Life Insurance And Covid-19: What You Need To Know

The COVID-19 pandemic has caused many people to think about their mortality and consider taking out life insurance. But what impact does coronavirus have on life insurance policies?

If you already have a life insurance policy and you pay the premiums, there is no need to worry. Your coverage is guaranteed, and the insurance company cannot deny a claim unless the cause of death was specifically excluded. Currently, there are no exclusions for pandemics, and if you were to die from a pandemic-related disease, your family would receive the death benefit.

However, if you are applying for life insurance for the first time and have suffered damage from coronavirus, there may be exclusions. When you apply for cover, insurers will ask if you have had the virus, and if you have ongoing symptoms, your application will be underwritten accordingly. In some cases, insurers may postpone your application for 14 to 30 days, or even longer if you were hospitalized with COVID-19. The cost of your premiums may also be affected if you've had a severe COVID-19 infection or are experiencing long COVID symptoms, with premiums potentially increasing by 50-100% or more.

Life insurance applications and COVID-19

The coronavirus pandemic has had a significant impact on life insurance applications. While those with existing policies have not been affected, new applicants may face challenges. Here's what you need to know:

Application Process

The life insurance application process has adapted to the pandemic, with non-face-to-face applications becoming more common to maintain social distancing. However, the pandemic has led to an increased focus on foreign travel during the application process. Insurance companies will want to know the countries visited, specific regions within those countries, and the duration of your stay. If you have recently returned from or plan to travel to a country affected by COVID-19, the insurance company may postpone any decisions until you have been back for some time or until you return from your trip.

Medical History and Examinations

Insurance companies will ask about your medical history, including any COVID-19 diagnosis or exposure. They may also inquire about your recent visits to healthcare providers and any diagnostic tests performed. It is crucial to be truthful about your travels and medical history, as the insurance company can decline a claim in the first two years of coverage if they find any material misrepresentation.

Waiting Periods and Postponements

If you have recently recovered from COVID-19, your application may be postponed for at least 14 days. This waiting period is longer if you were hospitalized, typically ranging from three months to six months. The postponement could be even longer if you have residual effects or complications from the virus.

Impact on Premiums

A severe COVID-19 infection or long COVID symptoms may affect the cost of your premiums. Insurance companies determine your health classification based on your personal health history, and a severe illness or long-term health problems resulting from COVID-19 could result in a lower health classification and higher premiums.

Alternative Options

If you want to avoid the potential delays and increased premiums associated with COVID-19, you can consider a simplified issue or guaranteed issue policy. These types of life insurance are more expensive but ask fewer questions and do not require a medical exam. However, keep in mind that if you pass away from an illness within the first two years of a guaranteed issue policy, your beneficiaries will only receive a refund of the premiums paid.

Premiums and COVID-19

The impact of COVID-19 on life insurance premiums depends on several factors, including the severity of the infection, the presence of long-term symptoms, age, and pre-existing health conditions.

If you have experienced a severe case of COVID-19, requiring hospitalisation or resulting in long-term health complications, your life insurance premiums may be affected. The impact on premiums is due to the increased risk assessment by insurers, who consider the potential long-term effects of the virus on an individual's health. In such cases, insurers may postpone your application until a certain period has passed since recovery, or they may charge higher premiums. The postponement period can vary, with some companies requiring a 30-day wait after diagnosis for non-hospitalised cases and a 3-month wait for hospitalised cases. If residual effects are still present after the postponement period, the insurer may further postpone, increase premiums, or even decline the application.

For those with long-term symptoms or "long COVID," the impact on premiums will depend on the specific symptoms and overall health profile. Some symptoms, such as difficulty breathing or problems with daily activities, may result in limited options and higher premiums. However, if diagnostic test results indicate improvement, insurers may be more flexible with rates.

Age and pre-existing health conditions also play a role in determining premiums. Older individuals, especially those over 75 or 80 with multiple health conditions, may face higher premiums or challenges in obtaining coverage. On the other hand, younger individuals who have recovered from COVID-19 without ongoing symptoms are less likely to experience an impact on their premiums.

It is important to note that traditional life insurance policies do cover deaths caused by COVID-19. Additionally, there are currently no exclusions for pandemics in life insurance policies, but this may change in the future if insurance companies determine that the risk of catastrophic losses is too high.

During the pandemic, some companies offered premium payment deferrals for customers facing financial difficulties due to COVID-19, such as job loss or the need to self-quarantine.

Travel history and life insurance applications

It is important to be truthful about your travel history and any medical issues related to COVID-19. Insurance companies can decline a claim within the first two years of coverage if they find that you misrepresented your health status. After two years, they would have to prove fraud to deny a claim.

The impact of COVID-19 on life insurance applications is not just limited to travel history. If you have had COVID-19, your application may be postponed or declined, especially if you have ongoing symptoms or complications. Insurance companies use your current and past health records to determine eligibility and rates, so any medical condition related to COVID-19 can affect the cost and availability of coverage. If you are fully recovered from COVID-19 without any complications, you are likely to be eligible for life insurance without any issues.

To summarize, the COVID-19 pandemic has led to an increased focus on travel history and foreign travel in life insurance applications. Insurance companies are cautious about potential exposure to the virus and may postpone applications for those who have recently travelled to affected countries. Additionally, the presence of ongoing COVID-19 symptoms or complications can impact your eligibility and rates. Being truthful about your travel history and health status is crucial, as misrepresenting your health may result in denied claims in the future.

Vaccination status and life insurance

The COVID-19 vaccine does not impact an insurer's decision to pay out claims. It also does not determine your eligibility for coverage. In 2021, the Canadian Life & Health Insurance Association issued a statement clarifying that vaccination status does not affect a policyholder's ability to obtain coverage or benefits. This was in response to rumours and misinformation suggesting that receiving a COVID-19 vaccine could negatively affect life insurance applications.

The vaccine can, however, open up coverage for those with underlying health conditions. According to data from the Centers for Disease Control and Prevention (CDC), the vaccine reduces the risk of dying from COVID-19.

During the pandemic, many employers mandated COVID-19 vaccines for their workers, particularly in the healthcare industry. However, this led to some pushback and lawsuits from employees, particularly those who requested religious exemptions. As a result, experts urge employers to exercise caution when implementing vaccine mandates and to have accommodation procedures in place.

While your vaccination status does not impact your life insurance, your current and past health records are used to determine eligibility and rates. So, if you have any long-term complications from COVID-19, they can affect the cost and availability of coverage. You will need to disclose any related conditions, such as heart conditions, blood clots, or neurological symptoms.

If you are experiencing long COVID or other medical complications, you may have to pay more for coverage or apply for a guaranteed issue policy if you don't qualify for a fully underwritten policy.

Pre-existing conditions and life insurance

Pre-existing conditions can make it more difficult and expensive to get life insurance. According to the Centers for Medicare and Medicaid Services (CMS), as many as half of all adults under the age of 65 have some form of a pre-existing medical condition, such as asthma, diabetes, or heart disease. While these conditions may make it harder to get life insurance, it is still possible to obtain coverage. The specific policy types you qualify for will depend on your particular medical problems, how well your condition is managed, and the insurer.

Age and health are the two most important factors that life insurance companies use to determine whether a person is insurable and at what cost. Younger, more physically fit individuals are less likely to die and therefore pose less of a risk to insurers. Other factors, such as lifestyle and gender, also affect insurance rates. Risky habits and dangerous hobbies, such as smoking and scuba diving, can increase the cost of life insurance. Conversely, women tend to live longer and therefore enjoy lower rates.

Insurers evaluate the risk posed by pre-existing conditions and their likelihood of causing recurring issues. For example, cancer, heart disease, and other severe chronic illnesses are considered higher risk. Even if you have a pre-existing condition, insurers will evaluate how well you manage that condition. If you are otherwise healthy and your condition is under control, you may have a better chance of approval and qualify for more favourable premiums. Demonstrating vigilant management of the condition, such as routine medical provider visits and regular medication usage, can reduce risk from the insurer's perspective.

In addition, premiums can increase and approval chances can decrease with age, as younger people generally have a longer life expectancy. Lifestyle habits can also influence approval chances; for example, smokers with pre-existing conditions may have lower approval chances, while those who exercise regularly and maintain a healthy weight may have higher approval chances.

If you have a pre-existing condition, it is important to be honest on your life insurance application. Lying or omitting information about your health could result in disqualification from coverage or a significant premium increase. Instead, focus on managing your condition and maintaining a healthy lifestyle, which can improve your chances of approval and help you obtain coverage at a reasonable cost.

Frequently asked questions