What does COVID mean for your insurance premiums?
When it comes to life insurance, what is the impact of the global pandemic? Brought to you by Pinnacle Life.
The global pandemic has brought many things into sharp focus for people across the world: reassessing life priorities, changing jobs, moving from cities to regional areas and learning how to deal with uncertainty.
For some people, one of these refocused priorities is talking about what happens to their family’s financial security if they pass away.
Gillian Vaughan, chief executive of Pinnacle Life in New Zealand, says at its heart, life insurance is about protecting people and that’s particularly important right now as the world continues to grapple with COVID-19.
“When it comes to COVID, it’s definitely another uncertainty to deal with – but life insurance companies deal with uncertainty all the time,” she says. “We look at what we do know and how it is similar or different to known diseases, based on the information we have and any new information that emerges.”
Having a conversation about life insurance, and understanding how it works and what can affect premiums, can take away some of that uncertainty.
“Having an illness or a disease can lead to higher prices,” Vaughan explains. “Most people have some sort of health issue – and some of those health issues have greater risks associated with them than others. We know what’s riskier based on valid statistical research and information.”
Picture: Gillian Vaughan, chief executive of Pinnacle Life in New Zealand.
Assessing for COVID risk
So, how do you assess the risk when the disease is somewhat unknown? “One of the questions we get relatively often is, ‘what does COVID mean for your insurance premiums?’ And people seem really surprised to hear the answer at this point is nothing,” says Vaughan.
“People ask about whether we cover them if they die of COVID. They ask if we cover them if they are vaccinated, or not vaccinated. And the answer is yes to all of those questions.”
“People ask about whether we cover them if they die of COVID. They ask if we cover them if they are vaccinated, or not vaccinated.”
She adds that insurers can only use the information in front of them and must be able to show why a premium has changed. They can’t make any changes without evidence to back it up.
“Insurers aren’t allowed to simply rely on general knowledge to make decisions about whether someone needs to pay an extra premium.
“Under the law we can only charge someone extra if there is valid scientific, statistical information that supports us charging more.
“As the impacts of COVID become better known, we’ll be sorting out what the long-term expected impact is at a population level and we’ll start to get a view on where one person’s risk might be different than another’s.
“What that means for premiums, at this stage, we can only guess, and underwriters don’t do guessing,” she says.
Find out more:
To review your member benefits go to https://www.pinnaclelife.co.nz/partner/caanz/caanz or call the Pinnacle team on 0800 22 22 23.