Orlando Harmon
The COVID-19 pandemic has had a significant impact on various aspects of life, including insurance. From travel insurance to life insurance and car insurance, individuals have had to navigate through changing policies and procedures to understand their coverage during these unprecedented times. Travel insurance, for example, has been affected by the pandemic, with individuals seeking refunds and facing challenges due to cancelled holidays and flights. Life insurance policies have generally continued to provide coverage for coronavirus-related deaths, and the vaccine does not impact the payout. Car insurance companies have also had to adapt, with lockdown orders resulting in decreased mileage and potential changes in policy costs. Overall, the coronavirus pandemic has prompted insurance companies to enhance their support and flexibility for customers facing financial difficulties and unique circumstances.
| Characteristics | Values |
|---|---|
| Life insurance claims | Covered by existing policies; no exclusions in new applications |
| Life insurance claims for Coronavirus-related deaths | Covered by existing policies; treated the same as deaths from other natural diseases |
| Life insurance claims for long COVID | May be covered, but eligibility and rates may be affected by long-term health complications |
| Life insurance and the COVID-19 vaccine | Does not affect eligibility or claims |
| Travel insurance claims | Covered if holiday cancelled due to Coronavirus; may need to claim a refund first |
| Travel insurance and vouchers | May be offered vouchers or credit notes, but these could affect other ways to claim |
| Driving during the pandemic | No need to notify your insurer if you are driving to deliver medicine or groceries |
| Driving to work during the pandemic | Your insurance policy will still be valid |
| Laid-up car insurance | Cheaper policies available due to no third-party or liability insurance |
| Car insurance rates | No definitive impact, but some insurers are offering premium relief |
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What You'll Learn
Life insurance claims and payouts
Life insurance policies do not treat deaths caused by Coronavirus any differently from those caused by any other flu, infectious diseases, or natural causes. If you have an existing life insurance policy, your coverage is not impacted by COVID-19. If you pass away due to COVID-19 or a Coronavirus-related ailment, your beneficiary will be able to make a life insurance claim.
In rare instances, insurers sometimes add a 'pandemic' exclusion to policies. In this case, Coronavirus-related deaths would not be covered. To find out what your policy covers, check your policy documents. If you have an active life insurance policy that was taken out before the pandemic, it is unlikely to be affected by Coronavirus. This means a valid claim can be made by your loved ones if you pass away from Coronavirus. It will only be invalid if there is a pandemic exclusion written into your policy.
Claims made due to coronavirus on existing policies that were taken out before the pandemic will be paid out as per the standard terms and conditions of the policy. This is because Coronavirus is a new illness and won't have been a pre-existing exclusion. New policy premiums are unlikely to be affected by the presence of the virus. If you miss a payment due to Coronavirus, it's important to contact your insurer to let them know of your situation.
The long-term health effects of COVID-19 may impact life insurance, but the vaccine does not. Most people who have recovered from COVID-19 without complications are eligible for life insurance with no issue. However, insurers use your current and past health records to determine eligibility and rates. So, any previous medical condition, including long-term complications you may have from COVID-19, can affect the cost and availability of coverage.
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Travel insurance and refunds
If your holiday has been cancelled due to the coronavirus pandemic, you may be covered by your travel insurance policy. Most insurers will cover you if you have lost money due to a coronavirus-related cancellation. However, it is important to check the specific terms and conditions of your policy, as they can differ.
If you are claiming because your holiday has been cancelled, your travel insurer might expect you to have first attempted to get a refund from your airline, accommodation provider, or holiday company. Some travel insurers may also ask you to make a claim with your card provider before making an insurance claim. Making a claim with your credit card provider could mean you get more of your money back.
If you paid with a debit card (or a prepaid card) or if it was a credit card booking not covered by Section 75 rules, you might still be able to get a refund under the 'chargeback' scheme. If you have paid money in advance to a UK company for travel services that cannot be provided because of the coronavirus pandemic, you will usually be entitled to a refund. However, many airlines or holiday companies have a backlog of refund claims, and some refunds are taking longer than normal. It is important to keep chasing your refund if you believe you are entitled to one.
You might be offered vouchers or a credit note and the option to arrange alternative travel. However, taking vouchers or a credit note could be risky, as you may be unable to use them if your travel provider goes bust. Taking vouchers may also affect other ways to claim if things go wrong, such as via your credit card provider or your travel insurance.
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Car insurance and mileage
The number of miles you drive annually is a factor in determining your car insurance rate. The more miles you drive, the higher your rate is likely to be. This is because the more you drive, the higher the chance of being involved in an accident. Therefore, insurance companies consider you a higher risk, and your rates will reflect this.
Insurers often ask how many miles you drive, and some track your mileage directly through pay-as-you-drive or usage-based insurance programs. They care about your daily commute—how far you drive to work and how often—so they can verify your annual mileage estimate. For example, if you live in the suburbs and commute into a busy city, your rates may rise because you are at more risk of an accident than someone driving locally over a shorter distance.
In general, if you drive more than 20 miles each way to work, your car insurance rates will be higher. However, this has been affected by the pandemic, with more people working from home and driving less.
Some companies offer insurance for low-mileage drivers, or usage-based insurance, which matches rates to driving habits. Low-mileage drivers are often eligible for discounts, with the threshold for qualifying usually being below 7,000 or 5,000 miles per year.
During the pandemic, if you were using your car to collect and deliver medicine or groceries to those affected by Coronavirus, your cover would not be affected, and you would not need to notify your insurer.
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Health insurance and long COVID
Long COVID can develop after contracting COVID-19 and could impact health insurance coverage. The condition can cause a lengthy and unpredictable list of debilitating symptoms, such as malaise, fatigue, breathing challenges, migraines, cardiovascular problems, and mental health issues. It can also result in major medical expenses, with one Harvard University researcher estimating that it could leave patients with an extra $9,000 a year in medical expenses.
If you have an ACA-compliant plan, you should have coverage for long COVID. The 10 essential benefits covered by ACA-compliant plans include inpatient and outpatient care, prescription drugs, mental health care, and rehabilitative services. However, it's important to remember that you still have a deductible and co-insurance or co-pays as applicable. Additionally, be mindful of whether the doctors you see are in-network, as this will affect your coverage.
If you have a non-ACA-compliant plan, your coverage for long COVID may be less certain. These plans, including short-term health insurance, generally do not cover anything related to a pre-existing medical condition. Therefore, if you are dealing with long COVID, it is advisable to avoid non-ACA-compliant plans to minimize costs.
If you lose your job due to long COVID and, as a result, lose your employer-sponsored health insurance, there are still options for getting new coverage. You may be eligible for Medicare or Medicaid, or you could consider enrolling in a family member's plan. Losing your job-based coverage also triggers a 30-day special enrollment period. Additionally, you might have the option to get insured through the Consolidated Omnibus Budget Reconciliation Act (COBRA), which typically allows people to remain on their workplace insurance plan for up to 18 months, although it can be expensive.
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Critical illness insurance
The coronavirus pandemic has had a significant impact on various aspects of our lives, including insurance. Critical illness insurance is designed to provide financial protection in the event of a critical illness, but how has it been affected by the pandemic?
Firstly, it is important to understand that critical illness insurance policies typically cover a specific set of critical illnesses, and COVID-19 is not listed as a covered condition in most policies. This means that a positive COVID-19 diagnosis alone is unlikely to result in a payout from a critical illness policy. However, if an individual suffers from severe complications due to COVID-19, such as respiratory failure or the need for a lung transplant, their policy may still pay out if these complications meet the definition of a covered critical illness.
The impact of COVID-19 on the cost of critical illness insurance is also worth considering. While there is no clear evidence of an increase in premiums specifically due to the pandemic, it is possible that the rise in claims may affect the cost of critical illness insurance in the future. However, it is important to note that pandemics tend to encourage more people to purchase insurance, which may help balance the cost of claims. Additionally, the cost of critical illness insurance is primarily based on age, and once a policy is in place, the premium is usually fixed.
The pandemic has also led to some changes in the application process for critical illness insurance. Some insurers may postpone approving a policy if the applicant is experiencing COVID-19 symptoms or has tested positive and is still symptomatic. In such cases, a negative test may be required before the application can be processed. Additionally, some insurers have increased the minimum period before a claim can be made on new income protection applications to ensure that any self-isolation period has ended.
Overall, while COVID-19 may not be specifically listed as a covered condition in critical illness insurance policies, the pandemic has had an impact on the availability, application process, and potential future costs of critical illness insurance. It is crucial for individuals to carefully review their policies and consult with insurance experts to understand their specific coverage and any changes that may occur due to the ongoing pandemic.
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Frequently asked questions
If your holiday has been cancelled due to coronavirus, your travel insurer will likely cover you for lost money. However, they will probably expect you to have attempted to get a refund from your airline, accommodation provider, or holiday company first. If you paid for your holiday by credit or debit card, your insurer might also ask you to make a claim with your card provider before making an insurance claim.
If you have an existing life insurance policy, your coverage is not impacted by COVID-19. If you pass away due to COVID-19 or a coronavirus-related ailment, your beneficiary will be able to make a claim. The claim will be treated in the same manner as a death caused by any other natural disease or ailment. However, if you have a deferred life insurance policy due to a prior health consideration, any claims associated with COVID-19 will have to wait out the pre-specified deferral period.
If you are using your own car for voluntary purposes, such as delivering medicine or groceries to those affected by coronavirus, your cover will not be affected. If you have to drive to your workplace because of the impact of COVID-19, your insurance policy will still be valid. However, if you are driving less due to lockdown orders, this could impact your insurance rates. It is still too early to ascertain the impact of COVID-19 on car insurance rates, but insurance companies have reported fewer accidents and claims, which may result in savings for consumers.
