Insurers Back Off Age Restrictions, Make Pricing Changes
Several life insurers are reversing COVID-19 restrictions on underwriting, even as the pandemic continues to infect record numbers of Americans.
On June 25, John Hancock resumed issuing policies up to and including age 90. The insurer paused issuance of policies for anyone between ages 80 and 90 for three months, a spokeswoman said.
Earlier this month, Pacific Life reinstated underwriting for applicants (in a standard or better risk class) up to age 81. A spokesman declined comment on the decision.
On April 7, Pacific Life temporarily limited underwriting to age 75 and below. The insurer was among many who restricted underwriting as the COVID-19 pandemic spread across the United States.
Those decisions were very difficult for insurers because the age 60+ group is a big potential customer pool for life insurance. And the tightened underwriting hurt overall policy counts.
According to MIB Group data, 60+ policy application activity was down 2.3% year over year at the conclusion of June. However, 60+ applications were up 3.4% in January and February saw a whopping 6.4% increase.
Prudential is the only insurer known to have completely pulled a product, suspending all sales of its 30-year term offerings in mid-April. Those products returned to the market Monday, along with some rate significant changes.
‘An Outlier’
According to two sources, Prudential relaunched Term Essential 30 and Term Elite 30 with across-the-board rate increases in New York, as high as 20% on the 30-year term, and a mix of rate increases and decreases across the shorter-term products.
Prudential is the nation’s largest insurer by assets.
“Prudential’s repricing was something of an outlier relative to term competitors,” said Andrew Berman, chief intelligence officer for Wink Inc.
Protective Life reduced premiums slightly on Classic Choice on Monday, John Hancock did increase rates on their term products, but not as sharply as Term Essential 30, Berman said.
Banner/Legal and General America’s OPTerm repricing in June was “a mixture of increases and decreases that vary all over the place with no distinct pattern,” he added, while AIG’s Select-A-Term repricing back in May was “primarily a price decrease.”
Insurers have said rate increases are enabling them to survive financially in an extreme low-interest-rate environment. The 10-year Treasury rate continues to set new record lows, settling in at 0.58% this week.
There is reason to believe insurers could sell plenty of life insurance absent the age restrictions. MIB data shows application activity up 3.4% for ages 44 and younger, and up 0.5% for ages 45-59.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
© Entire contents copyright 2020 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.