The coronavirus pandemic has made waves in pretty much every industry. Life insurance, being an industry that thrives on interest built on their cash reserves, is no exception. Not only that, but there are obvious health risks that make it harder to get life insurance right now. For older people, life insurance being hard to get is nothing new, but it is somehow getting even more difficult. There are many different factors that go into life insurance eligibility; to make sure you are properly educated to prepare for your future, let’s discuss life insurance for older people. Namely, why is it becoming even harder to get?
With the presence of a global pandemic, risk for life insurance companies has shot up across the board. Compound this with COVID’s tendency to be extremely aggressive for older folks, and you have a big problem for the elderly. This makes it far more likely, as long as the pandemic persists, that life insurers will be paying out to the families of older policyholders. Just like any other form of insurance, an increase in risk typically comes with an increase in price. As a result, it is more difficult to afford. Insurance companies also tend to be stricter when it comes to eligibility, and life insurers are notoriously thorough.
With the current state of interest rates, and the federal reserve constantly shrinking them, income for life insurers is dwindling. One of the major income sources for these companies is the interest they are able to make on the money they hold. When you shrink a major income source, risk inherently grows. Their ability to recover from losses, as well as their ability to absorb them in the first pl;ace, are put in jeopardy. This means that they will have to become stricter in order to stay afloat. Raised prices aren’t a surprise either, as they need to compensate for lost income in order to cover their current liabilities. Insurance companies are intricate beasts, and money can be lost at every turn. So, it makes sense that they are having to compensate heavily, at least for the time being.
The biggest issue for insurance companies is not knowing what to expect. While risk is inherent, they are constantly looking for ways to minimize it. So, the issues aren’t just the massive global pandemic, and the extremely low interest rates; the issue lies in the fact that we don’t know when either will end. These companies have to be aggressive out of the gate, because they don’t want to be left bankrupt because they were optimistic. These issues are temporary, but how temporary? There are executives paid big money to figure that out, and you bet your bottom dollar that they are going to overcompensate. After all, when the company goes away, so do those big bucks. Being one of the guys in charge when something like that happens doesn’t bode well for future jobs, either; this is especially true in this job market.
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