Coronavirus, COVID-19, has now caused shutdowns and quarantines globally. It is a pandemic, and there currently is no vaccine to protect the population. Senior citizens are identified as one of the target populations and are susceptible to contracting coronavirus. The chance of coming down with this disease causes many older people to consider their mortality. Final expense insurance coverage is taking on a new sense of urgency with many over 65 years of age amid coronavirus fears.
We understand the concern older people have. While they are worried about coming down with coronavirus, they are just as worried that, God forbid, they might pass away from it and leave their loved ones with sizable final expense invoices. It is only natural for a person to want to protect their families from financial problems. They also realize that an unanticipated coronavirus related death could do just that, and buying final expense coverage is a legitimate option.
We always recommend that final expense coverage be part of an older person’s financial planning. Nevertheless, we must caution against panic buying. Purchasing final expense insurance is a significant financial decision. It is not something to buy in a panic.
What is Coronavirus?
Coronavirus is an infectious disease that originated in Wuhan, China. People who are infected with coronavirus, according to the World Health Organization (WHO), will suffer from mild to moderate respiratory illness. The virus is spread through saliva or droplets from the nose that occurs with coughs or sneezes.
The WHO has identified older people as being susceptible to infection. Also, those with the following conditions are at risk:
- Cardiovascular disease
- Chronic respiratory disease
Coronavirus has recently been declared a pandemic, with cases being reported all over the world China, Italy, and Iran are currently among the countries with the most reported cases, and America’s figures are currently the highest. Quarantines and lockdowns are being used to reduce the number of infections, and most gathering places in the United States are either closed or severely restricted. Time will tell if these precautions finally bring the pandemic to an end.
Senior Citizens Are Justifiably Nervous
It doesn’t take much to understand why people over 65 years in age are upset. They are not only in the target demographic population for coronavirus, but many also have the health conditions that put them at risk. Many are being asked to stay at home, and disruptions in their ordinary lives serve to increase anxiety. Mortality is something these elderly folks are beginning to seriously think about in their isolation.
The current situation with coronavirus is enough to cause anyone in their golden years to be receptive to advertising about final expense insurance. Some are looking for any coverage to reduce any final costs. The danger is in panic buying.
Advertising Accentuates the Fear and especially from higher than expected policies from companies like Colonial Penn or John Hancock Burial Insurance
Senior citizens now have more time to watch television and be influenced by what they see on the screens. Insurance companies will use trusted celebrities to promote products, and the final expense insurance industry makes use of familiar faces to promote their products. Other companies rely on their highly trusted brand name to persuade anyone. We agree these are standard marketing techniques, but the pandemic is adding a sense of urgency to what is an important decision.
There is more to buying the right policy than merely picking up the telephone or responding to a mailed solicitation. An older consumer can easily be convinced to buy something that is not in his or her best interest. Frankly, we feel that buying a bad final expense policy is worse than having no coverage at all. A person needs to think about the following characteristics of final expense insurance before making any decision.
Health Questionnaire/Knockout Questions
A major factor that decides whether you qualify for a final expense insurance policy is the health questionnaire. It is only logical to ask an applicant about his or her health because of the risk involved. An insurance company hesitates to cover someone who might pass away a few months later.
Questionnaires on health must be completed. One section of the questionnaire contains what is known in the industry as knockout questions. That is precisely what they are.
The knockout question concerns health conditions that the insurance company will not cover with the final expense policy. This part of the standard questionnaire has become an even more important section in the era of coronavirus. If you note from the above paragraphs, respiratory disease, diabetes, and circulatory problems are health conditions susceptible to the coronavirus. You can expect to see questions covering any of these in the knockout section.
For example, depending on the insurance company, diabetes is going to knockout an applicant from consideration. The same is true for anyone who has COPD. It is possible that answering “yes” to one of the conditions might not disqualify an applicant from buying a company’s product. It can mean that the individual is bumped down to a more expensive policy that has specific conditions and limitations.
If anyone thinks they can lie on the questionnaire, that person’s in for a shock. It is in the only piece of information that insurance companies will ask for. They also want to know about the prescription history and an individual’s MIB file. That last bit of information is vital because it has the data the applicant supplied to other insurance companies. It is used to corroborate the answers on the health questionnaire.
We need to stress how essential it is not to deceive an insurance company with false answers. It isn’t just the possibility of being accused of fraud. An insurance company that has been given incorrect information can cancel the policy immediately. There is no refunding of premium paid, either.
Buying Final Expense Coverage in Haste is a Trap (Even During the Coronavirus Crisis)
Anyone who is in a quarantined state, whether it is mandatory or voluntary, has a lot of time on their hands. Many senior citizens are restricted to their homes where they spent a lot of time in front of the television set. While television is entertaining, this is a time when it also can cause a lot of anxiety.
The media is currently saturated with coronavirus stories. It is crucial to get as much information as possible, but there is a point where it becomes an overload. Senior citizens know they are a demographic at risk, and is the number of reported cases increase, so does the fear they may contract the virus. These same people also are exposed to all the media advertising that insurance companies televise about final expense insurance. The combination of too much time, vast amounts of information on the coronavirus, and the “buy now” pressure from advertising may course a person into making some terrible decisions about final expense insurance coverage. Here are a few.
1. Term Insurance Policies
These appear to be relatively easy to get, and the amounts of insurance are relatively attractive. All person must do is complete the application, send it in to the insurance company, and wait for the acceptance letter and the first premium invoice. If this sounds almost too easy, well, it is too easy. The full story about term final expense insurance is not always revealed.
We agree with insurance experts that term life insurance is excellent for a young person or someone with a family of small children. You can get a lot of coverage at a reasonable rate for an extended period. Nevertheless, term insurance is not the best idea for everybody. When it comes to final expense insurance, a term policy can be a disaster.
*Term insurance premiums are based on the age of the insured. Someone who is 65 years or older is going to pay more for the same amount of insurance than someone who is only 25 years old. More than that, there are insurance companies where, after every few years, the premium increases.
*Term insurance will expire. The definition is exactly what the word says. Term insurance is for a set number of years, and there is an expiration date. Fortunately, many insurance policies expire when the individual has a 90th birthday, but that is not true for all insurers. Some companies have the 80th birthday as the expiration date. When the insurance expires, the insured may have to buy a whole life insurance policy, and that is more expensive.
2. The Waiting Period
People who are buying final expense insurance because they are alarmed about the coronavirus might not realize the policy they purchase has a waiting period attached to it.
Many final expense insurance products have a 24-month waiting period. It means that before the full benefit is paid out to the beneficiaries, at least 24 months must elapse before the death of the insured. If a person dies within that 24-month waiting period, the beneficiaries will be lucky to receive all the premium paid and perhaps a small percentage of that premium added on. They will not receive the full coverage.
You should desire NO 2 year waiting period for Burial Insurance.
3. Guaranteed Acceptance Isn’t Always the Best.
Guaranteed Acceptance is a form of final expense insurance that appeals to people in poor health. There are no questions about a person’s physical condition, and that removes a lot of anxiety. Unfortunately, many insurance companies have the waiting period with guaranteed acceptance. You might be purchasing a policy that looks attractive in the beginning but leaves your beneficiaries with almost nothing at the end.
In these days of coronavirus stress, a good final expense insurance policy is a whole life insurance product that provides full coverage from the first day. Nevertheless, even these products have questionnaires and other underwriting stipulations. You have to be careful as a consumer to avoid getting the wrong type of coverage and paying a high premium for it.
The Bottom Line About Coronavirus and Final Expense Coverage
It all comes down to this. Anyone who is frantically looking for final expense insurance policy can easily overlook some of the caveats that are inherent in this insurance product. An individual could end up getting less insurance than is needed, forced to abide by a waiting period, and pay a hefty premium. It makes the whole effort not worth the trouble.
We are not suggesting anyone delay in buying final expense insurance. Certain insurance companies might use the coronavirus pandemic to persuade consumers to buy their policies. We worry that a person may try to get a policy, any policy, to cover final expenses. We feel that such people are buying in haste and may, unfortunately, repent at leisure for what they did. We want to take some time and explain why we feel that way.
We are an insurance agency that cares about its clients. We appreciate how anxious a person may be about the coronavirus and the consequences of contracting it. Some insurance companies may use the pandemic as a means of persuading the consumer to buy their product without bothering to examine it. On ethical grounds, we refuse to rush anybody into buying a final expense policy. We will follow the procedure we will always use and place the client first.
As soon as a person expresses a desire to use our services, we will move quickly to find the right policy. We will ask questions about an individual’s health, but it is to determine if the knockout questions of an insurance company might disqualify that individual. We are willing to explain the pros and cons of any insurance product calmly. Please rest assured that we are not promoting one insurance company over another. It is the client who will decide.
The information we ask of is intended to find the best possible final expense insurance policy to fit your needs. Anything we ask is kept confidential.
We believe that the day will come when coronavirus will no longer be an issue. We know that until that time, many people want to take a significant step in their financial planning and purchase a final expense insurance policy. We are here to help, and we would welcome the opportunity to be of service to you. Please feel free to contact us at your earliest convenience.