Does life insurance cover COVID-19?

The rise of COVID-19 has left many questions that impact our day-to-day lives unanswered. One of these is whether your life insurance covers COVID-19.

This article seeks to unravel the issues around how the pandemic has affected life insurance and find answers to questions you will have about your policy.

Does my life insurance cover COVID-19?

In the tragic event of you dying from COVID-19, your life insurance policy will, in most cases, pay out.

The National Association of Insurance Commissioners (NAIC) published a brief at the outset of the pandemic. It says, “There is no pandemic exclusion for life insurance. General life insurance covers pandemics, assuming you were truthful about your travel plans and exposure to illness during the application process.”

However, you also need to be aware of the following factors that could impact your life insurance:

• Your original application for life insurance contained false information. If you’ve lied about factors such as pre-existing conditions or travel abroad, this can invalidate your insurance.

• Your life insurance policy will lapse if you fail to make payments on time. In this case, there is usually a 30-day grace period. Although, during the pandemic, some states have enforced longer periods. If you pay any lapsed instalments during this time, you should be covered.

• If you only have an accidental death policy, know that you will not be covered for death from diseases including COVID-19. Cover will apply solely if you die as the result of an accident.

• The cash value component of your life insurance policy may be tied to equity markets, long term interest rates, or a specific market index, such as the S&P 500, many of which have fallen in value due to, among other things, the impacts of COVID-19. However, most cash-value life insurance contracts guarantee a specific minimum rate of return that could exceed current market conditions.

It makes sense to check what sort of life insurance policy you have and be sure of its terms and conditions to put your mind at ease.

How does government travel advice affect life insurance?

Many companies are asking life insurance applicants to wait for 30 days after returning from State Department Level 3 (Reconsider Travel) and Level 4 (Do Not Travel) countries before their policy can be started.

For existing life insurance policyholders, if they travel to Level 3 or Level 4 countries, their insurance may be invalidated in the event of a claim. This is because they would be deemed to have defied government travel advice.

It’s best to verify the terms of your policy with your life insurance provider. You must also exercise complete honesty with them regarding any travel plans.

Will new policies still include COVID-19 cover?

Many insurance companies are accepting new applications for life insurance policies, which still include COVID-19 cover.

However, the pandemic has affected life insurance in different ways. As reported above, if you have traveled immediately before putting in your application then you will likely be asked to wait for a 30-day period to ensure that you don’t fall sick with COVID-19 before the policy can be activated.

The NAIC has looked at how COVID-19 will affect insurance policies in the future. In their Global Macro and Insurance Outlook, they said that the increased number of claims would have an effect on the insurance industry, which could take the form of premium increases.

And finally…

It’s imperative that you check with the company providing your cover about its terms and conditions. While it’s business as usual for life insurance, it still pays to be sure of your policy’s terms and conditions as the pandemic continues.