Back in March, actuaries for life insurance companies started crunching the numbers on possible COVID-19 death claims, trying to anticipate how many would eventually roll in. The Wall Street Journal reports life insurance companies are now significantly reducing the estimates on their exposure to death claims, by an average of between 40% and 50%, though it's not because there were fewer deaths than anticipated. Instead, it's due to the fact that Americans who are dying in disproportionate numbers from the virus are ones who don't traditionally scoop up big life-insurance policies, if at all. Older Americans, for example, usually buy smaller policies once their mortgages and kids' college tuition is paid off. Minorities, too, have driven this estimate reduction: Black Americans, for instance, have tended to buy more modest policies that mainly cover burial costs.
Buying an ample policy is "not something that my father's generation was trained to think about and to do," says Sarah Rattray, whose Jamaican immigrant father died of the virus in May at age 70. Also not typical purchasers of adequate policies, due to the expense or disqualification: low-income individuals and those with preexisting conditions. The pandemic has, however, caused some to reassess their life insurance needs. A survey cited by InsuranceNewsNet.com notes 22% of respondents say COVID-19 has made them mull a policy, with that percentage even higher among Hispanic (38%) and Black (36%) adults. Still, a certified financial planner tells CNBC people shouldn't rush out to purchase life insurance just because they're fearful of getting infected. "I only would recommend buying life insurance if you have a need for life insurance," Barbara Ginty tells the outlet. (Read more coronavirus stories.)