Alyssa Lane
The COVID-19 pandemic has led to many people asking whether their life insurance policies would cover coronavirus-related deaths. The good news is that, according to sources, if you already have a policy in place, you're covered for COVID-19. However, if you haven't applied for a policy yet, you may face delays in approval. Some insurers may even postpone your application if you have recently travelled to high-risk countries or have plans to do so. It is also important to note that there is no specific product called 'Coronavirus cover'.
Would life insurance cover coronavirus?
| Characteristics | Values |
|---|---|
| Existing life insurance policy | Yes, it would cover coronavirus. |
| New life insurance policy | Yes, but there may be delays in approval. |
| Non-disclosure of coronavirus | Insurers can deny a payout. |
| Pandemic clause | Some policies may have a pandemic clause, which would mean no payout for coronavirus. |
| Critical illness cover | Coronavirus is not considered a critical illness, so no payout. |
| Income protection | Some policies may cover coronavirus under income protection. |
| Travel to affected areas | May affect your ability to get a new policy. |
| Vaccine status | The COVID-19 vaccine does not disqualify you from receiving life insurance or a claim payout. |
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What You'll Learn
Pre-existing conditions
Life insurance policies do cover deaths caused by COVID-19. However, having COVID-19 won't automatically disqualify you from getting life insurance, but it may make the process trickier. If you have a pre-existing medical condition, it may make obtaining critical illness cover more difficult. Providers are still offering critical illness cover, but they are taking extra care to ask about COVID-19 in your application. It is unlikely that coronavirus would be listed as a critical illness in the provider's terms and conditions. Therefore, if you are looking for critical illness cover to protect you in the case of a COVID-19 diagnosis, this will more than likely be ineffective as COVID-19 would not be listed as a critical illness under the policy.
If you have a pre-existing condition that the government or NHS has stated is more at risk for COVID-19, this would not stop you from applying for life insurance. However, your insurer may place a postponement period on your application. If you have recently recovered from COVID-19, your application might be postponed for at least 14 days, or even longer if you were hospitalized with the virus. If you are over the age of 75 or 80 and have compounding health conditions in addition to COVID-19, you may benefit from comparing quotes at multiple life insurance companies, as some will offer more affordable rates than others.
If you contract COVID-19 and experience severe symptoms, some companies might postpone your application for 14 to 30 days until you have recovered. The main indicators of risk for people with COVID-19 are hospitalization or impairment in completing activities of daily living. If you have a pre-existing condition that increases your risk for serious health complications as a result of COVID-19, Medicare provides coverage for a range of preventive care, screening, and treatment for some of these pre-existing conditions. For example, Medicare Part B can cover a variety of services associated with heart disease, as the fever associated with COVID-19 places additional strain on the heart, which can be deadly when the heart is already weakened.
If you are applying for life insurance, the cost of your premiums might be affected if you have had a severe COVID-19 infection or if you are experiencing long COVID symptoms. Like other pre-existing conditions, a long COVID diagnosis could make life insurance more expensive, making it crucial to compare quotes from different companies, as some offer more affordable rates for certain health conditions like long COVID.
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Non-disclosure
The consequences of non-disclosure in life insurance can be significant. If an applicant passes away due to coronavirus and it is discovered that they had the virus at the time of application but did not disclose it, the insurer may deny the claim and refuse to pay out to the applicant's loved ones. This is because non-disclosure can invalidate the insurance contract, as it is based on the assumption that all relevant information has been provided truthfully.
To avoid non-disclosure, it is essential to be transparent and provide honest answers during the application process. Applicants should carefully review the application form and ensure they understand all the questions before providing accurate and complete information. While it is not mandatory to take a coronavirus test before applying for life insurance, doing so can ensure that applicants are aware of their health status and can provide accurate information.
In some jurisdictions, such as Australia, the legal framework surrounding non-disclosure in insurance contracts has evolved. Previously, applicants were bound by a Duty of Disclosure, which required them to disclose all relevant information. However, as of September 27, 2021, this duty has been replaced by a duty to "take reasonable care not to make a misrepresentation". This change acknowledges the disparity between the knowledge of consumers and insurers and aims to protect consumers from unintentional non-disclosure.
It is worth noting that non-disclosure is not the same as a pandemic clause, which is a rare exclusion written into some policies stating that a payout cannot be made for coronavirus-related claims. While non-disclosure can lead to the denial of a claim, the presence of a pandemic clause in a policy does not necessarily imply non-disclosure.
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Pandemic clauses
A pandemic clause is a rare exclusion written into some older insurance policies, which means a payout cannot be made for coronavirus. This exclusion gained attention during the COVID-19 pandemic, with consumer groups calling on insurers to scrap all exemptions related to pandemics.
Insurers faced scrutiny over their response to the pandemic, and their treatment of vulnerable workers and medical workers. In Australia, the Financial Services Council (FSC), which represents major life insurance companies, reassured customers that COVID-19 would have little impact on their cover. One of Australia's biggest life insurers, TAL, initially planned to add a coronavirus exclusion clause to new policies for healthcare workers, but after a backlash, they dropped these plans.
It is important to note that non-disclosure of relevant information, such as having COVID-19 at the time of application, may result in insurers denying a payout. Therefore, it is recommended to review your life insurance policy and provide full disclosure to ensure your loved ones can receive a payout if you pass away due to coronavirus. While there is no specific 'Coronavirus cover' product, a standard life insurance policy can provide coverage for coronavirus-related deaths as long as full disclosure is given during the application process.
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Critical illness cover
In general, insurers have stated that they will not pay out on critical illness cover as a result of coronavirus because it is not a specified illness under the terms of their policies. Viral infections such as COVID-19 are not typically included in the list of 'critical' illnesses and are therefore unlikely to trigger a payout. However, while COVID-19 infection itself is not a covered condition on any critical illness policy, the complications that can arise from it may be covered. According to medical professionals, some individuals who are infected with COVID-19 and do not die from it may suffer from lasting lung conditions. Under these circumstances, a claim may be possible, depending on the exact wording of the policy.
If you have a critical illness insurance policy in force before you develop COVID-19 and it has a death benefit attached, you should be able to make a death claim on the policy in the event of your passing. Additionally, if you are unable to work due to 'shielding' or 'self-isolation', this would not be covered by income protection insurance. However, if you have an existing income protection policy, insurers will pay coronavirus-related claims once the policyholder has reached the end of the deferred period and is still unable to return to work due to their illness.
It is recommended to consult your insurer with any questions about your policy cover. Most providers have updated their websites to include answers to specific questions about COVID-19 for concerned customers. It may be beneficial to explore your life insurance options to ensure protection for yourself and your family in the event of death and/or critical illness.
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Income protection
If you are unable to work for longer than your deferred period as a result of coronavirus, you will most likely be covered by an existing income protection policy, provided you developed the virus after the policy went live. This means that, after your deferral period, you will start to receive a monthly benefit equivalent to a proportion of your salary until you are well enough to return to work or until your payment period ends. This, of course, depends on your policy's terms and conditions.
Some income protection insurance policies include redundancy cover. In this case, you may be able to claim if you lose your job or your business closes due to coronavirus. However, redundancy cover has some key restrictions. First, you must serve a no-claims period, typically six months, during which your employer cannot indicate that redundancies or closures may occur. There is also a waiting period, usually 28 days, from when you lose your job to when you can claim benefits.
It is important to note that some insurers have increased the minimum period before a claim can be made after the policy starts (known as a deferred period) to ensure that any period of self-isolation would have ended before a claim can be made. If the policyholder is ill with coronavirus at the end of a deferred period and beyond, they would be eligible to submit a claim.
The coronavirus pandemic has put thousands of UK jobs at risk. If you are worried about being out of work, income protection insurance could help. However, it is important to be completely open and honest with your insurer and disclose any international travel plans or potential exposure to coronavirus.
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Frequently asked questions
Yes, if you already have a policy in place, you're covered for COVID-19. If you haven't applied for a policy yet, you might face delays in approval.
Your application might be postponed until you make a full recovery. It is recommended that you get tested for coronavirus before applying for life insurance.
Your insurance company might postpone your application if you have plans to travel to or have recently visited any destinations with Level 3 or Level 4 travel warnings from the CDC.
Your life insurance company can't change your rating class or premium after your policy is in force.
AIG has confirmed that death from coronavirus will be "handled like any other life insurance claim."
