The impact of COVID-19 on the Protection market

Published by Georgia Bulbrook on 22 March 2021

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Currently, only 1 in 10 people (10%) have some form of long-term protection however, due to recent health risks, attitudes are beginning to change. The ongoing COVID-19 pandemic has affected every aspect of all of our lives, including how protection policies are applied for, the underwriting process and any claims are administered.

As a result of the current situation, protection providers are seeing an increase in the number of applications for life insurance. The pandemic has changed individuals’ attitudes towards their protection needs, both from a health and income position. For example, being furloughed and losing 20% of their income has highlighted the difficulties an inability to work can cause, further focusing individuals’ minds as to what would happen if they were to lose all or some of their income.

Applications and Underwriting

All providers have now introduced Coronavirus related questions upon application.

If a new applicant has been recently diagnosed with coronavirus, providers will now tend to postpone any underwriting decision until full recovery is confirmed.

Applicants may also experience delays in obtaining medical evidence & medical screenings, so underwriters will use their expertise to consider all applications where they would usually obtain medical evidence. In some instances, they may be able to suggest alternative evidence or offer cover based on the application questions alone.

Most have introduced virtual screening to help, which is likely to involve answering medical questions with a nurse over a video call and taking height, weight and a pinprick sample of blood, which will be sent to the lab for testing.

It is important to note that if an individual has been furloughed it is unlikely they can set up a new Income Protection policy.


Life insurance claims as a result of death from Coronavirus will be handled like any other life insurance claim on a case-by-case basis.

Under a Critical Illness policy, Coronavirus is not considered a critical illness, and therefore the claims process has also not been affected.

For an Income Protection policy, claims as a result of being unable to work due to COVID-19 will be considered, however there will be a deferred period of a minimum of 4 weeks with the majority of providers. In addition, strict occupation definitions must be satisfied to have a successful claim.

Group Protection

Death In Service, Income Protection and Critical Illness

The group protection market has also been affected in relation to Death In Service, Income Protection and Critical Illness policies.

The overall number of applications has increased, however there has been a decrease in new to market business, due to fewer new companies starting up in the past year.

It is worth noting that many providers have temporarily ceased providing quotes for ‘frontline industries’ – e.g. private medical care, care homes etc – due to the high risk of Coronavirus exposure.

Coronavirus is covered as normal for DIS and Coronavirus absence mostly appears to be covered under Income Protection.

Insurance companies are experiencing an increase in claims, but most providers have simplified their process being more flexible with the information they can accept.

Their quote, application and claims process have been mostly unaffected, as they are already generated mostly using an automated system.

Whilst many would expect premiums to have drastically increased, as high-risk members are already factored into the pricing, there have not been any extensive increases.

Private Medical Insurance

There has also been an increase in applications for Private Medical Insurance and their underwriting process has been designed to make switching and joining larger schemes easier.

Interestingly, it has been seen that the demographic age profile decreased across the whole of the PMI market, showing that the younger generations may be seeing this cover as a higher priority.

In terms of claims, they have fluctuated during the year - reducing considerably in April and May and are currently running just below the usual level expected.

Premiums have increased slightly in 2020, although some base rates remained unchanged for existing clients.

Added value services

Many providers include ‘added value services’ as standard but research conducted by Aviva highlighted:

91% of their customers could not name any free or paid for benefits that came with their policy.

58% didn’t realise there were any additional benefits when they took out their policy.

77% wanted to be kept better informed.

To ensure you have adequate protection in place, or to review existing policies with an Independent Financial Planner please contact us on +44 (0)1227 768231 or provide your details on our online enquiry form.

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice.

You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.

Kreston Reeves Financial Planning Limited, Independent Financial Advisers. Authorised and regulated by the Financial Conduct Authority.

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