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Life insurance is a contract between the policyholder and the insurance company (insurer). Term insurance is the most widely used life insurance product. If you take a policy in your name, then you become the insured. In this case, you need to pay the premiums as directed by the insurer. If you die before the policy matures, then the insurer will pay the specified amount to your beneficiary. You can buy a life insurance policy either in your name or any of your family members.
Since the coronavirus has changed the entire global scenario, you might wonder whether buying a Term life insurance policy is possible or not. But fortunately, COVID-19 has not affected the purchase of a term plan and other life insurance plans.
You can't choose an appropriate policy unless you have a clear idea of it. There are primarily two types of life insurance:
1. Term Life Insurance It is easy to understand a term plan, and the insurance quotes are available online. It is affordable for people with low incomes as well.
Term insurance is suitable when you wish to get a replacement for your income source over a certain period. During this period, you might pay off your debts or do some important works. It is for a specified period and lacks any maturity value when the insured lives to the end of the term.
2. Whole Life Insurance
A Whole life insurance policy is a bit complex. It costs higher than a term plan. Whole life insurance is the most popular and simplest one in this category. Endowment Insurance, Money-Back Insurance are other forms of a whole life insurance policy.
Whole life insurance carries a maturity value and provides a guaranteed rate of return. Such a policy can serve as compensation on death or security for your retirement.
Apart from the classification above, you might get other forms of life insurance or term plan in different companies.
Why Is Getting a Term Life Insurance Policy Simple Like Before?
As it turns out, the coronavirus has not failed to affect the life insurance industry. There is still the availability of life insurance policies, however, medical examinations for the proposed insured will vary as per certain circumstances.
The coronavirus epidemic has been a massive threat to the global economy. But, not many impacts have been traced to the life insurance industry. Thus, you can follow the same process to apply for a life insurance plan or a term plan. Even the premiums remain the same for a term plan and other life insurance plans.
Also, some experts have stated that life insurance products like term plans aren't changing anytime soon. The underwriting process for a person is the same as it was before the arrival of COVID-19. Furthermore, policy rates remain unchanged despite the outbreak of coronavirus. Therefore, all life insurance companies are open to applications for prospects.
Has Coronavirus Affected the Medical Examination Process for Term Life Insurance?
The pandemic has not affected the medical examination procedure associated with the application of a life insurance policy. The medical exam will happen as usual unless the proposed insured suffers from a disease.
Medical examiners conduct these medical tests. They might work in hospitals, nursing homes, or anywhere else. To be precise, they are registered to work for a particular life insurance company. Thus, there is no chance of infection in case you come in contact with these examiners.
Besides this, the medical examiner, along with your life insurance agent, can reach your home to conduct the medical tests. So, you need not take any chances by stepping outside your home.
Can Your Travel History Affect Life Insurance Premiums?
Several life insurance companies check the travel history of the proposed insured. A declaration on the same from the application has been a standard practice long before this pandemic.
However, the travel history has no relation to premiums. It can only affect the underwriting process and medical exam for the life insurance policy.
Life insurance experts state that an applicant who has just returned from a COVID-19 affected country must wait. They must do their medical tests and then complete the application process. Some countries have entered levels 3 and 4 of coronavirus. Your application might get postponed if you have recently returned from one of those countries.
Some insurance companies have proposed to conduct the medical examination on a case-by-case basis. If you apply for term insurance in such a company, then they will ask you travel-related questions. They might withhold the medical examination if they feel it's necessary. In case you have a travel history, then the company might wait until you show any COVID-19 related symptoms.
Term Life Insurance Policy Pricing
Are you looking forward to buying a term insurance or term plan? Then the cost is going to be your first concern.
Term insurance plan can have additional riders which can increase the coverage level but for an additional premium. In case of any confusion regarding term life insurance, you can check with your advisor. They will suggest the most suitable plan with the right coverage.
Life insurance companies earn interest by investing premiums collected from their clients. Thus, interest is a significant source of income for them. Interest rates have declined after the arrival of COVID-19. Hence insurers are most likely to raise premiums of insurance policies.
However, people prefer term life insurance for its affordability. Thus, the prices of term insurance won't change for some time. Prices can increase only when interest rates appear to be a significant part of pricing. Therefore, the prices of whole life insurance policies might increase, whereas the price for term life insurance policies will stay unchanged.
Hopefully, you have some idea about life and term insurance. For more ways to take care of yourself during the coronavirus outbreak, consider all the information mentioned above while buying a policy. Have a thorough discussion with your insurance company. Analyze all factors carefully and then finalize your decision.