated to buy life insurance in the early months of the pandemic, especially in March and April 2020.

However, as the pandemic began to spread, MIB’s Life Index found that life insurance applications rose by 4% in 2020, which was the largest full-year increase in over a decade. Policies spiked in July 2020 by 14.1%, followed by a 7.6% jump in October 2020.

Interestingly, the largest growth of new policies came from younger adults:

  • 7.9% increase among age 44 and younger
  • 3.8% increase for individuals ages 45-59
  • 1.7% decrease among age 60+

Despite the pandemic and the correlating growth in policies issued, many Americans still either have no life insurance or not enough coverage to fully cover their household expenses. These two groups — the uninsured and the underinsured — are referred to as the “underserved life insurance market.”

Key COVID-19 Pandemic and Life Insurance Trends

According to LIMRA, the difference between the amount of life insurance people in the US have versus the amount they need is significant — $12 trillion industrywide. The average deficit between the coverage amount they have and what they actually need is about $200,000.

Since COVID-19 began, younger individuals appear to be more interested in increasing their death benefit due to the pandemic, possibly because these groups have minor children and larger mortgages. Another reason may be due to higher unemployment rates among these groups, which means they also lost their employer-provided policies.

It’s possible the pandemic has also helped younger people understand the need to get policies while they are healthy. With COVID-19, death is not the only issue. The virus attacks the body in a variety of ways, and can cause damage to the heart, lungs, kidneys, liver, brain, nervous system, and other organs. Reports estimate that up to 25% of COVID patients are experiencing “long haul” or “long COVID” symptoms (i.e., ongoing health issues) that last beyond their initial recovery, even among those who had mild cases. Since many life insurance policies require medical underwriting, these long-haul issues could impact future rates and possibly insurability.

RelatedCOVID-19 FAQs: Your AAFMAA Policy and the Coronavirus

In fact, some life insurance providers are requiring applicants to complete a statement of good health before a new policy can be delivered, confirming that there have been no health changes since the initial application. This statement can give insurance providers the ability to contest the policy payout due to a COVID-19 death within two years after the initial policy date.

Buying Life Insurance During COVID-19

COVID-19 has brought the need for both physical and financial protection. If you don’t have life insurance already, there’s no better time to apply than now. COVID-19 can cause long-term health issues, which could make it harder to get life insurance later on, so the earlier you get it, the lower your rates will be. 

RelatedAAFMAA Is Here For You During COVID-19

As a servicemember, you may already have life insurance coverage through the military. However, is it enough? A supplemental life insurance policy is a smart option to fill in the coverage gaps just in case. At AAFMAA, we offer a variety of life insurance products designed exclusively for servicemembers and Veterans to ensure your loved ones are financially protected. Contact the Life Insurance experts at AAFMAA to learn more about how much coverage you need and which plan can serve you best.

Common Questions

Yes, your AAFMAA policy will cover a death related to COVID-19 if you are an existing AAFMAA Member with a policy issued more than two years ago or prior to a COVID-19 diagnosis, even within the first two years the policy is owned. The only exclusion on AAFMAA policies is death by suicide within the first two years.

However it is important to note that death claims made against an underwritten policy issued within the last two years are contestable, regardless of the cause of death. Contestable death claims are reviewed and subject to denial if we find undisclosed material information that would have changed the outcome of the policy issuance decision.

Yes, if you are applying for a policy that requires medical underwriting, you must disclose a positive COVID-19 diagnosis. Not doing so would be considered material misrepresentation and could result in your policy being voided.

As mentioned above, death claims made against an underwritten policy issued within the last two years are contestable, regardless of the cause of death. Additionally, you don’t have to die for a material misrepresentation to void your contract. The policy can be voided at any point within the first two years if AAFMAA finds that you provided incorrect information about your health history and that the correct information would have prevented us from issuing the policy.

If you were diagnosed with having contracted COVID-19 prior to applying for life insurance and you failed to disclose that diagnosis on your application, your death claim could be denied. This is because, if you had disclosed your COVID-19 diagnosis, we would have followed current industry guidelines and possibly postponed acceptance of your application. In this case, your policy would be voided and your survivors would only receive a refund of the premiums you had paid.

No, the COVID-19 vaccine is classified as a typical wellness check, for which we do not require disclosures and do not deny death claims. We strongly suggest that our Members follow CDC recommendations and receive the COVID-19 vaccination as soon as they are eligible.

Industry guidelines indicate that a COVID-19 diagnosis may postpone acceptance of your application for a period of three weeks to 1 year following recovery, depending on the severity of symptoms and treatment. This timeline is subject to change as new information becomes available and industry guidelines are adjusted accordingly. Those who experience a full recovery may be considered for issue before 12 months, while serious cases (such as those which required a ventilator) may be postponed for longer.

No. Receiving a COVID-19 vaccination will not affect the acceptance of your application.

No, AAFMAA cannot change your premiums or your health classification on a policy you currently hold. Your premiums and health classification will remain the same, even if you have been diagnosed with COVID-19 or you are at a higher risk of exposure due to your job, living situation, or recent travel, or if you get one of the COVID-19 vaccinations approved for emergency use by the USFDA.