How Long Will Pre-COVID Life Insurance Rates Last?

As the COVID-19 pandemic continues to disrupt the world, life insurance carriers are challenged by maintaining a profitable business.

One looming fear for consumers is the cost of life insurance. Will it go up as insurance companies are anticipating more death claims than they otherwise would? They are also affected by the protracted low interest rate environment. Insurance companies typically invest premiums in high grade bonds, and with interest rates so low, returns are expected to be lower as well. These factors can translate into higher rates for new life insurance.

According to Byron Udell, founder and CEO of, “Over the past 25 years, life insurance rates have fallen dramatically, to record lows. For example, a 20-year level term policy on a perfectly healthy 40-year old male can be found today for as little as $309 annually. That’s almost 70 percent less than what the same policy cost just 25 years ago. This has made life insurance affordable for almost everyone.”

The future of how life insurance companies will manage COVID-19 is unknown; however, moving forward, some could decide to suspend the issue of new policies, or possibly add a temporary surcharge on new policies due to the expected mortality (risk of death) related to the COVID-19 pandemic. If insurers determine surcharges are needed, the increase could be significant. The more pressing question then becomes, what does that look like for consumers?

According to Byron Udell, “If one assumes that half of the population will be infected – the CDC predicts more than that- and that one half of one percent will die, that could add a temporary surcharge of $1,250 annually in addition to the current rate of just $309 for a $500,000 20-year level term policy. It’s important to understand that the insurance companies can’t add these types of surcharges to existing guaranteed level term policies.”…Read more>>