The Gift Of Life Insurance
Happy Holidays from our Mackay Insurance Family to yours!
2020 was not the year we had planned for during our hopeful 2020 goals and wish list making. Instead of hopes and dreams, we got limitations and closed doors. This however, does not take away the joy of the holiday season nor the hope we have for next year!
The difference between 2020 and 2021? We’re going to be prepared this time around!
Last year, so many families were caught completely off guard with the onset of COVID-19. It came with new rules, laws and regulations to follow - none of which the world was accustomed to. Suddenly the connection we had between us and our loved ones became severed by a 6-foot circumference and mandatory masks, something we never would have thought possible!
At Mackay Insurance, we have compassion for families that have been affected by COVID-19 and want to encourage our clients to prepare for the year ahead in order to protect those that we hold close to our hearts.
One of the ways that Mackay Insurance provides protection and security to your loved ones is through life insurance.
Let’s pull our close ones near this holiday season and give them the gift that will keep on giving.
Life Insurance After COVID-19: What You Need to Know About Premium Prices
First, let’s talk about the effects that COVID-19 had on the life insurance industry. With the sudden scare of a new virus knocking on our doors, there were many families that felt the need to act on their life insurance plans sooner rather than later. Now, we have the opportunity to prepare for the year ahead, rather than be surprised by it.
Here, the key question becomes: will the spike in claims drive a corresponding increase in new life insurance policy premiums?
In other words, is now the right time to opt in to a life insurance policy that makes sense to you and your loved ones?
That’s a question that only you can answer, however we encourage all of our clients to discuss this immeasurable gift with their loved ones in order to make a wise decision for their future.
Meet the Two Basic Categories of Life Insurance
There are two basic umbrella categories for life insurance policies: limited (term) and whole (permanent/participating, universal).
Term Lie Insurance
Limited or term life insurance is guaranteed life insurance. The premiums you pay are set at the time you purchase the policy and will continue unchanged until a claim is made or the policy expires.
Whole Life Insurance
Whole life insurance follows the policyholder throughout life. Some types of whole life policies offer fixed (unchanging) premiums and some do not.
Typically, participating/permanent policies will offer unchanging premiums and universal policies offer variable premiums.
Will COVID-19 Raise Life Insurance Costs?
If you already have an active life insurance policy, the answer to this question will depend on what type of policy you are carrying.
Your life insurance premiums will not change if you have a term life insurance policy.
The majority of whole life insurance policies also offer fixed premiums. The exception is universal life, since this type of life insurance policy doubles as an investment that can accrue interest over time.
However, if you have not yet purchased a life insurance policy of any kind, what happens during this second wave of COVID-19 could well impact the price of future life insurance policy products. Now very well might be the best possible time to obtain life insurance for your family.
New Applications for Life Insurance Policies Are on the Rise
Some insurers are reporting increases in new policy applications by up to 70 percent and at least one major Canadian news outlet has stated that life insurance is the most commonly overlooked aspect of long-term financial planning - and one that can no longer be ignored.
With applications on the rise at the same time that claims are on the rise, what is this going to do to policy costs? Ay Mackay Insurance, we understand that this year has been tough financially, and that Christmas time only makes things tighter, but we encourage our clients to remember this: life insurance is a priceless gift that cannot be replaced.
Why Would Life Insurance Premiums Increase After COVID-19?
To you, life insurance is a financial safety net for your loved ones in the event the unthinkable happens - whether from COVID-19 or any other cause.
But to insurers, life insurance is a product like any other. Even though it seems relatively intangible from the outside looking in, from the inside looking out, there are significant costs associated with issuing each new life insurance policy.
These include everything from renting office space to keeping the lights on to staff salaries to claims payouts to how various investment markets are performing.
Not only has COVID-19 caused a tragic spike in new claims, but it has also wreaked temporary havoc with the Canadian and worldwide stock markets, interest rates and other investment indices.
So, if the cost of doing business - which here means the cost of issuing each new life insurance policy - increases, then the cost of policy premiums could very well increase accordingly.
Some estimates place future life insurance premiums increases as high as 20 percent over what policyholders are paying presently. Participating/permanent and universal life insurance prices are expected to be impacted far more than term life insurance prices.
What Is the Post-COVID Life Insurance Application Process Like?
One question we are getting a lot right now is whether there have been any significant changes in the life insurance application process due to COVID-19.
To date, the application process remains largely unchanged - with two important exceptions: travel and a positive test result for COVID-19.
If you apply for a policy and then you decide to travel, this could delay your approval for a new life insurance policy. Your insurer may also require you to disclose upcoming travel plans as a part of the policy application process.
If you contracted COVID-19 earlier this year and are now seeking to purchase a life insurance policy, you may find that your application process takes longer. You may also wind up paying more for your policy.
If you apply for a life insurance policy and contract COVID-19 while you are waiting to be approved, this may have a similar impact on your policy approval and premium costs.
Should You Shop for a Life Insurance Policy Right Now?
This is a question with no one-situation-fits-all answer. It really depends on you, your position in life and your family.
At its simplest, life insurance is a product with just one purpose: providing for your loved ones if something should happen to you.
For this reason, purchasing life insurance only makes sense if there is no other existing source of financial support there for your family should your income disappear.
Even though some people do purchase life insurance as an additional form of investment and retirement planning, the primary reason to purchase life insurance will always be a protective one - a gift like no other.
Get in Touch With Mackay Insurance in Belleville Ontario
Here in Belleville, Ontario, Mackay Insurance is open to serve you! Let us know how you prefer to connect with us - in-person (with advance appointment), phone or by email.
Is it the right time to seek a life insurance quote? Quite possibly, this could be the most ideal time. Let our Mackay Life Insurance brokers walk you through the process so that you can feel confident with the protection you are providing your loved ones this coming year and beyond.
Please reach out to our Mackay Insurance team by phone at 888-853-5552 or online if we can be of service this holiday season.
Merry Christmas from us to you!