No jab, no life insurance? Insurer moves to take inoculation status into account for new customers

Life insurance could be harder to get, or more costly, for people who aren’t vaccinated against Covid-19 and have pre-existing conditions, if the industry follows one company’s lead.

Partners Life says it plans to change the way it assesses new customer applications, to take Covid inoculation into account if they have comorbidities – more than one disease or chronic condition.

That could result in it charging more, restricting cover or even declining to cover an unvaccinated person, if they are assessed as being at higher risk of claiming prematurely.

Chief executive Naomi Ballantyne said no existing customers would have any changes applied to their premiums or coverage as a result of Covid-19 infection or their Covid-19 vaccination status.

“Our approach for new applications at present has not changed due to Covid, meaning currently new applicants are not assessed for Covid vaccination status (but any previous Covid infection which leads to ongoing health issues would be considered an underlying condition).”

But Ballantyne said that as New Zealand’s Covid statistics increased, the company expected to start assessing new applications differently.

“Where an applicant presents to us with underlying health disorders such as diabetes, respiratory or heart disease, then in order to assess their likelihood of prematurely claiming, we will have to determine their inoculation status (through vaccination or previous infection) in order to consider the potential impact on their claim ability of a future Covid infection.”

She said if the future risk was assessed as being higher for an unvaccinated applicant than for someone with the same underlying conditions, but who was inoculated, then terms would be offered reflecting that increased risk.

“Depending on the product type being applied for, that might mean increased premiums and/or excluded or restricted cover. The applicant will have the choice to accept the terms offered or apply elsewhere.”

Ballantyne said any change in assessment would apply across its product range which includes life insurance, income protection, total and permanent disability cover and medical insurance, although it was less applicable to medical cover as people with Covid were treated as acute under the public health system.

“Initially our concerns are life [insurance] because death seems to be a reasonably common outcome of not being vaccinated and getting Covid and disability [insurance] in respect of long Covid, because if you have a bad Covid infection you can be susceptible to the continuing impact on your life.”

Ballantyne said there wasn’t yet any data on when the impacts of long Covid ended.

“For a disability product that pays for a long time, that could be a major impact on the claims risk.”

Ballantyne said she hoped the assessment change would be not be permanent and once effective treatments for Covid became more widespread it could be dropped.

“We have to protect all of our clients because if you take on people that become pretty heavy immediate claimants, everyone pays for that.”

“That is the balancing act.”

So far, other major insurers don’t appear to be following suit.

Sharron Botica, chief customer and digital officer at AIA New Zealand – the country’s largest life insurer – said it did not ask new customers to disclose their Covid-19 vaccination status as part of its underwriting process.

“As always, we continue to monitor the developing situation, but at this time we don’t have any plans to change our current underwriting approach for AIA New Zealand.”

Grant Willis, head of Asteron Life, said although it and its reinsurers were closely monitoring the medical developments around Covid-19 and its long-term impacts, at this stage the company needed more data to inform any decisions on how it would underwrite for the disease in future.

“Kiwis tend to be under-insured when it comes to life and income protection type covers, and we think it’s important that New Zealanders know that there are still options for them when it comes to personal insurance, even if they have suffered from Covid-19 or other major health issues.

“An independent financial adviser can provide advice on which insurers may be able to support them and how their cover might be specifically tailored for their circumstances if they are in that situation.”

Tim Fairbrother, a financial adviser at Rival Wealth, said the Partners Life move wasn’t really a change in policy.

“The policy has always been – if you have had a pre-existing condition or previous ailment, it will be considered before the policy starts.”

But he said that until now, insurers just hadn’t been taking Covid-19 into account, as they do for other issues such as hepatitis, HIV or diabetes.

“The data overseas tells us that if you have had Covid, or are unvaccinated and therefore more likely to get it, then you are more at risk of ongoing issues than someone that hasn’t had it.

“Therefore the insurer has to assess whether the increased risk will mean it will cost them more over the life of the policy, and if it does, it is unfair on people that haven’t had Covid to ask them to pay the same.”

Fairbrother said New Zealand was now going into a different phase of the pandemic, and that meant a change from what was normal before.

He expected other insurers to follow Partners Life.

“It is easy for insurers to say now that they won’t change future policy. In New Zealand we haven’t had any long Covid effects yet that other countries have seen, as we haven’t seen large segments of the population infected.

“With the unrealistic elimination strategy now gone, it is only a matter of time that we see our infected numbers rise, and therefore more long-term effects.”

He said unvaccinated people would need to get advice and shop around to make sure that their policy would cover them for possible long-term Covid effects.

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