CoronaVirus’s Impact On Life Insurance Sector

Just a few months back COVID-19 became a global pandemic, spreading like fire it not only destroyed lives but became a matter of concern for the economy as well as financial markets. Just when this virus hit the news all around the world it caused a commotion in the life insurance sector, this sector became interesting to people. CoronaVirus made a huge impact on life insurance majorly because of the arising questions from the public. It made the consumers curious about how this outbreak will affect their existing policies. As the pandemic has continued to spread across the world, with its effect on financial markets and economy (globally), the insurance industry is also not immune.

Impact of CoronaVirus on Life Insurance Sector

The economic fallout caused by Covid-19 will make the people have second thoughts about opting for life insurance because disposable income of people is being consumed but this disease being very serious has scared the people. The scared public will opt for life insurance. Keeping in mind that Covid-19 still does not have a proper cure, and the scared public will result in the insurance sector’s growth. Life insurance policies usually include savings plan, term insurance plan, and investment linked insurance policy with assured or semi-insured long term returns.

Now the question that pops up is that during this pandemic what changes has come upon the life insurance industry and its policies. This global disease without a cure has forced people to think about all the worst case scenarios that could arise upon their loved ones in their absence. This thought of the public can cause a significant boost in ‘Term Insurance Plan’ since this type of policy offers the sum assured to family members in an event of sudden demise of policy holder during the tenure of policy.  Since the income of many individuals can be unstable due to pay-cut, unemployment, unpaid leaves there might be a resistance to choose higher cover.

Talking about ‘Investment-linked policy’ there might be a chance that people who believe in taking risk or believe in purchasing  even after the stock market has been badly affected by the CoronaVirus outbreak will begin a new investment-linked policy as of now. However, the existing consumers are suggested to stay put and not to withdraw prematurely; this will help them maintain most of their investment in the long run. As for the ‘Long term saving insurance policies’ they might seem eye-catching but as the rate of interest may fluctuate it becomes a challenge for the insurance providers to deal in marketing of such policies.

Some of the insurance providers have increased the grace period for the payment of premium which eventually will affect the renewal of premium. While this pandemic takes over the world some of the insurance providers have started including coronavirus coverage for their existing consumers. Some of the insurance companies may face rise in claims because of rising death rates due to coronavirus, this may be the highest claim settlement year.

Endnotes

In conclusion this year the life insurance sector may flourish because the scared public and uncertainty of cure may cause people to have thoughts about securing a future for themselves and their loved ones. For insurance companies it will be a phase of premium growth with high market penetration because “life matters”. Life insurance has the tendency to flourish this year due to the current pandemic situation.