COVID-19’s Impact on Life Insurance

Elderly woman in mask pondering COVID-19's impact on life insurance while looking out windowThe COVID-19 pandemic has prompted many to consider life insurance or reevaluate their current policies, and the industry has been facing a surge in demand. The uncertainty regarding one’s health during this pandemic is leading many to think about the finances their loved ones will be left with in the case of an untimely death. If you’re looking into life insurance at this critical time, you need to understand COVID-19’s impact on life insurance and how this pandemic has altered your prospects.

Does My Current Life Insurance Policy Cover COVID-19?

If you currently have a life insurance policy – either whole or term – you’re likely covered from a death due to COVID-19, and a coronavirus-related adjustment should not be required. However, there may be a few exceptions that would prevent your claim from being processed:

  • Missed insurance premium payment: A policy may lapse if you’ve missed a payment. However, most carriers offer a 30-day grace period, and some are extending grace periods during the pandemic. Your agent can inform you of any COVID-19 related policy changes.
  • Your application was inaccurate: If you lied about your weight or income or neglected to disclose travel plans, the carrier can refuse your claim due to false information.
  • You only have an accidental death policy: Accidental death and dismemberment insurance only covers accidents. If it is a rider to your traditional policy, you should be covered; otherwise, this insurance does not cover deaths caused by illness or disease.

Can I Apply for Life Insurance During the Pandemic?

While COVID-19 may affect new insurance applications, it’s still possible to buy life insurance. Some underwriting programs are providing the option of filling out applications online and halting the need for a paramedical exam. Even so, an application can be denied or delayed for the following reasons:

  • Testing positive for COVID-19: If you test positive for coronavirus, you cannot obtain life insurance until you recover and are cleared by a doctor.
  • Recent or expected travel: If you have recently traveled outside the country or plan to in the next year, some carriers will postpone the approval of your application.
  • Recent hospitalization: Some carriers are denying or delaying applications if you’ve had a hospitalization in the last 12 months, due to the increased risk of contracting the virus in a medical setting.

Furthermore, it’s important to ask questions, as some carriers are raising rates, putting age restrictions on applicants, and adding exclusion riders to new policies that voids them of liability if the insured passes from COVID-19.

How are Insurance Providers Conducting Qualifying Medical Exams?

An in-person medical exam was once a crucial step in the sale of life insurance. However, many carriers have been switching over to an “accelerated underwriting” process before the crisis. This process uses an applicant’s electronic health records, prescription list, past medical claims, driving record, and most recent blood work to determine their risk. These are obtained upon signing the HIPAA release provided on standard life insurance applications.

Staying informed of COVID-19’s impact on life insurance is necessary to safeguard your family’s financial wellbeing during these uncertain times. If you currently have life insurance, be sure to reach out to your independent agent to learn about changes in your policy or to see what options are available if you can’t afford your premium payment. TJ Woods Insurance is staying informed about personal and business insurance’s response to this pandemic and making sure our clients understand all the latest changes and updates. If you have questions about the virus’s impact on your insurance policies or are interested in obtaining life insurance, contact us today.