How does Covid-19 affect life insurance?

There is much confusion when it comes to covid-19 and life insurance.

This article will discuss the most common questions and answers people have about Coronavirus and life insurance.

Topics covered in this article

 

Does life insurance payout if you die from Coronavirus?

In most cases, the answer will be yes. If you have an existing policy and die, they will not deny the claim if you die from Covid.

One caveat to consider is if your policy has a two-three year waiting period. Some policies have a waiting period where the insurance company will not pay out the death benefit during this provision. If your policy has a waiting period, and you die from Coronavirus (or any other ailment) while this provision is active, there will be no death benefit payout. The insurance company will simply refund the premiums you’ve paid plus a small amount of interest.

The final thing to consider is when did you acquire the policy.

If you buy life insurance today and die within the first 24 months, all companies (no exceptions) will contest the claim. All life insurance contracts contain what’s called the incontestability clause.

This clause grants life insurance companies the right to investigate a claim before paying out the death benefit. This condition is only valid for the first 12-24 months (depending on the state) of the policy. If you die during this time, the insurance company will order a copy of all your medical records.

Their goal is to ensure you answered all the health questions correctly when you applied. If they find evidence of a health issue that existed before you applied that would have caused them never to issue the policy, they will not pay the death claim. They would merely refund the premiums paid to the beneficiary.

If they find no evidence of any conflicting health issues, they can and will pay the entire claim.

So if you applied with a company where they asked about Covid, and you didn’t answer the questions correctly, expect the claim not to be paid (if you die within the first two years).

We say that because the life insurance company will order your records. When they see you didn’t answer the Covid questions (or any of the health questions for that matter), they will deny the claim.

As a general rule of thumb, if you answer the health questions accurately, your claim will be paid in full even if you die from Coronavirus.

 

Can you get a new policy if you have/had Covid?

If you currently have Covid-19, you will not be able to get a policy. After you have recovered from the virus and it’s been 30 days or more, then you can get a new policy issued.

Bear in mind that every life insurance company is different. Some want you to wait 30 days, but some want 60 or 90 days.

 

You had Coronavirus, and now have complications. Will you still be able to get coverage?

You can still get a new life insurance policy issued if you sustained long-term complications from your bout with Covid. However, what specific life insurance options you have will entirely depend on the nature of your complications.

According to Mayo Clinic, the most common long-term side effects seem to be with the lungs, heart, and brain. Having issues with these organs still makes you insurable in most cases. But again, it depends on the details.

For example, if you developed COPD after having Covid, you can still easily get a new policy. But having COPD will significantly affect the price of your coverage and which insurers will accept you.

It’s highly advisable that you speak with an experienced life insurance agent who can provide better clarity about your options.

 

How have life insurance companies responded to covid?

Thankfully, changes were made to accommodate existing policyholders, given that so many lost their jobs at no fault of their own. In addition, many life insurance companies amended their applications to address Covid-19 issues.

  • Existing policyholders: Many life insurance companies granted additional time for people to make their payments so their coverage didn’t lapse. Grace periods of 90 days or more were not uncommon. However, as of 2022, most carriers have eliminated their extended grace periods since work has resumed for most of the country.
  • New applicants. Virtually all life insurance companies made changes to their underwriting procedures to mitigate their risk. They most commonly lowered the age availability for new applicants and asked about foreign travel and Covid related health questions.

Not every company made these (or any) changes, but most did. If you are confused about your options, play it safe and talk to a professional. Don’t come to any conclusions by yourself.

 

Do you have to get the Coronavirus vaccine to get a new life insurance policy?

Absolutely not. No life insurance company requires an applicant to have the vaccine in order to get a new policy issued.

 

Will a policy not payout if you didn’t have the vaccine?

Absolutely not. No life insurance company can deny your claim because you were unvaccinated.

 

Should I get coverage now or wait until the pandemic is over?

If your death would result in a financial loss for someone else, you should get coverage asap.

If this pandemic has taught us anything, it’s that life is uncertain. If you need or want life insurance, do it now. Waiting will not help you.

 

Tips from a professional

Firstly, if you had a loved one who died from Covid, we are very sorry to hear that.

Please know that if your loved one died after January 20, 2020, FEMA provides financial assistance to help with funeral costs. You can go here to learn more or call them at 1-844-684-6333.

Second, there is hope if you have a policy and are struggling with the payments due to a job loss. Most life insurance companies want to keep you as a client. They are sensitive to the current situation. Call them and see if you can do any of the following to keep your policy in force:

  • Borrow from the cash value (if any)
  • Get on a payment plan to make up the missed payments
  • Grant additional time to make a payment(s) before it lapses
  • Reinstate the policy if it’s already terminated

At Choice Mutual, we have successfully implemented these strategies for our clients across dozens of insurance companies. The worst you can be told is no. It’s best to ask. In most cases, your life insurance company will work with you.

Lastly, if you seek a new policy and currently have or had covid, speak with an experienced agent before coming to any conclusions. Doing online research is helpful. You can learn a lot, but online research can only take you so far.

In the end, you must speak with an agent who can clearly outline real expectations for you.