4 things to know about life insurance during a global health crisis

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The coronavirus is making people think about life insurance coverage, and if they need it.

 
  • As global health crisis Coronavirus spreads, some life insurance companies and agencies are seeing an uptick in applicants for life insurance coverage.
  • It's not too late to sign up if you've been considering it. Nothing will change if you already have a policy. 
  • Largely, the same rules apply that always have: Shop around for a policy before choosing one, and make sure you're being truthful on the application or you might void your coverage. 
  • Read more personal finance coverage »

In a global health crisis, life insurance can be confusing. Will it still cover you if anything happens? And, is it too late to sign up? 

You're not the only one with life insurance on the brain.

Online life insurance agent Fabric has seen a 50% increase in applications since February, Allison Kade, Fabric's head of organic growth, told Business Insider. Amy Danise of Forbes reports that online life insurance agency LifeQuotes has seen a 29% increase in application since January 20.

While Kade says there's no certainty that the increase is tied to the virus, she suspects it's gotten people thinking about life insurance who would have normally put it off. "It's scary, but also a good excuse to do something that even when the panic abates, you'll be glad you'll have done," Kade said. 

1. If you already have life insurance, there's no need to worry

Anyone who already has life insurance doesn't need to worry about their policy - it's already in place, and no virus could change that.

If anything should happen to you, your policy will cover it. Nothing will change, and so there's really no need to worry. Even if you're in an affected area, your policy and monthly premiums aren't likely to change - the rate you have is locked in for the entire term of your policy. 

2. Potential price fluctuation makes now a good time to apply

Insurance prices are constantly fluctuating, due to many factors. While life insurance would certainly be impacted by an influx of fatalities, its prices can also vary based on the market and interest rates, which play a big role in how life insurance companies make money through investing.

Tim Zawaki writes for S&P Global's Market Intelligence that record-low interest rates could pose a threat to the life insurance industry, affecting its investments and ultimately its profitability. But, he writes, it is still too early to say just how much it could jolt life insurance prices for consumers, if at all.

Kade expects prices to hold steady in the short term, without much change. "If you're a healthy young person and you're applying for life insurance, your rates shouldn't be changed due to this Coronavirus," she said. "The underwriting process is the same if you apply today as if you were to have applied two months ago."

In the long term, anything could happen. But, anyone concerned about a potential future price increase could benefit from applying now.

3. If you're applying, don't lie

Lying on your life insurance application could cost you, and it's not worth risking your policy's validity to save a few dollars. Lies about your health or medical conditions will likely be caught, as life insurers can check medical records, and can go as far as to cancel your coverage, according to Policygenius.

While many online life insurance agents like Fabric also request travel history, Kade says that it's not tied to the virus. "This question predates any of the Coronavirus concerns," she says. For Fabric, Kade says that answers to this question are more about the amount of risk posed by traveling, and that certain destinations that are higher risk than others. 

Lying on the travel history portion, or on any other portion, of your application could constitute as fraud. You're better off telling the truth. 

4. If you're applying now, don't forget to shop around

As always with life insurance, you'll want to shop around and make sure you're getting the best possible deal. Each insurance company considers your information differently, and companies price your policy depending on your individual risk profile. 

To avoid paying more than you should each month for your policy, get quotes from several different insurance companies or online life insurance agents. Compare them to find the most coverage for the least money, and you'll find the one that's the best deal for you. 

Fabric offers term life insurance policies for parents. Get a free quote for coverage and see how affordable life insurance can be »

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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