Coronavirus: Life Insurance Impact And Your Coverage

The COVID-19 pandemic has had a significant impact on the life insurance industry, with many people rushing to secure coverage for themselves and their families. While the virus does not directly affect existing life insurance policies, it has caused some changes in the application process and underwriting standards for new policies. Life insurance companies now consider international travel, recent COVID-19 infection, and long COVID symptoms when assessing new applicants, and may postpone applications or increase premiums for those with severe infections or ongoing symptoms. However, having COVID-19 will not automatically disqualify someone from getting life insurance, and most companies continue to provide coverage for COVID-19-related deaths.

Life insurance and the COVID-19 vaccine

The COVID-19 vaccine does not impact life insurance coverage or eligibility. This has been clarified by state departments, insurance industry groups, and the American Council of Life Insurers (ACLI). Claims that COVID-19 vaccines void life insurance policies or affect eligibility are false.

Vaccine Status and Life Insurance

Life insurers do not consider vaccination status when deciding on claims, and it is not a reason for benefit denial. Getting the COVID-19 vaccine will not negatively affect your life insurance coverage or eligibility.

The Impact of Misinformation

Misinformation stating that the vaccines are experimental and that vaccination could void existing policies or impact future coverage has caused confusion. However, these claims are untrue, and there is no reliable data to support them.

Official Statements

The New York State Department of Financial Services, the Texas Department of Insurance, and several other state insurance departments have issued statements confirming that receiving a COVID-19 vaccine will not affect death benefits.

The ACLI, representing 94% of industry assets in the U.S., has also clarified that life insurers do not consider vaccination status when deciding on claims.

Positive Effects of Vaccination

Vaccination can positively impact life insurance by reducing the risks of long-haul symptoms and serious illness from breakthrough infections. It can help prevent severe health issues and lower mortality risks, which are factors considered by life insurers when setting premiums.

Addressing Concerns

To address any doubts or concerns, individuals can contact their life insurance company for direct answers and thoroughly review their policies. It is important to educate oneself with reliable information to dispel concerns and ensure timely and accurate life insurance coverage for financial protection.

Applying for life insurance during the pandemic

The coronavirus pandemic has had a significant impact on the process of applying for life insurance. While those with existing policies have not been affected, new applicants may face challenges and delays in obtaining coverage. Here are some key things to keep in mind when applying for life insurance during the pandemic:

Application Process:

The life insurance application process has adapted to the pandemic with non-face-to-face applications, allowing applicants to maintain social distancing. However, the pandemic has increased the focus on foreign travel, with insurers requiring detailed information about countries visited, specific regions within those countries, and the duration of stays. If you have recently returned from or plan to travel to a country affected by COVID-19, your application may be postponed until more time has passed or you return from your trip.

Medical History and Examinations:

Insurers will ask about your medical history, including any COVID-19 diagnosis, symptoms, and ongoing health issues. They may also require a medical examination, which was challenging to arrange during the height of the pandemic. Some companies have offered alternatives, such as forgoing the exam temporarily and charging a higher premium, with the option to refund the difference if the applicant later aces the medical exam. Other companies have increased the amount of death benefit needed to waive the medical exam requirement.

Impact of COVID-19 Diagnosis:

A COVID-19 diagnosis will not automatically disqualify you from getting life insurance. However, your application may be postponed for at least 14 days if you have recently recovered, or longer if you were hospitalized. The severity of your illness and any long-term complications will impact your eligibility and rates. If you have fully recovered from COVID-19 without complications, you are likely to be eligible for life insurance without issue.

Travel History:

Your travel history is a significant factor in your application. If you have travelled to or plan to travel to regions heavily affected by COVID-19, insurers may postpone their decision until you return or more time has passed. This is due to the increased risk of exposure associated with travel to these areas.

Alternative Options:

If you wish to skip the detailed underwriting process, you can consider simplified issue or guaranteed issue policies. These types of life insurance are more expensive but ask fewer questions and do not require a medical exam. Guaranteed issue policies, in particular, do not take your health into account, ensuring coverage regardless of your medical history.

Long COVID:

If you are experiencing long COVID, it is important to note that insurance companies typically review these applications on a case-by-case basis. The range of symptoms associated with long COVID, including breathing difficulties, cognitive issues, and fatigue, can impact your eligibility and rates. Working with an experienced agent or broker can help you find insurers that are more likely to meet your needs.

In summary, while it is possible to obtain life insurance during the pandemic, applicants may face delays, increased premiums, or alternative policy options depending on their individual circumstances. It is essential to be transparent about your medical history and travel plans to ensure proper coverage.

Travel history and life insurance applications

Life insurance applications ask for detailed information about your travel history. This is because frequent travel to areas where COVID-19 is more prevalent may increase the risk of exposure.

On the application form, you will be asked if you have travelled outside the country within the past 12 months or if you plan to do so within the next 12 months. You will need to disclose the countries visited, the specific regions within those countries, and the length of time spent abroad.

If you have recently returned from a country that has been impacted by COVID-19 or plan to travel to one soon, the insurance company will likely postpone any decision until more time has passed or you return from your trip.

If you have travelled to a country against the advice of the government and contracted COVID-19, your claim will not be declined.

Non-Face-to-Face Applications

Non-face-to-face applications were already available before the pandemic. This means that you can go through the entire application process without meeting the advisor, allowing you to maintain proper social distancing.

Medical Exam

Most life insurance companies require a medical exam as part of the application process. This is usually conducted by a licensed medical professional at your home or workplace. They will collect blood and urine samples and measure your blood pressure and height/weight.

During the pandemic, most medical providers suspended in-person services. As a result, some insurers increased the amount of death benefit needed for mandatory medical exams to over $1,000,000, for applicants under a certain age.

Simplified Issue and Guaranteed Issue Policies

If you want to skip the underwriting steps, you can buy a simplified issue or guaranteed issue policy. These types of life insurance are more expensive, but they ask fewer questions and you can skip the medical exam.

Keep in mind that if you have a guaranteed issue policy and you pass away from an illness within the first two years, your beneficiaries will only receive a refund of the premiums you paid.

Application Process

The process of applying for life insurance can be lengthy and may take four to eight weeks for traditionally underwritten policies to be approved and issued.

Lying on Your Application

Lying on a life insurance application is a form of fraud that could result in legal consequences. Omitting important details or misrepresenting information on your application could lead to a denial of benefits later on.

Long COVID and life insurance

The long-term effects of COVID-19 can play a role in determining your eligibility for a new life insurance policy. Long COVID can interfere with your daily life and cause issues like brain fog, fatigue, and shortness of breath. It can also worsen or trigger other chronic conditions such as diabetes, blood clots, and heart conditions.

Applying for Life Insurance with Long COVID

During the life insurance underwriting process, you will typically complete a detailed questionnaire and medical exam to evaluate your overall health. Insurers base policies and premiums on several factors, including your medical history and current health.

Since the effects of long COVID are still new, each insurance company may handle it differently. If you have ongoing health issues related to COVID-19, it is advisable to work with an experienced life insurance agent or broker who can help identify insurers and coverage to meet your needs and reduce your chances of being denied.

Factors Affecting Underwriting Outcome

• Was the diagnosis of COVID-19 confirmed?
• Is there a recent history of suspected COVID-19 diagnosis or exposure to the virus?
• What symptoms, if any, have you experienced, and have you fully recovered?
• Were you hospitalized?
• What is your travel history or planned travel? Frequent travel to areas where COVID-19 is more prevalent may increase the risk of exposure.

Types of Life Insurance Policies

If you have long COVID, you may be offered life insurance at non-standard terms, usually with an increase in premiums. Some insurers may postpone or decline your life insurance application if you are undergoing ongoing tests or experiencing strong symptoms.

Simplified issue life insurance is based on a short medical questionnaire rather than a physical examination. Compared to guaranteed life insurance, it offers larger coverage levels at lower premiums. While it may be more expensive than traditional life insurance, your coverage will likely still be rated.

Term life insurance is ideal if your health will not be affected by your condition during the policy period (usually 10, 20, or 30 years). If you have a pre-existing condition, your term life insurance premiums will also be rated. There is no deferral or waiting period with fully underwritten term life insurance, which means it provides the full death benefit in the event of the insured individual's death during the specified term.

Guaranteed issue life insurance does not require any information about your health but comes with higher rates and lower coverage amounts. If you have more serious health problems due to COVID-19 and do not qualify for standard or simplified insurance, you may be able to obtain coverage through guaranteed issue insurance. However, most insurers will require a deferral term of 24 months, during which your beneficiary will only receive the premiums paid so far instead of the full death benefit if you pass away.

Impact on Existing Life Insurance Policies

If you already have a life insurance policy in place, your coverage is guaranteed, and your beneficiaries will receive the death benefit in the event of your death, including death due to COVID-19 or related conditions. Your policy will only be denied if the cause of death was specifically excluded, such as suicide within the first two years of the policy.

Tips for Applying for Life Insurance

• Be completely truthful about your travels and doctor's visits on your application.
• If you have health issues and COVID is impacting you, ensure you attend follow-up appointments, as companies may not offer coverage otherwise.
• Work with an independent broker to find an insurer that will work with your specific background.

Life insurance payouts for COVID-19 deaths

As of 2024, there is no pandemic exclusion on life insurance policies, so COVID-19 deaths are covered. However, there have been reports of insurance companies giving beneficiaries the runaround when it comes to COVID-19 deaths.

Problems with Payouts

Insurance companies will try to find any possible way to initially deny a claim or delay payment. Tactics include requiring you to repeatedly send and re-send paperwork, delaying responses to your inquiries, and delaying payment on your claim.

Determining Cause of Death

Problems can arise when determining and recording the cause of death because COVID-19 affects individuals differently. The most straightforward way to list the cause of death is "complications from COVID-19", but some coroners will specify the complication, such as:

• Respiratory failure
• Stroke
• Heart attack
• Sepsis
• Multi-system organ failure

If the death was COVID-19 related, review the death certificate and be sure that COVID-19 is cited, so that the insurance company can't claim that the cause of death was something else and potentially deny your claim.

Common Reasons for Denial of Claims

• Misrepresentation on the application or medical questionnaire
• Contestability period (the two-year period following the purchase of a life insurance policy during which an insurance company can deny claims if the insured made a mistake on the initial application)
• Lapsed policy due to non-payment of premiums

Getting Help

If you are experiencing problems with a denied claim, a life insurance lawyer can help you fight the denial and negotiate with the insurance company.

Frequently asked questions