With COVID-19 sweeping the world, you may wonder how the pandemic affects your life insurance coverage. The answer comes down to whether you already have a policy. If you haven’t yet applied for a policy, you could face delays in approval.
Yes, there is generally no pandemic or epidemic exclusion for life insurance. This means if you have an active life insurance policy and continue paying premiums, your beneficiaries will receive a payout if you die from COVID-19 or related complications.
What if I have an active life insurance policy and travel to an affected area?
Your life insurance company won’t change your rating class or premium after your policy is in force. As long as you make timely premium payments, you’re protected. To be sure always check with your insurance company to verify your coverage if you’re planning to travel – especially considering the recent federal ban on non-essential travel, for which they might have enforce specific policies.
To stay safe, heed government and agency updates about traveling to avoid facing higher risks of quarantine or contracting the virus.
Can I apply for life insurance during the coronavirus pandemic?
Yes. While the coronavirus is an evolving pandemic, it shouldn’t affect your ability to apply for life insurance.
However, your insurance company might postpone your application if you have plans to travel outside the country, in accordance with the recent non-essential travel ban imposed by the Canadian government.
The time you’ll have to wait for coverage varies, so ask your insurer about the time frame. Your insurer will likely require you to be back in Canada for several months before they approve your policy to ensure you haven’t caught the coronavirus.
Similarly, if you contract COVID-19 and then apply for life insurance, your insurer could refuse coverage or require you to fully recover before issuing a policy.
Another option you may be considering is “guaranteed issue life insurance,” which is a no-questions-asked life insurance policy offered by some companies. Unfortunately, these policies are pretty pricey and offer a relatively small death benefit.
Can I get life insurance if I have the coronavirus?
If you tested positive for COVID-19 before applying for life insurance, you could end up getting a lower health rating and a more expensive life insurance policy. Some life insurance companies might even postpone your approval until you have made a full recovery.
Will I be covered by life insurance if I die from coronavirus / COVID-19?
Yes, once your life insurance policy is in place, it will pay out for all types of death, including anything related to complications from COVID-19 or any other disease.
Will life insurance premiums increase due to the coronavirus?
If you have an active life insurance policy, your premiums won’t change.
For future policies, life insurance companies set premiums based on a range of factors, including life expectancy. A pandemic increases your chances of mortality, so you can expect to pay a higher premium if you take out a policy during the coronavirus.
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Should I get life insurance during a pandemic?
During a global health crisis like the coronavirus, it’s natural to worry about protecting your family.
If you have loved ones that would be financially burdened if you died, it’s a good idea to look into life insurance. That way, they’ll have the money they need to pay for living expenses and maintain their lifestyle when you’re no longer there to provide for them. And if you have assets to protect or cosigned debt like student loans, it might be worth buying a policy so those obligations aren’t passed on to your family if you die prematurely.
On the other hand, if you have the savings to self-insure or don’t have dependents, assets or outstanding debt, life insurance may not be as important to your financial planning.
What’s not covered by life insurance?
During a pandemic like the coronavirus, your policy’s typical clauses apply. Your insurer usually won’t pay out your policy if you commit suicide or die while committing a serious crime. They also won’t pay out your benefit if you die in a way that’s listed as an exclusion in your policy — like racecar driving or recreational flying.
What is a pandemic?
A pandemic is the rapid spreading of a disease worldwide, according to the World Health Organization (WHO). It’s different from an epidemic, which refers to the spread of disease in a contained population or region.
WHO declared COVID-19 a pandemic on March 11, 2020.
What happens if I lie about my travel plans?
Your beneficiaries might not receive any money when you die. All life insurance policies have a contestability period, which means your insurer can investigate your death if you die within the first 2 years (usually) of taking out a policy.
If your insurer finds out that you lied or withheld information about travel to affected areas, the company has the right to delay or deny the death benefit while investigating your claim — even if you didn’t die from the coronavirus.
Life insurance is a legal contract, and you must be completely transparent in your application or risk denied claims.
How do I file a claim for a coronavirus-related death?
The life insurance claims process is generally the same for all life insurance policies. If you’re a beneficiary, contact the life insurance company that holds the policy, and have the policy number handy.
The insurer will likely ask you to complete a claims form and submit documentation. This will likely include a certified copy of the death certification and any supporting documentation, such as a police report.
What can I use the life insurance payout for?
Beneficiaries can use the money however they wish. Many choose to use the proceeds of a life insurance policy to cover the funeral and burial costs, medical bills, mortgage or rent payments, childcare and college tuition.
If you already have a life insurance policy, the coronavirus outbreak should have no impact on your coverage and your beneficiaries’ death benefit. But if you’re hoping to apply for a policy, you might have to wait for approval, especially if you’ve recently traveled outside of the country.
It’s too early to report accurate mortality data. But WHO suggests the “crude mortality rate” — or the number of reported deaths divided by reported cases — is between 3% and 4%. To put this into context, the mortality rate for the seasonal flu is below 0.1%.
COVID-19 is a new disease, and concrete evidence of how it spreads is developing by the hour. It’s thought to spread through respiratory droplets, like coughs and sneezes. Learn more from the Government of Canada website as the situation develops.
Katia Iervasi is a staff writer who hails from Australia and now calls New York home. Her writing and analysis has been featured on sites like Forbes, Best Company and Financial Advisor around the world. Armed with a BA in Communication and a journalistic eye for detail, she navigates insurance and finance topics for Finder, so you can splash your cash smartly (and be a pro when the subject pops up at dinner parties).
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