The acute impacts of COVID-19 are now obvious across the globe, and the path to social and financial recovery is far from straightforward. It feels like the world is lurching from one crisis to another.
This prospectus of doom hardly bodes well for consumer purchasing power or confidence in financial institutions. As individuals, we’ve never felt quite so conscious of our vulnerability to the immediacy and volatility of global events.
Given the present conditions of uncertainty, how can a relatively expensive, long-view product like international life insurance stay relevant?
International life insurance in times of global crisis
The global context: not looking rosy
After a sharp sell-off in March 2020, global markets have rallied strongly as national governments race to open up economies and societies. We’re gradually re-acquainting ourselves with the ‘new normal’ as we learn to live alongside COVID-19.
However, lingering concerns are not only threatening the global recovery, but they’re also changing the way individuals perceive risk in a way that perhaps hasn’t happened since 9/11. In short, we’ve never felt so personally vulnerable to events outside of our control.
How can international life insurance help?
Insurance is about dealing with risk. In times of increased risk — perceived or otherwise — it stands to reason that increasing one’s cover under an appropriate insurance policy is the most logical course of action. But in times of financial distress, this logic is tested sorely. At what point does one prioritise risk of potential financial loss over the reality of here and now?
Products like international life insurance — niche, relatively expensive, and protecting against a risk whose effects won’t personally affect the purchaser — are often the first to be dispensed by consumers.
Consumer concerns about life insurance
Since February 2020, we’ve fielded hundreds of questions from brokers, members, and prospective members about our life insurance product. Each question has a common theme: we understand the importance of international life insurance, but we’re more concerned with our current financial situation.
Here’s a rundown of these three audiences:
1/ Our broker partners
We work with thousands of brokers around the world. Some are part of enormous, multinational brokerages. Some are small, independent outfits. Yet they all want to understand how they can sell international life insurance to their clients in the present climate.
2/ Our members
Our members might be experiencing financial pressure. Perhaps they are considering cancelling their policy, or maybe they are choosing which insurance policies in their portfolio to maintain and which to cancel.
3/ Prospective members
Those people who until recently were considering purchasing a life insurance policy with us, but have shelved those plans due to economic uncertainty.
The importance of life insurance
We, William Russell, cannot advise consumers or brokers on why one insurance product is more important than another. But we can put the experience and expertise we’ve accumulated over the last 30 years in this space to good use, making general, informative statements about the importance of adequate financial protection.
For most of us, however, nothing will ever be more important than the future well-being of our family. In these unsettling times of increased risk and personal vulnerability, we must all decide whether we can afford to sacrifice long-term protection for the here and now.
Perhaps the investor’s mantra of maintaining portfolio discipline in periods of market volatility is relevant here. Investors commonly argue that time in the market is far more effective than timing the market. Just consider this note from Warren Buffet from the 1960s:
Buffet Partnership Letters, 1957–1970
Life insurance is not so different from investments. We don’t get to choose when disaster strikes, and we don’t have the chance to buy an insurance policy once the effects of the risk have already made themselves known. But when disaster does strike, surely we’re better off knowing we can rely on a good-quality insurance policy from a reputable provider.
We purchase life insurance to protect our families against both the present and the future. If our general risk increases, then it makes sense to increase our protection. Perhaps this means prioritising our current insurance portfolio or taking out additional cover in challenging times.
What are insurers doing?
Analysts report that claims related to COVID-19 will exceed the cost of events like Hurricane Katrina and 9/11; it can be hard for insurers — facing unprecedented losses — to know the right thing to do.
Not for some time has the insurance sector been under the microscope of public scrutiny. Livelihoods are at stake on both sides of the line. Several businesses in the UK are taking action against insurers such as Hiscox for non-payment of claims under business interruption insurance policies.
Some insurers seem better prepared to weather the storm than others. With a well-hedged balance sheet, companies like Munich Re are increasingly confident of managing financial losses. Yet other insurers have struck a tone-deaf note — eg AXA, who have ignored pleas from the EU regulators to suspend dividend payments to shareholders.
Have peace of mind with William Russell
For 30 years, William Russell has provided international health insurance and international life insurance for people living and working abroad. With over 40,000 hospitals in our worldwide network, you can travel with the knowledge you have access to the best medical care wherever in the world you are.
Get a health insurance quote from William Russell today and discover the benefits of our comprehensive cover.