The Latest On COVID-19 And Impaired Risk Underwriting


(This is a follow up to Mr. Gersten’s article, “The Impact Of COVID-19 On Impaired Risk Underwriting,” that appeared in the September 2020 edition of Broker World.)

Less than a year ago it would have been excessive, if not redundant, to issue a 90-day impaired risk underwriting update. Not so in 2020.

Continuous change
All of us have experienced the pervasive impact of the pandemic on our own lives and that of our businesses over the past 10 months. It has been a time of figuring out what works, what doesn’t, and, most of all, making countless adjustments and changes. We’re just now coming to grips with the fact that the days ahead will continue to be challenging.

We are not alone. Insurance companies are coping with their own trials in maintaining employee health while retaining productivity and managing profitability. There’s good news however. Our experience makes it clear that people are capable of responding to the task and doing what’s necessary to get the job done for everyone involved, particularly for brokers and their clients.

Updated carrier impaired risk guidelines
It’s no different with life insurance carriers. They are constantly evaluating how the COVID-19 virus evolves and its impact on people’s health. As may be expected, they have modified their guidelines when considering risks that are now considered problematic given the pandemic. The following impaired risk guidelines are representative of many of the larger life insurance companies:

  • Under age 65: risks can be considered up to table 4 (D).
  • Age 66-69: risks can be considered up to table 3 (C).
  • Age 70-79: risk must be standard nonsmoker or better.
  • Age 80-85: all risks are being postponed for now.
  • Retention: up to $10 million standard, only up to age 59.
  • Retention: up to $5 million standard, only up to age 65.

To see how these impaired risk guidelines can playout with clients, here are three case histories that provide further insight:

Case #1. A 58-year-old insurance agent asked that his personal insurance purchase for $2 million be shopped, given past atrial fibrillation and a recommended ablation procedure history done six years ago. Two carriers offered a preferred nonsmoker rate. When the case was formally reviewed, it was found that the applicant had a history of childhood onset asthma and the offer was reduced to standard rates given that the carrier considered this a comorbidity. Upon further review finding there were virtually no symptoms for years, the preferred offer was restored.

Case #2. A female age 60 with mild, stable M.S., a single episode of a DVT fully recovered, and sinus tachycardia, was declined by all but one carrier due to the assortment of medical history and COVID-19 comorbidity. The sole offer was for a standard nonsmoker policy.

Case #3. A male age 64, required $1 million of new life insurance. The client had a four-vessel coronary artery by-pass graft surgery six years earlier, subsequent to a small, mild heart attack. Tentative rate evaluation showed that offers would run between tables 4-5 with three carriers. However, two of the three carriers would have to postpone their offer until their guidelines for COVID-19 changed. One carrier offered the table 4. With caveats that all other risk factors were ideal with no further concerns, the client applied and was able to secure the table 4 offer, just within that carrier’s COVID-19 guidelines.

It’s not expected that there will be many additional underwriting enhancements to the impaired risk guidelines during this coming winter period. It’s based on the assumption that things will, for the most part, remain the same until one or more vaccines is approved, herd immunity occurs, or there are more successful medical treatments that bring a level of comfort to insurance carriers that their mortality experience will not suffer adversely from COVID-19 deaths.

Current carrier challenges
However, there is more to the insurance carrier story. Each one has its own challenges. In general, however, here is what you can expect to encounter:

  • Service delays of from one to three weeks for specific top line carriers for each new business function. It is important to understand a carrier’s status and limitations to be prepared to set appropriate client expectations.
  • Need to evaluate and triage risks so as to avoid COVID-related mortality. This causes carriers to be more restrictive than field underwriters may fully appreciate.
  • With strained field communications, persistent case follow-up from the field is essential.
  • There is an additional need to thoroughly screen for possible COVID-19 contact.
  • Securing attending physician statements is more challenging than pre-COVID-19.
  • There is an increased need to scrutinize an approved application and question client COVID-19 status upon policy placement. For the most part, this is done with a Declaration of Insurability.
  • Structuring and enhancing automated underwriting offerings so they have a marketable, workable process that will serve to maintain and increase application counts.
  • Recognizing that the sales process has changed, probably forever, and embracing changes that will help facilitate and enhance the experience.
  • Progressive underwriting innovations for risk assessment and more speedy processing.
  • Many carriers have set barriers to access when evaluating impaired risk cases on a preliminary basis due to COVID-19-caused service limitations.

Being cognizant of the formidable challenges faced by carriers will help obtain the best possible outcomes for clients.

Broker challenges
As with the insurance companies, it’s clear that the demands on brokers have never been greater than they are currently:

  • There is an increased need to be resourceful and innovative. Many agents find they don’t have the infrastructure that they had pre-COVID-19.
  • Embracing and incorporating all of the available technology should be a top priority.
  • Relationships with clients, prospects, carriers, and wholesalers demand consistent care and attention, albeit electronically.
  • Staying focused by planning your day to avoid disruptions and distractions.
  • Consistent and flawless execution of your plan, client contacts, and processing are required.

There’s no sugar-coating it. The challenges confronting everyone in the life insurance industry are daunting, far more demanding than anyone would have thought possible. Yet, as its long history demonstrates, with careful thought, determination, and persistence, our industry will come through the current crisis.

Allan D. Gersten, CLU, ChFC, CFP®, is chairman of First American Insurance Underwriters, Inc., an insurance brokerage that specializes in supporting agents with life insurance, long term care and annuity products.

Gersten can be contacted via telephone at 781-449-6800. Email: