Life Insurers Are Delaying Covering Applicants Who Previously Had Covid-19

Some of Those Facing Delay Are Likely Going to Be Denied Life Insurance

Washington, D.C. – The American Council of Life Insurers (ACLI), the largest trade organization of life insurance companies in the nation, has confirmed CFA’s concern that some American consumers applying for life insurance might encounter COVID-19 related delays when seeking life insurance. As ACLI explained in its letter, “today’s circumstances may delay a coverage decision for some people in some circumstances.”

“This admission is stark evidence that we need disclosure from life insurers to let us know who the ‘some people’ are who face delay and what ‘circumstances’ lead to such delay?” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner. “Consumers need to know answers to such basic questions as: Will vaccines be required?  Will negative PCR tests be required?  Will different standards apply by age grouping?”

ACLI pointed out, and CFA agrees, that delay “is not a rejection.”  But the reason for any delay would be to seek COVID-related medical information that might lead to a rejection. It would be logical to assume that some rejections do occur after the delay period.

CFA copied their letter of response to ACLI to the National Association of Insurance Commissioners (NAIC).  CFA again asked that NAIC consider adopting a model rule for life underwriters requiring transparency and reasonable standards regarding delay or denial of life insurance coverage because an applicant has or previously had COVID.

“The NAIC rule should require that insurer underwriting rules be made public prior to use, be transparent, and provide standards for delaying or denying of coverage. We also asked leading life insurers to consider voluntary transparency about COVID-related life insurance underwriting standards,” said James H. Hunt, CFA’s Life Insurance Actuary and former Vermont Insurance Commissioner.  “The public needs some understanding of the basis on which their applications will be evaluated in the COVID era.”

Given the delays in coverage, the likelihood of some rejections, and a lack of clarity about the current practices being deployed by leading writers of life insurance, CFA believes it falls squarely upon the NAIC to provide transparent standards for COVID-era underwriting unless some voluntary action is quickly taken by the industry.

“We believe that transparency regarding this new practice is a modest accommodation that carriers could make to provide consumers the opportunity to know with which insurers they will encounter COVID-related delays based on their particular situation,” Hunter said. “A voluntary approach to this adopted now might allow insurers to have varying standards, which might not be possible if regulators are required, by insurer inaction, to set the standards. The many millions of Americans who have had COVID, as well as those who fear it, need access to this information to help them make important life insurance decisions for their families.”

Contact: J. Robert Hunter, 703-528-0062